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Chapter: 1
Trade is an integral part of the total developmental effort and national growth
of all economies including Bangladesh. It particularly plays a central role in
the development plan of Bangladesh where foreign exchange scarcity
constitutes a critical bottleneck. Export trade can largely meet foreign
exchange gap, and export growth would increase the import capacity of the
country that, in turn, would increase industrialization, as well as overall
economic activities. Bangladesh’s import needs are substantial; hence the
need to rapidly increase exports is immediate. In order to finance the imports
and also to reduce the country’s dependence on foreign aid, the Government
of Bangladesh has been trying to enhance foreign exchange earnings through
planned and increased exports. However, the global trade scenario has
exposed structural limitations of the Bangladesh economy, posing a variety of
challenges for the country that has under developed technology and a low
capital base. In the process, we examine Bangladesh’s export and import
performance compared to various countries, regions and the world over the
years. We also discuss the sources of Bangladesh’s imports and directions
of Bangladesh’s exports and the dynamic changes over the years, and
highlight the trends of export and import shares to GDP and trade balance
positions.
1.2 OBJECTIVES OF THE STUDY
This paper has been prepared from the corner of two objectives are as
follows:
1.2.1 Primary objective
It is known to all that, importing more goods and services than exporting for
an economy have continuous bad effect on its real growth. On the other
hand, study of export and Import of international business provides a greater
learning opportunity about varieties terms, policies, rules of export and import,
products, opportunities as well as the paths for business expansion
throughout the world for maximizing profit. We strongly hope that our paper
will provide lot accurate and useful information that will help those who want
to get an idea on export and import condition of Bangladesh.
1.3 SPECIFIC PURPOSE OF THE STUDY
There are many factors that discourage local companies from going
international and taking their goods across the world. But the benefits of
international trading far outweigh its disadvantages. The global village is
growing even closer, and this has made exporting a big business that grows
exponentially every year, and benefits from improved logistics and
communication channels. Business can gain some long lasting benefits from
international trade. Importing and exporting goods can help to broaden our
horizons in the following ways:
Trading our products internationally can give us an advantage over
competition. If the domestic market is already flooded with similar products,
then overseas markets may just be the answer to better profitability. This
holds especially true for products that aren’t widely available overseas. As
the international market for our good gets bigger, sales increase, giving us
an advantage over others in our industry.
Companies engaging in international trade experience improved efficiency
brought on by the presence of economies of scale in production. This can
bring about significant trade gains due to the reallocation of resources that
can raise productive efficiency. Simply put, more output can be created at
lower costs bringing about major savings. International trade can give us the
opportunity to understand the varied market trends that can affect our
business. It is common business saying that 95% of a company’s
prospective market is situated out of the country. And it just won’t be wise
to forego such a huge potential for business, leads, profits and thus
business growth. So, the function of international trade is to capitalize on
profitable opportunities for owners, which is the single most significant
directive for corporations and many other businesses. For business concerns
that offer season specific services or products, expanding operations to
overseas is a perfectly viable way of staying busy and making money all
year around. And staying in business all year round is a great way of
outmaneuvering competitors.
International trade can introduce a company to whole new foreign markets.
Spreading risk in foreign markets and companies means that organization
won’t only be subjected to the tribulations of the Bangladesh economy. This
diversification can shield their businesses from the investment risk of putting
all their eggs in one basket. Similarly, international traders are also ideally
poised to take advantage of the higher than usual potential for growth of
some foreign economies. It is important to do our research right to find the
right emerging markets for our kind of businesses. Of course, it is also
important to balance these advantages against the likelihood for high costs
and abrupt changes that are the special risks of investing internationally.
International trade holds many benefits for those who are willing to put in
the extra effort. As websites such as Export promotion Bureau Bangladesh
make it obvious, importing organizations are eager to make their
infrastructures available to new trading partners on a global scale, which is a
sure sign that the time is ripe to explore new opportunities.
1.5 FUTURE SCOPE OF THE STUDY
may have some scope in variety of ways for various users, persons or
groups. The study is specifically focused on the exporting and importing
different products and its effect on the economy.
o This report will render a close past theoretical look at the export and
import that have been changed over time and may be used as
historical data to decide for making future action.
o The study will also help to know the reasons behind of growth of
export in different sector and also together increasing import of
Bangladesh.
o The study will help to know the reasons of imbalance trading and its
effect on economy at the time.
o The study will help us to gather knowledge about the kinds of
products & services are exported or imported from different countries.
o It will assist to know the major products of exporting and importing
are performed by bangladesh.
1.6 METHODOLOGY OF THE STUDY
The paper has focused mainly on limited items of exported and imported
products of Bangladesh. Some limiting factors were faced while conducting
process for preparing the report. These factors are as follows:
o Particularly as we full time job holder so, time was really critical factor
for us to accomplish this report.
o We could not gather whole information of trading of given products
equally standard from the prospect of export and import.
o We have found it so critical to summarize information from different
sources because of some lack of understanding to this process though
tried best with our level.
o We have found some data and information (year of 2011 as well as
2012) to the different websites dissimilar from commerce ministry of
Bangladesh government which has led us to be confused on some
particular term of trading of Bangladesh internationally. However, we
have included data, information, table and all graphical presentation from
the most reliable sources like websites of Bangladesh government, World
Bank, WTO, IMF, DCCI, EPB and so on.
International trade has truly expanded to encompass most of the world over
the past century. The countries of the world have seen that everyone can
benefit from specializing in the production of a certain good or set of goods
and by having skilled workers that provide services to others. This trade off
in strengths and weaknesses help get some commodities to locations that
would otherwise be unable to attain goods or services that they need. The
world of trading between countries is ever changing with the advancement in
technology that becomes available to countries.
