Services exports declined 5.56% in FY20

Like manufacturing goods, export performance of the services sector declined in the last fiscal year, bringing total earnings down by 5.56 percent compared to a year before.

Bangladesh earned $6,132 million by selling services abroad in the 2019-20 fiscal year, which was $6,493 million in the previous year, according to the full-year provisional figures released by the Export Promotion Bureau.

The decline was 17 percent in June this year than in the same month last year, going down from $507 million to $416 million.

Services export accounted for about 15 percent of total export proceeds of $39.8 billion from goods and services in the last fiscal year that ended in June.

Total exports amounted to a little over $47 billion in 2018-19 fiscal year.    

Though the overall figure dropped, earnings from government services, the single largest source of earnings in the services sector, performed better than the previous year.

The government earned $2,935 million in the July-June period of FY20 from sales of services to diplomatic missions and international organisations, as well as from office maintenance.

The amount was up by 3.4 percent from the previous year's earnings from the same source.

Transportation, construction, travel, education and tourism, insurance and banking services, and computer are among the 12 categories of services in the services sector basket.

Though insignificant in amount, earnings from insurance service jumped by 1,064 percent compared to last year, reaching $7.1 million.

Personal, cultural and recreational services fetched 86 percent more than the last fiscal year's amount.

Information, computer, financial and business services are few areas which brought more earnings from abroad in the last fiscal than a year back.

A total of $276 million came from computer services – software, data processing, and consultancy, up from $240 million in the previous year.

Construction services earned $263 million, 39 percent down from the previous year and 70 percent less than the target.

Foreign students and tourists are among the buyers of personal services that brought in $319 million, 13 percent less than the previous year.

Transportation, including sea, air, rail and road transport, saw 13 percent decline in proceeds, with the three major modes performing worse than last year.

The decline has been attributed to the Covid-19 pandemic that stalled or slowed most activities of individuals and businesses. Movement of transports stalled, and that is why earnings from transportation services declined.

"Limited capacity and poor quality of services restrict the scope of countries like Bangladesh to compete with developed countries in the trade of services, which requires high skill training, research and innovation," said Ali Ahmed, chief executive officer of Bangladesh Foreign Trade Institute (BFTI).

The institute conducted a survey of six products in the services sector with support from the World Trade Organisation's (WTO) Enhanced Integrated Framework, and found that Bangladesh needs to build capacity to derive benefits from the relaxed WTO rules for trade in services. These relaxed rules apply to the world's less developed economies," Ali said.

"We need improvements in areas like linguistic skills. We need to enhance productivity, diversify products and improve quality of services," the BFTI chief executive said.

Remittance earnings are not included in services sector export earnings, said Dr MA Razzaque, research director at the Policy Research Institute.  

The services sector's export performance has not fallen like that of goods as its lion's share has come from the government goods and services, he said. 

"Transportation services have been affected largely because of the drastic fall in goods export earnings during the peak of the pandemic," said Razzaque, also a former professor of economics at the University of Dhaka. 

Computer services, including software, data processing and consultancy, have enjoyed a good growth and this shows the demand for services in this sector remained unchanged in the last fiscal year, he said.

"But why earnings in the telecom sector dropped is difficult to evaluate," he added.

International call, software development and e-services that bring money from overseas is the export of the ICT sector, said Syed Almas Kabir, president of Bangladesh Association of Software and Information Services.

"The ICT sector could not achieve its export target due to Covid-19. However, the pandemic has created prospects for some new opportunities in the near future for this sector."   

Kabir hopes that in the current fiscal year, this sector will be able to reach the export target.