Forex earnings growing on exports, remittances

Bangladesh's forex earnings keep on running on a steady lane, with both exports and remittance inflows maintaining positive growth in January this year. 

Last month, export earnings witnessed a 41% year-on-year growth, while remittances increased by 4.52% with many Bangladeshi expatriate workers going to overseas workplaces after the pandemic situation has turned the corner.

In the last seven months of the current fiscal year, the exports, propelled by a strong rebound of apparel shipments and shifting of many work orders from China, raked in more than $29 billion.  

Apparel shipments grew by 29% year-on-year in July-January, according to the Bangladesh Garment Manufacturer & Exporters Association (BGMEA).

Industry leaders say the country's exports have put on an excellent performance, riding on continued flows of orders of garment items, mainly triggered by high consumer demand in Western countries. 

Md Fazlul Hoque, managing director at Plummy Fashions Ltd, one of the greenest factories in the world, told The Business Standard, "We hope our export growth will continue at least for the next two-three months as demand in Europe and American countries continue to rise."

There are no effects of the Omicron variant on the exports yet as factories are running at full capacity with orders continuing to flow in, he added.

But they are now facing a shortage of workers; that is why they are having to turn down many work orders, Fazlul Hoque, also the former BKMEA president, noted.

BGMEA Vice-President Shahidullah Azim said their exports have increased, but high prices of raw materials have been eating into their profits.

Dr Zaidi Sattar, chairman at Policy Research Institute, told TBS that if such growth continues, our exports might hit the $50 billion mark at the end of the current fiscal year."

Many orders shifting to Bangladesh from China as part of sourcing diversification by importers and a trade tension between the US and China contributed to Bangladesh's export growth, he added.

Remittances keep flow in

Remittance inflow to the country has increased by around $74 million or 4.52% month-on-month in January this year even though the overall receipts fell by around 13% year-on-year.

Expatriates sent home $1.7 billion January 2022, which was $1.63 billion in December last year.

According to the Bangladesh Bank's report, about 3 lakh Bangladeshi employees went abroad in October-December last year, while 73,992 workers went in the July-September quarter that year.

Remittance inflow was very high at the beginning of 2021 as many expatriates sent all their money to their families, fearing that they might have to return to the country any moment due to the Covid-19 situation.

However, the remittance inflow started dropping in June last year. After declining for about six months, it began to rise again in December 2021 and that trend continued in January this year.

The government has set a remittance target of $26 billion for FY22. However, remittances received in the first seven months of the current fiscal were far less than the target, according to a report of the Bangladesh Bank published on Tuesday.

In the first seven months of the current fiscal, the country received $11.94 billion in remittances, which was only nearly 46% of the government's target.

The government recently increased the incentive on remittances from 2% to 2.5% to encourage remittance inflows through legal channels.

Officials concerned said currently more remittances are coming from the Middle Eastern countries as their economies recovered due to an increase in fuel prices in the world market.

Serajul Islam, spokesperson and executive director of the Bangladesh Bank, told TBS, "One of the reasons for the increase in remittances is that the government has increased incentives against remittances since the beginning of this year."

"Besides, the expatriates are sending their saved money considering the upcoming Ramadan. At the same time, the number of new expatriates has increased as Covid-19 situation has normalised. All in all, remittances will increase in the coming days," he said.