The importing and exporting of goods across the globe is regulated by the
World Trade Organization (WTO). This, like many other organizations have
multiple benefits and drawbacks for the parties involved beyond practical
application of rules and policies. One major benefit of the WTO is that they
allow for trading on neutral ground allowing neither of the parties involved to
obtain an unfair advantage during the trade agreement process. Any disputes
that arise between two or more trading parties are also handled by the WTO
which is also a benefit of having the organization in place. The organization
itself acts as a mediator or referee of sorts when it comes to the process of
trade between nations across the globe. This type of organization also has
drawbacks when it comes to certain real world application in certain aspect.
Nothing is perfect but again some of its approaches to policy are only really
beneficial in theory. It seems as if the WTO organizations method of
operation is business focused with little care as to the effects its agreements
have on the populous of the countries involved.
Four key points defined in the international trade simulation are the
also would have affected the value of the currency. Terms of trade however
depend on many factors during negotiation, primarily the stability of both the
government and the economy. Political and economic stability also play
important factors. Foreign investment seeks out countries with a strong
economy and a stable government in which to invest their capital. It is
making the safe bet to place their capital in a stable environment than an
unstable one. If a country is perceived to become or be unstable, these
investments are pulled out, thus reducing that economy’s access to capital,
making funds scarce and devaluing their currency (Van Bergen). However if
the investment is strong, then the currency becomes strong as more
countries demand access to it via investment. One of the decision factors
whether to open a Free Trade agreement was based on the factor of
countries stability. With one country, maintaining a robust economy paired
with a stable democratic government and the other an unstable agrarian
economy with a loosely organized and frequently shifting political environment.
It was a safe decision on the behalf of Roadmap to select the stable
country to open a free trade agreement as this would create a safer bet to
withhold as much impact on both the home country and Roadmap currency.
The World Trade Organization (WTO) is the only global international
organization dealing with the rules of trade between nations. The WTO has
many trade topics, such as tariffs. Customs duties on merchandise imports
are called tariffs. Tariffs give a price advantage to locally produced goods
over similar goods, which are imported, and they raise revenues for
governments. The WTO allows countries to negotiate trade on neutral ground;
they help lower trade barriers and open markets for trade. Communication is
difficult between countries; the WTO also solves this by interpreting contracts
so both parties understand, and have a successful relationship. The WTO
has helped increase trade and will continue to do so in the future.
The simulation of the country of Roadmap tested the knowledge we have
attained pertaining to international trade. This demonstrated how even one
decision can change the face of trade between two countries and how each
country can benefit from exchanging goods with one another to help fill in
where one country may be weak. We learned how tariffs can affect imports,
exports, and the balance of trade. This simulation shows the direct link
between an international trade decisions by a country and how it will affect
its outcome financially as well as any future interaction with that country. The
result of this simulation is that there is always going to be change when
dealing with trade issues with other countries. There will be up and down
times that each country will face when attempting to trade a good or service
with another country. The World Trade Organization has been implemented to
help countries grow their economies by importing and exporting of goods.
The bottom line in making any decision when deciding what to trade with
another country is to compare how the items being traded are equaling out
to one another. This is comparative advantage and must be monitored
continuously over time due to changes in the availability of goods,
commodities, and the workers a country may have available.
2.2 Definition of Export and Import
The idea of trade between nations has been around for centuries. It began
with trade routes for silk, spices, and other commodities. It later began to
include seafaring trading such as cocoa from Central and South America
being sent to Europe. Today the world of trade includes anything that a
person can conceive: grains, cotton, tobacco, spices, services, components
for making a good, and the list go on. The individual countries must weigh
every option and angle that is present when entering into a trade deal with
other countries. Bangladesh economy has passed through a heightened pace
of global integration in the 1990s. The degree of openness of the
Bangladesh economy is now higher than many developing countries though
international trade of Bangladesh is extremely small relative to the size of its
population.
"Foreign demands for goods are produced by home country". In national
accounts "exports" consist of transactions in goods and services (sales,
barter, gifts or grants) from residents to non-residents. A general
delimitation of exports in national accounts is given below:
An export of a good occurs when there is a change of ownership from a
resident to a non-resident; this does not necessarily imply that the good in
question physically crosses the frontier. However, in specific cases national
accounts impute changes of ownership even though in legal terms no change
of ownership takes place. Export of services consists of all services
rendered by residents to non-residents. In national accounts any direct
purchases by non-residents in the economic territory of a country are
recorded as exports of services; therefore all expenditure by foreign tourists
in the economic territory of a country is considered as part of the exports of
services of that country. Also international flows of illegal services must be
included. National accountants often need to make adjustments to the basic
trade data in order to comply with national accounts concepts; the concepts
for basic trade statistics often differ in terms of definition and coverage from
the requirements in the national accounts:
Statistical recording of trade in services is based on declarations by banks to
their central banks or by surveys of the main operators. In a globalized
economy where services can be rendered via electronic means. Basic
statistics on international trade normally do not record smuggled goods or
international flows of illegal services. A small fraction of the smuggled goods
and illegal services may nevertheless be included in official trade statistics
through dummy shipments or dummy declarations that serve to conceal the
illegal nature of the activities.
"Imports" consist of transactions in goods and services (sales, barter, gifts
or grants) from non-residents residents to residents.
