IFC advises building competitive sectors to diversify Bangladesh export basket

The International Finance Corporation of the World Bank Group has advised Bangladesh to build competitive sectors for export diversification.

Doing so will help the country sustain accelerated economic growth, increase investment opportunities, and create more jobs, particularly for women, IFC said in a report released in Dhaka on Sunday. 

The report, “Building Competitive Sectors for Export Diversification: Opportunities and Policy Priorities for Bangladesh”, reveals that a diversified export portfolio comprising competitive sectors, such as leather and footwear, plastics, and light engineering, will help create greater access to international markets for Bangladeshi products.

It provides recommendations for policymakers on strategy development to integrate priority sectors with the global value chain.

“To sustain its growth trajectory and reduce overdependence on any single item, Bangladesh needs to build a strong manufacturing ecosystem and develop new products, while paving the way for large scale job creation and poverty reduction,” IFC quoted its Country Manager Wendy Werner as saying in a statement.

The IFC publication compares Bangladesh’s export performance to several comparator countries, including Vietnam, Cambodia, Malaysia, China and India, to identify where Bangladesh can improve.

It considers economic factors like employment generation, women’s employment, growth of small and medium enterprises, and foreign direct investment needed in seven potential sectors for export diversification.

“Bangladesh’s economy is moving forward at a stable pace. The government has launched a concerted effort to diversify its exports and we sincerely hope this pioneering publication will help inform the policy discourse on sustainable export-led growth,” the statement quoted the Prime Minister’s Economic Affairs Adviser Mashiur Rahman as saying.

Commerce Secretary Mohammad Jafar Uddin was also present.

The report, co-authored by IFC Private Sector Specialist Hosna Ferdous Sumi and Senior Economist Masrur Reaz, has been supported by Bangladesh Investment Climate Fund II, an IFC advisory project implemented in partnership with the UK Department for International Development.
At the launching event organised in cooperation with Policy Research Institute, its Chairman Zaidi Sattar cautioned that most new products introduced by exporters are not sustained beyond the first year.

He stressed the need for addressing export sustainability on priority basis as it is a critical challenge for maintaining diversification.