A general delimitation of imports in national accounts is given below: An
import of a good occurs when there is a change of ownership from a non-
resident to a resident; this does not necessarily imply that the good in
question physically crosses the frontier. However, in specific cases national
accounts impute changes of ownership even though in legal terms no change
of ownership takes place. Imports of services consist of all services rendered
by non-residents to residents. In national accounts any direct purchases by
residents outside the economic territory of a country are recorded as imports
of services; therefore all expenditure by tourists in the economic territory of
another country are considered as part of the imports of services. Also
international flows of illegal services must be included. Basic trade statistics
often differ in terms of definition and coverage from the requirements in the
national accounts: Statistical recording of trade in services is based on
declarations by banks to their central banks or by surveys of the main
operators. In a globalized economy where services can be rendered via
electronic means. Basic statistics on international trade normally do not record
smuggled goods or international flows of illegal services. A small fraction of
the smuggled goods and illegal services may nevertheless be included in
official trade statistics through dummy shipments or dummy declarations that
serve to conceal the illegal nature of the activities. Like many other third-
world countries, Bangladesh relies quite heavily on exports to provide for the
needs of its densely populated nation. The same products sold locally will
generally fetch a much lower price than they would on the international
market. This means that it is far more profitable for the country to engage in
exportation than it is to engage in local trade. While this may mean that a
large percentage of the country’s GDP is sent off abroad as Bangladesh
exports instead of being enjoyed by the country’s own people, it also allows
for a steady influx of foreign currency. Currently Bangladesh’s main export
items are garments, jute and jute-related goods, leather, frozen fish and
seafood. Just three years ago the country made over $2,000 billion from
export trade. The majority of the country’s trade is conducted with the USA
but a small portion of exports also sees its way to Germany, the UK,
France and Italy. However these figures should not mislead you into thinking
that the country is well-off. As one of the poorest and most densely
populated countries in the world, the majority of these profits will generally
make their way into the pockets of a few wealthy while the rest will be
thinly spread out amongst those involved in the production of these goods.
To add to this, the country’s economy depends on an erratic monsoon cycle
as well as drought and flooding which makes regular harvesting difficult.
Besides these Bangladesh exports, the country is also engaged in the
production of rice, tea, sugar wheat, ship scrap metal, textiles, fertilizer,
pharmaceuticals, ceramic tableware and newsprint. Though yields can at
times be quite high, the country still faces widespread poverty and it is
struggling to free itself from this. Some progress has been made, but there
are still many people living below the breadline in Bangladesh.
2.3 How to Measure the Effects of Export and Import on the Economy
The inter-relationship between nation’s imports and exports, and its exchange
rate, is a complicated one because of the feedback loop between them. The
exchange rate has an effect on the trade surplus (or deficit), which in turn
affects the exchange rate, and so on. In general, however, a weaker
domestic currency stimulates exports and makes imports more expensive.
Conversely, a strong domestic currency hampers exports and makes imports
cheaper.
Let’s use an example to illustrate this concept….
versus the Taka has thus diminished the U.S. exporter’s competitiveness in
the Bangladeshi market. At the same time, consider a garment exporter in
Bangladesh whose primary market is the U.S. A shirt that the exporter sells
for $10 in the U.S. market would fetch her 500 Taka when the export
proceeds are received (again ignoring shipping and other costs), assuming
an exchange rate of 50 Taka to the dollar. But if the Taka weakens to 55
versus the dollar, to receive the same amount of Taka (500), the exporter
can now sell the shirt for $9.09. The 10% depreciation in the Taka versus
the dollar has therefore improved the Bangladeshi exporter’s competitiveness
in the U.S. market.
To summarize, a 10% appreciation of the dollar versus the Taka has
rendered U.S. exports of electronic components uncompetitive, but has made
imported Bangladeshi shirts cheaper for U.S. consumers. The flip side of the
coin is that a 10% depreciation of the Taka has improved the
competitiveness of Bangladeshi garment exports, but has made imports of
electronic components more expensive for Bangladeshi buyers. Multiply the
above simplistic scenario by millions of transactions, and we may get an
idea of the extent to which currency moves can affect imports and exports.
Countries occasionally try to resolve their economic problems by resorting to
methods that artificially depress their currencies in an effort to gain an
advantage in international trade. One such technique is “competitive
devaluation,” which refers to the strategic and large-scale depreciation of a
domestic currency to boost export volumes. Another method is to suppress
the domestic currency and keep it at an abnormally low level. This is the
route preferred by China, which held its Yuan steady for a full decade from
1994 to 2004, and subsequently allowed it to appreciate only gradually
against the U.S. dollar, despite having the world’s biggest trade surpluses
and foreign exchange reserves for years.
2.5 Effect of Inflation and Interest Rates
Inflation and interest rates affect imports and exports primarily through their
influence on the exchange rate. Higher inflation typically leads to higher
interest rates, but does this lead to a stronger currency or a weaker
currency? The evidence is somewhat mixed in this regard. Conventional
currency theory holds that a currency with a higher inflation rate (and
consequently a higher interest rate) will depreciate against a currency with
lower inflation and a lower interest rate. According to the theory of
uncovered interest rate parity, the difference in interest rates between two
countries equals the expected change in their exchange rate. So if the
interest rate differential between two nations is 2%, the currency of the
higher-interest-rate nation would be expected to depreciate 2% against the
currency of the lower-interest-rate nation. In reality, however, the low-
interest-rate environment that has been the norm around most of the world
since the 2008-09 global credit crisis has resulted in investors and
speculators chasing the better yields offered by currencies with higher interest
rates. This has had the effect of strengthening currencies that offer higher
interest rates. Of course, since such “hot money” investors have to be
confident that currency depreciation will not offset higher yields; this strategy
is generally restricted to stable currencies of nations with strong economic
fundamentals. As discussed earlier, a stronger domestic currency can have
an adverse effect on exports and on the trade balance. Higher inflation can
also affect exports by having a direct impact on input costs such as
materials and labor. These higher costs can have a substantial impact on
the competitiveness of exports in the international trade environment.
2.6 Economic Reports of Trade Balance
The balance of trade is the difference between a nation’s export and its
imports. A crucial point to note is that both goods and services are counted
for exports and imports, as a result of which a nation has a balance of
trade for goods (also known as the “merchandise trade balance”) and a
balance of trade for services. The net or overall figure forms the balance of
trade or “trade balance,” a major contributor to a country's economic well-
being. A nation has a trade surplus if its exports are greater than its
imports; if imports are greater than exports, the nation has a trade deficit.
2.8 Trade Data – Census Basis and BOP Basis
manifests, this is not possible for trade in intangible services. The latter is
therefore compiled based on the flow of funds, the foundation on which
balance of payments (BOP) trade statistics are based. Therefore, data on
merchandise trade is available based on both custom-based trade statistics
and BOP, while data on services is only available on a BOP basis.
For example, in the U.S., statistics on exports and imports are compiled by
the Commerce Department’s Bureau of Economic Analysis (BEA) and
released in a monthly report. The BEA collates information on exports from
exporters electronic export information (EEI) that have been submitted to the
U.S. Automated Export System (AES). Exporters submit this export
information to the U.S. Census and also to U.S. Customs and Border
Protection. Similarly, import data is compiled from documents collected by the
U.S. Customs and Border Protection pertaining to goods that have arrived in
the U.S. from foreign countries. The BEA adjusts the goods total on a
census basis to bring the data in line with the concepts used to prepare
national and international accounts. The BOP-basis data derived in this
manner enables goods trade numbers to be summed with services trade
figures to arrive at a more accurate picture of overall U.S. trade, goods and
services.
2.9 Distinguishing Between a Service Export and Import
Statistics for trade in services are derived from the BEA’s estimates of
service transactions between foreign countries and the U.S., based on
periodic surveys and partial information from monthly reports. The BEA
provides export and import data on services in a number of categories travel,
passenger fares, royalties and license fees, transfers under U.S. military
sales contracts (only for exports), and direct defense expenditures (only for
imports). While the distinction between an export and import of a physical
good is readily apparent, it is not as clear for a service. Here, the flow of
funds determines whether a service transaction qualifies as an export or an
import, depending on whether it is a debit transaction that results in a
payment or outflow of funds, or a credit transaction that results in a receipt
or inflow of funds. So, for instance, fares received by U.S. carriers from
foreign residents for travel between the U.S. and foreign countries, or
between two points overseas, would show up on the export side of the trade
balance for services. Likewise, fares paid by U.S. residents to foreign
carriers would show up on the import side of the trade balance for services.
2.10 Factors That Affect Trade Balance
China’s enormous trade surplus with the U.S. may lead to renewed calls for
the nation to revalue its Yuan, which critics opine is being held artificially
low to stimulate exports U.S. trade data occasionally affects the greenback,
which in turn has an impact on commodity prices because of the negative
correlation between the two (stronger dollar causes weaker commodity prices
and vice versa). These moves often result in volatility in Canada’s TSX
Composite index, which has a heavy weighting in commodities. In general,
market watchers appear more concerned with trade deficits than trade
surpluses. This may be because chronic deficits often trigger steep currency
devaluation, leading to severe repercussions for the local economy as the
higher interest rates that are used to prop up the currency take their toll. In
summer of 2013, the currencies of India and Indonesia slumped 14% in
just over two months as investors focused on nations with large trade and
current account deficits. While India’s foreign currency reserves grew in leaps
and bounds after the economic reforms of the 1990s, rising gold imports in
2013 led to widening trade deficits, causing the Indian government to take
measures to restrict gold imports.
2.12 The Bottom Line
Imports and exports exert a major influence on the consumer and the
economy directly, as well as through their impact on the domestic currency
level, which is one of the biggest determinants of a nation’s economic
performance.
The trade is called the exchange of goods between two countries. Bilateral
trade agreements give preference to certain countries in commercial
relationships, facilitating trade and investment between the home country and
the foreign country by reducing or eliminating tariffs, import quotas, export
restraints and other trade barriers. Bilateral trade agreements can also help
minimize trade deficits.
3.1 Bangladesh in Regional and Bilateral Trade
[The tables have been given below to show the position of Bangladesh in
export and import among its partners from SAARC countries that include
historical data from 1998 to 2011. (Not found data of 2012 and 2013)]
Figure: 1
4.2 Major Product - Wise Export of Bangladesh
Sl Category
1 Agar Products/Agar Wood
2 Agricultural Equipments
3 Animal Casing
4 Agricultural Equipments-1
5 Aluminums Products
6 Artificial Flowers
7 Audio & Video (CD, VCD, DVD, VCR, Paper, Magazine)
8 Automobile Products
9 Ball Pen
10 Bamboo Products
11 Basket Ware
12 Batik Items
13 Battery (Auto)
14 Battery Dry cells
15 Beach Chair
16 Bees Wax
17 Betel Leaves & Nut
18 Bi-Cycle
19 Biscuits
20 Blade
21 Blazer And Coats
22 Blouses, Ladies Shirts & Fashion
23 Books & Periodicals
24 Brass Products
25 Bricks
26 Broom Sticks
27 Cables
28 Candles
29 Cane Products
30 Canned Fruits
31 Canned Fruits
32 Canvas Shoes
33 Carbon Rod
34 Carpet Backing Cloth
35 Carpet
36 Carton
37 Cement Exporters
38 Cement
39 Ceramic Products
40 Chemical Products
41 Computer Paper
42 Condensed Milk
43 Copper Wire
44 Cotton Waste
45 Cosmetics
46 Cotton Bags
47 Crabs
48 Crushed Bone
49 Cut Flower
50 Data Entry
51 Dehydrated
52 Door Shutter
53 Dry Fish
54 Dry Foods
55 Electrical Products
56 Espadrilles
57 Embroidery
58 Fan
59 Feathers
60 Fertilizer
61 Fish Maws
62 Fish Meals
63 Fishing Net
64 Flush Door
65 Food Products
66 Footwear & Leather Goods
67 Footwear
68 Fresh Fish
69 Fresh Fruits & Vegetables
70 Fruit Juices
71 Furniture
72 G I Pipe
73 Galantine
74 Gift Items
75 Glass Products
76 Gloves
77 Grey Fabrics
78 Hand Bags
79 Hand Made Paper
80 Handicrafts
81 Handloom Products
82 Hanger
83 Herbal Medicine
84 Hessian Cloth
85 Home Textiles-Specialized Textiles Exporter
86 Honey
87 Hooves
88 Human Hair
89 Jam & Jelly
90 Jamdani Sharee
91 Jewelers
92 Jute Backing Cloth
93 Jute Braid
94 Jute Goods
95 Jute Mat
96 Jute Shoes
97 Jute Yarn & Twine
98 Jute Shopping Bag
99 Kitchen Ware
100 Knitwear
101 Leather (Crust & Finished)
102 Leather Garments
103 Leather Products
104 Light Engineering Products
Table : 2
4.4.2 Export by Major Products of the year 1992-93
Table : 3
Chart: 1
Total Export Of
Export Of RMG % Of RMG's To
Year Bangladesh
(In Million Us$) Total Export
(In Million Us$)
1983-84 31.57 811.00 3.89
1984-85 116.2 934.43 12.44
1985-86 131.48 819.21 16.05
1986-87 298.67 1076.61 27.74
1987-88 433.92 1231.2 35.24
1988-89 471.09 1291.56 36.47
1989-90 624.16 1923.70 32.45
Table: 4
4.12 Main Apparel Items Exported From Bangladesh (m US$)
Cost and quality of products that are produced on time, reliably and
The country’s single month export earnings hit a record $3 billion in July,
the first month of the financial year 2013-14, riding on the performance of
readymade garment sector that defied factory disasters, Export Promotion
Bureau officials said. Provisional data from the EPB, which was sent to the
commerce ministry for approval on Sunday, showed that the export earnings
totaled $3,024.29 million in July, growing by an impressive 24 per cent
compared with the same period last fiscal year.
The export earnings figure of July in financial year 2012-13 was $2.4
billion with 4.26 per cent growth. The EPB vice-chairman Shuvashish Bose
told New Age on Tuesday that export crossed $3 billion because of
impressive performance by the readymade garment sector. Even after the
tragic incidents at Tazreen Fashions and Rana Plaza, the export earnings of
July proved that Bangladesh has not lost its competitiveness in the RMG
sector,” he said. Export earnings growth has been on an upward trend in
the last three months with the earning standing at $2.53 billion in May and
2.69 in June, the two months of the previous FY 2012-13.EPB officials
could not immediately give the data on RMG export earnings but said that
the export growth of the sector was double digit and higher than that of the
earnings of June of FY 2012-13. The total export earnings from RMG
sector in June was over $2.1 billion. The country’s export in the just
concluded FY 2012-2013 was $27.01 billion, growing by 11.18 per cent
from the previous FY, whereas the government set the export earnings
target for the current FY 2013-14 at $30.50 billion with a growth of
12.84 per cent.
The total RMG export in FY 2012-13 grew by 2.73 per cent to $21.51
billion in the FY 13 from $19.08 billion in the FY 12. Garment industry
people and many of the experts, however, were shaky about achieving the
target for FY 2013-14 against the backdrop of Rana Plaza collapse that
killed more than 1,100 garment workers in April. The Rana Plaza incident
and the Tzaneen Fashions fire that killed 113 workers in November, 2012
created an international outcry over the factory safety standard in the
country. Bangladesh Garment Manufacturers and Exporters Association
leaders earlier said that the international buyers were putting less order in
Bangladesh following the Rana Plaza incident while the impact of the
building collapse would be seen in the export figure in September-October.
[Note: we could not find the data of the month of September-October in the website of EPB.]
Finally, the details highlight the importance of industry complying with the
Bangladeshi government’s labor and building standard – an ever further
main issue as the country attempts to move into higher-value garment
exports. Investigate the need for the government to work closely & directly
with industry to make sure standards are correctly implemented, The World
Bank said firms might also require support to rearrange factories out of
residential areas and into purpose-built facilities with safer working
environment. The RMG sector has economic contribution as well as social
contribution in Bangladesh. It has created employment opportunities for about
five million people including young, poor and illiterate women. However,
recently the RMG sector is going through severe disturbances. The clashes
between garment workers and law enforcers create serious crisis in this
industry (Islam and Ahmad 2010). In January 11, 2010, the garment
workers created violence for getting the facilities such as lunch bills and
encashment of casual leaves. Forty workers were injured, production of 30
garment factories were halted. The garment workers had created another
aggression on April 28, 2010 for increasing their monthly wage rate from
US$ 25 to US$ 70. During that incidence, more than 22 RMG factories
were affected and 30 peoples were injured (Islam and Ahmad 2010).
The wage rate (0.25 US$ hour) is the lowest in Bangladesh compare
with other countries like China (0.35), Vietnam (0.40), Pakistan (0.40)
and India (0.60). Overtime allowance is also inadequate in the garment
Worker unrest took place on June 21, 2010 for implementing minimum
wages of US$ 70 a month. In that clash, two hundred peoples were
injured and thirty factories were ransacked (Islam and Ahmad 2010). The
garment workers had violated at Dhaka on June 30, 2010 for protecting
the closure of factories, and more than 40 people were injured. The
workers have been engaged in street protest, picketing, or blocked of a
manager's office or a factory for expressing their dissatisfaction about their
wages and other job related issues. One of the reasons for this unrest in
the garment industry is legal and institutional failures to ensure labor rights
(Islam and Ahmed 2010). Most of the garment factories in Bangladesh do
not follow the labor law and ILO conventions (Islam and Ahmed 2010).
The Labor Act 2006 (called Labor code) clearly mentions that the wage
of a worker must be paid within seven workings days [Section 123 (1)].
Majority factories do not provide appointment letters/contract letters, identity
cards and employee handbooks. Health safety and security condition in this
sector are also insufficient. The workers do not have a clear idea about
their rights and labor laws (Islam and Ahmed 2010).There are some
important causes that reduce productivity in the garment sector. Issues like
unresolved labor conflict and poor teamwork result in firm’s ineffectiveness,
low motivation, boredom for specialized work, rapid technological change and
high cost that reduced innovation (Abdullah 2005b). The most common
reasons of labor unrest in the garment sector are wage rate and unpaid
wage. Some garment owners do not pay salaries and overtime allowance to
the workers on time. However, owner’s claim that more than 90 percent
factories pay workers wages within 1st and 2nd week of the month
(Rahman, Bhattacharya 2008). Political unrest at the national level often
influences violence at the RMG sector. Sometimes women workers work
until 3 o’clock in the morning for meeting their shipment deadlines (Jamaly
and Wickramnanyam 1996). In most of the factories in the RMG sector,
daily working hour is 8.28 hours (excluding overtime working hours)
(Bhattacharya 2008). Women generally choose to work in the RMG sector
due to their poor economic condition with little or no control over their
income. In fact, women face discriminations at work in terms of wage
differentials and gender differences. They are working in poor condition and
feel insecurity. The women workers are living under the poverty line
because of their low wage.
They cannot maintain their basic cost of living so that they try to increase
their income by working overtime. Until 2010, the minimum wage of US$
43 per month has not yet implemented. Still they are living below poverty
line (Clark and Kanter 2010/2011). Participants were asked to share
their opinions about the causes of recent unrest in the garment sector. Most
of the participants believe that influence of external factors is the major
reason for current unrest in the garment sector (F1:1; F1: 3; F1:6; F3:1;
F2:4). For example, some garments where payment are quite high also
experience labor unrest (F1:1; F1: 3; & F1:6). Participants reported that
there are some external groups always try to create rumor about unfair
management practices so that workers become restless and create dispute
against the garment management.
Dispute in a garment factory also have influence on the workers of another
garment factory to create further disputes (F3:1 & F1:1). Apart from the
external influences, there are antitrust relationships exists between workers
and management. The workers believe that they are always exploited by the
Management. Labor unions are promoting these views (F2:4). Poor
relationship among workers and the front line managers (FLMs)/supervisors
are reasons of labor unrest in garment industry (F2:3). FLMs or the
supervisor’s poor behavior makes the workers stubborn and reluctant to
work, and it often creates disputes among the workers in garment factory
(F1:1&2). Moreover, if management does not solve worker’s problem
quickly, it also creates disputes (F3:7). A participant reported that strict
supervisors sometimes get support from top management due to their high
achievement (F2:7). Prompt and participative management approaches to
complain are effective remedy to resolve worker’s disputes.
Five deadly incidents from November 2012 through May 2013 brought
worker safety and labor violations in Bangladesh to world attention putting
pressure on big global clothing brands such as Primark, Loblaw, Joe Fresh,
Gap, Wal-Mart, Nike, Tchibo, Calvin Klein and Tommy Hilfiger, and retailers
to respond by using their economic weight to enact change No factory
owner has ever been prosecuted over the deaths of workers. Other major
Bangladesh uses the Harmonized Tariff System for tariff classification. Tariff
rates are set at 10, 15, 20, and 25 %. Certain products are exempt from
duties. Additional taxes/charges which may apply:
15 % value-added tax
Supplemental tax on certain goods
Landing fee
Insurance charge
5.3 Customs valuation basis
Specific duty rates is based on net weight. Ad valorem duties are based on
value assessed as follows: CFR value, plus insurance fee (1%) and
landing charge (1%). Bangladesh also applies the WTO Customs Valuation
agreement. According to this agreement, there are six acceptable methods
of determining customs value. Typically the first method is used (unless the
buyer and seller are related parties). When the value cannot be obtained
this way, or is rejected by customs, one of the other methods is to be
used, in descending order:
o Transaction value (the price actually paid or payable by the
importer, plus certain costs and expenses)
o Transaction value of identical goods
o Transaction value of similar goods
o Deductive value (the sale or resale value, reduced by certain
costs such as customs duties, taxes, and commissions)
o Computed value (calculated by adding together certain
costs/values for production, materials, profit and other expenses)
o Fall-back method
5.4 General import license/permit requirements
are required. "To order" B/Ls is acceptable. For airfreight, an air waybill
(AWB) is required.
5.11 Certificate of Origin (general)
The ATA Carnet currently is not accepted in this country. An ATA Carnet is
obtained in the country from which the goods are to be first exported (see
Figure : 1
Imports: $32.61 billion (2011 est.) & $34.56 billion (2012 est.)
Source: CIA World Fact book - Unless otherwise noted, information in this
page is accurate as of December 6, 2013.
Import, billions Share in the world Import share in Import per Import
Year
dollars import, ‰ GDP, % capita, dollars growth, %
Figure: 2
1970 8 13 4
1971 6 13 5
1972 9 10 5
1973 8 8 7
1974 9 7 10
1975 7 8 11
1976 18 8 10
1977 12 9 12
1978 19 14 14
1979 22 19 18
1980 32 21 24
1981 31 22 24
1982 30 23 23
1983 28 18 24
1984 28 16 22
1985 29 15 23
1986 26 8 23
1987 28 7 24
1988 31 5 28
1989 35 3 29
1990 36 5 32
1991 34 4 28
1992 34 3 31
1993 39 3 30
1994 40 3 35
1995 55 3 47
1996 60 3 46
1997 59 3 51
1998 61 1 54
1999 65 1 60
2000 66 1 63
2001 73 1 62
2002 66 1 72
2003 72 0 86
2004 85 0 124
2005 91 0 163
1979 10.6 12 8
2005 20 0.1 22
The variations in the share of consumer and capital goods are not notable
for the period 1995/96-1998/99 except for consumer goods in FY
1996-97, when the share dropped to 28% from 39% in FY 1995-96.
The shares of consumer goods dominate throughout the period recording
38% to 39% of total import payments. Capital goods, on the other hand,
registered 13% to 16% of total import payments during this time. The share
for combination of consumer goods and materials represented 63% to 68%
of total import payments, whereas the same for capital goods and materials
together was 32% to 37% during the stated period (BBS 2000: 251).
2 Performance & Construction of Electric circulating BDS 818:1998 (BDS 181: '98,
Fans & Amend 1: 06)
Regulators (Ceiling & dec head fans, pedestal fans &
table/cabin fans with in-built regulators)
3 Tubular & other switches for domestic & similar BDS 117:2005
purposes (Push button, Piano etc.)
4 Tubular Fluorescent Lamps BDS 292:2001
Prepared Foodstuffs;
Beverages, Spirits and
Vinegar; Tobacco and $324,402,630 $485,547,480 $534,364,521
Manufactured Tobacco
Substitutes
Footwear, Headgear,
Umbrellas, Sun Umbrellas,
Walking-Sticks, Seat-Sticks,
Whips, Riding-Crops and
Parts Thereof; Prepared $27,349,697 $67,321,442 $53,273,596
Feathers and Articles
Made Therewith; Artificial
Flowers; Articles of Human
Hair
Machinery-and
Mechanical Appliances;
Electrical Equipment; Parts
Thereof; Sound Recorders
and Reproducers,
$2,517,800,784 $3,100,436,283 $2,929,889,782
Television Image and
Sound Recorders and
Reproducers, and Parts
and Accessories of Such
Articles
Optical, Photographic,
Cinematographic,
Measuring, Checking,
Precision, Medical or
Surgical Instruments and $139,329,950 $154,821,347 $147,687,635
Apparatus; Clocks and
Watches; Musical
Instruments; Parts and
Accessories Thereof
Miscellaneous
$105,247,794 $95,766,573 $99,522,106
Manufactured Articles
1273 LPG dealers and 305 Packed Point Dealers appointed by three oil-
marketing companies in the country for retail trading. There are more than
6,000 tank Lorries owned by dealers/distributors for transportation of
petroleum products from oil company depots to their selling points. During
1997-1998 the Corporation imported 5,13,000 tons crude oil from Abu
Dhabi and 6,31,000 tons crude oil from Saudi Arabia thus totaling
11,44,000 tons under state to state annual contract basis. The C&F cost
of this imported crude oil was US$ 151.56 million equivalent to Tk
7,141.51 million. The average C&F import cost was US$ 132.48 per tons.
Similarly in 1997-1998 the Corporation imported about 17,23,000 tons of
various grades of Refined Petroleum Products from KPC, SHELL and ESSO
and also procured about 12,000 tons bitumen from Iran under international
tender. The C&F cost for the above import amounted to US$ 268.06
million equivalent to Tk 12,630.99 million. The imported refined products
included 100 thousand tons petrol, 272 thousand tons SKO, 126 thousand
tons jet petrol and 1,225 thousand tons HSD. The average C&F cost for
this was US$ 154.36 per tons while the average C&F import cost of
bitumen was nearly US$ 173.64 per tons. During the mentioned period
Bangladesh Petroleum Corporation (BPC) also imported about 39,742 tons
different grades of Lube base oil at a C&F cost of US$ 11.78 million
equivalent to Tk 555.07 million and the average import cost was US$
296.41 per tons. So during 1997-98, BPC imported 29, 19,000 tons of
crude and refined products and the total import cost amounted to US$
431.40 million equivalent to Tk 20327.57 million.
During the same period the Corporation exported 1,10,968 tons surplus
petroleum products like 10,459 tons naphtha and 1,00,509 tons furnace oil
from the refinery and earned US$ 10.11 million equivalent to Tk 476.38
million. In that year the country's only refinery produced 11,560,00 tons
various finished petroleum products by refining imported crude oils including
38 thousand tons condensate received from the gas fields. At the same time
the sole Bitumen plant of the country 'Asphaltic Bitumen Plant' produced
57,462 tons of bitumen and LPG bottling plant 'LP Gas Limited' bottled a
total 10,61,000 cylinders (each cylinder containing 12.5 Kg LPG) which
were delivered to the three oil marketing companies for marketing purpose.
Two lube blending plants of BPC, namely Standard Asiatic Oil Company Ltd
and Eastern Lubricants Blenders Ltd, blended different grades of 39,042
tons lubricating oil and supplied to three oil marketing companies. Last year
BPC took several initiatives for activating the country wide marketing and
distribution of various petroleum products by giving greater importance to the
oil demand of the Northern regions. The government raised the price of
0.25% sulfur gasoil, superior kerosene, 95 RON and 92 RON gasoline by
Taka 5 (6.75 cents)/liter and the price of 180 CST high sulfur fuel oil by
Taka 8/liter. Officials said the government had decided to hike the prices
four months after the previous hike on May 6, 2011 as multilateral donor
agencies including the International Monetary Fund had suggested adjusting
the prices of petroleum products in line with the prices in the international
market. In May, the government had raised all petroleum product prices by
Taka 2/liter. BPC had earlier projected that it would require around Taka
460 billion in the current fiscal year 2011-12 (July-June), up 53% from
the previous fiscal year's Taka 300 billion to import an increased quantity of
fuel to feed domestic demand. And it said that the government subsidy to
BPC might have to increase more than three times to Taka 260 billion in
the current fiscal year, from the previous year's Taka 80 billion, if the
domestic oil prices were not increased.BPC will require to import around
6.50 million mt of petroleum products in fiscal year 2012-13, up 27.45%
from previous fiscal year's 5.10 million mt. The demand might soar to
around 7 million mt for 2012-13 depending on fuel requirements of the
new gasoil and HSFO-fired power plants. BPC has planned to import around
4.0 million mt of gasoil and 1.5 million mt of HSFO to meet the mounting
oil demands in 2011-12 fiscal years. The remaining 1 million mt of
petroleum products include kerosene, A-1 jet fuel, gasoline and other fuels.
The country's petroleum demand is rising fast as the government has moved
to widen its range of energy sources by installing dozens of high-cost diesel
and furnace oil power plants in both the private and public sectors, the
sources added.
Twenty seven diesel and furnace oil-fired rental and quick rental power
plants are now operational across the country and a dozen more are
expected to come online soon.BPC is struggling to make payments for
petroleum imports; and suppliers especially the Malaysian Petro, the trading
arm of state-owned PETRONAS, and the Philippines National Oil Company
recently offered BPC a deferred payment mechanism to pay for import bills
within six months with interest to ensure payments. In the past 10 years of
operations, BPC has made profit only in fiscal 2008-2009 of Taka 3.22
billion when oil prices in the international market went down following the
global economic meltdown. BPC incurred losses of around Taka 72.08
billion for fiscal 2010-2011. In fiscal 2009-2010, the losses were at
Taka 20.49 billion. Bangladesh's petroleum import bill surged about 41
percent year on year to nearly 5 billion U.S. dollars in the last 2011-12
fiscal that ended in June, said a central bank official Monday. This is
compared to 3.18 billion dollars the South Asian nation of 152.52 million
people spent in the previous 2010-11 fiscal year (July 2010-June
2011). The settlement of letters of credit (LCs), generally known as actual
imports, for petroleum products stood at 4,479.21 million dollars in the
2011-12 fiscal year (July 2011-June 2012). In the last fiscal, he said
the country's overall fuel import orders also increased by 51.40 percent year
on year. The overall import orders, officially known as fresh opening of
import letters of credit, increased to 4.671 billion dollars in 2011-12
against 3.085 billion dollars in the previous fiscal year, said the official
quoting the Bangladesh Bank (BB) data. State-run Bangladesh Petroleum
Corporation (BPC), the country's sole importer of petroleum product, said it
raised import of fuel to cope with greater demand in the power and transport
sectors and farm irrigation.17 percent of the fuel oil imported in the last
fiscal was spent on power generation. Communications and irrigation also had
35 percent and 42 percent shares of total import respectively in the last
fiscal year. In the current fiscal year’s estimated import target at about 5.8
million tones of petroleum products to meet the growing demand from various
sectors.
5.26 Petroleum’s Impact on Economy
RMG |75.65%
Frozen Food |4.22%
Jute Goods |2.60%
Leather |2.19%
Chemical Products |1.77%
Raw Jute |1.21%
Agri Products |0.72%
Tea |0.06%
Others 11.56%
Figure: 3
Figure: 4
6.4 Bangladesh Gross National Product
Figure: 5
The Gross Domestic Product per capita in Bangladesh was last recorded at
597.49 US dollars in 2012. The GDP per Capita in Bangladesh is
equivalent to 5 percent of the world's average. GDP per capita in
Bangladesh is reported by the World Bank. From 1960 until 2012,
Bangladesh GDP per capita averaged 311.6 USD reaching an all time high
of 597.5 USD in December of 2012 and a record low of 219.3 USD in
December of 1972. The GDP per capita is obtained by dividing the
country’s gross domestic product, adjusted by inflation, by the total
population.
Figure: 6
6.6 Bangladesh Current Account to GDP
Figure: 7
6.7 Bangladesh Terms of Trade
Figure: 8
Figure: 9
6.9 Bangladesh Balance of Trade
Figure: 10
7.1 Findings
Economist specialist says that the outcome of 2012-2013 may not continue
in near future because international pressure is increasing day by day on
RMG particular issues. So it is very important task of government to resolve
the all problems of garments workers like maintaining workplace safety and
international standard hour working and standard figure of salary, bonus as
well as overtime payment.
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