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The Indian Rupee has dropped to its lowest in history in last Thursday's trading against US dollar. Though Rupee closed at Rs 59.57 to a greenback, the market saw it at Rs 59.93 against a unit of US dollar. Analysts have opined that Rupee is not likely to bounce back significantly due to possible withdrawal of the stimulus by the United States government as well as some of the foreign institutional investors continuously withdrawing from Indian investments.
On the other hand, Bangladesh Taka is continuously gaining strength against the US currency. While it saw its lowest at almost Taka 84 to a US dollar, it is now trading at approximately Taka 77 against a unit of the greenback. Analysts are of the opinion that with reduction of imports, almost stable exports and inward remittances, Taka is likely to see a new level of 70 against a unit of US currency if the US dollar is not continuously supported by the central bank.
India, in view of growing disturbances in our apparel plants, is trying its best to boost their apparel or clothing exports and eyeing reduction of the huge difference with Bangladesh, if not with China too. The Indian government is quite active to meet their performance gap on apparel exports and ready to consider further incentives for their relevant exporters. A falling Rupee is likely to work as a booster here. Even in the near and distant past, we have seen the Reserve Bank of India (RBI) coming up with various incentive packages to 'pull up' its various industry segments to remain afloat or prosper amid various global market threats.
Though there has been a longstanding debate as to ingenuity of the entrepreneurs versus policy support of the government as the reason for success for our apparel export, the government in the recent days could not come up with any integrated approach, with regard to its support to our garment industry. While `bonded warehouse facility' remains a big policy support until today, we have seen continuous reduction in cash incentives and increase in tax at source since apparel industries are historically paying low taxes. While Pakistan even has come up with extra-ordinary package for its exporters like 'exchange rate gap' support or paying a few extra bucks for each dollar earned through exports, Bangladesh has left it to the market forces for the last several years. Cash incentives also declined in areas other than the cases with 'new product, new market' and the textiles products.
While the government is yet to meet its fiscal 2013 target for exports, it is eyeing almost 12 per cent plus growth in the country's aggregate exports for fiscal 2014, from US$ 28 billion to more than US$ 30 billion. Though our exports are holding up, despite no dramatic upside in the US economy or cloudy European economy, increasing this by more than 12 per cent without any specific stimulus may be a daunting task, specially when India is very supportive of its ready-made garments industry to `do their best' in view of the ailing Bangladesh apparel industry. While jute and jute goods are likely to do well along with more pharmaceuticals and software exports, our apparel exports are not showing very good signs after `Rana Plaza' tragedy. While the country has seen more than US$ 19 billion apparel exports in the fiscal 2012, it may not meet its target of US$ 23 billion in fiscal 2013 unless all the stakeholders, specially the government, do their best.
While the central bank is quite engaged with its policy option to continuously support the US dollar in order to protect export and remittance pie, we have not seen anything mentionable in the Finance Minister's budget speech with regard to helping out the garment sector to withstand the recent and immediate future challenges. Even we have not seen any extra allocation to pay the increased 'factory inspectors', not to talk about any allocation for `factory relocation', 'separate industrial zone development' or worker rationing support. The Finance Minister seemed to be limited to the 'prayers' for the salvation of the departed souls and wishing for no recurrence of the same type of incidents in future. Apparel industry as a whole deserves a 'soft landing pad' and helping hand from the government, no matter whether a section of our garment owners has come out to be 'blood sucker' due to 'continuous squeeze' by the buyers or not. While a new wage board or BGMEA-recommended continuous review of the workers wage in view of market rise or fall is a good idea, their owners deserved some policy support from the government, too. Now with falling Rupee and rising Taka, their life is going to be further tough.
The BB is seen continuously buying US Dollar from the banks to support our exports and inward remittances. However, this may not be enough in view of fast falling imports and increasing inward remittances. We need a few more steps like 'interim package', 'a few extra bucks', 'interest subsidy' or may be tax breaks or tariff reduction for the major export-related imports for our exporting friends. Along with these we must develop a dynamic process to immediately react to any policy changes in our competing countries, specially India, with regard to their ready-made garment exports. More exports mean more employment generation, more employment generation means more poverty reduction.
Falling Rupee, rising Taka: We must protect our exports :: Financial Express :: Financial Newspaper of Bangladesh
On the other hand, Bangladesh Taka is continuously gaining strength against the US currency. While it saw its lowest at almost Taka 84 to a US dollar, it is now trading at approximately Taka 77 against a unit of the greenback. Analysts are of the opinion that with reduction of imports, almost stable exports and inward remittances, Taka is likely to see a new level of 70 against a unit of US currency if the US dollar is not continuously supported by the central bank.
India, in view of growing disturbances in our apparel plants, is trying its best to boost their apparel or clothing exports and eyeing reduction of the huge difference with Bangladesh, if not with China too. The Indian government is quite active to meet their performance gap on apparel exports and ready to consider further incentives for their relevant exporters. A falling Rupee is likely to work as a booster here. Even in the near and distant past, we have seen the Reserve Bank of India (RBI) coming up with various incentive packages to 'pull up' its various industry segments to remain afloat or prosper amid various global market threats.
Though there has been a longstanding debate as to ingenuity of the entrepreneurs versus policy support of the government as the reason for success for our apparel export, the government in the recent days could not come up with any integrated approach, with regard to its support to our garment industry. While `bonded warehouse facility' remains a big policy support until today, we have seen continuous reduction in cash incentives and increase in tax at source since apparel industries are historically paying low taxes. While Pakistan even has come up with extra-ordinary package for its exporters like 'exchange rate gap' support or paying a few extra bucks for each dollar earned through exports, Bangladesh has left it to the market forces for the last several years. Cash incentives also declined in areas other than the cases with 'new product, new market' and the textiles products.
While the government is yet to meet its fiscal 2013 target for exports, it is eyeing almost 12 per cent plus growth in the country's aggregate exports for fiscal 2014, from US$ 28 billion to more than US$ 30 billion. Though our exports are holding up, despite no dramatic upside in the US economy or cloudy European economy, increasing this by more than 12 per cent without any specific stimulus may be a daunting task, specially when India is very supportive of its ready-made garments industry to `do their best' in view of the ailing Bangladesh apparel industry. While jute and jute goods are likely to do well along with more pharmaceuticals and software exports, our apparel exports are not showing very good signs after `Rana Plaza' tragedy. While the country has seen more than US$ 19 billion apparel exports in the fiscal 2012, it may not meet its target of US$ 23 billion in fiscal 2013 unless all the stakeholders, specially the government, do their best.
While the central bank is quite engaged with its policy option to continuously support the US dollar in order to protect export and remittance pie, we have not seen anything mentionable in the Finance Minister's budget speech with regard to helping out the garment sector to withstand the recent and immediate future challenges. Even we have not seen any extra allocation to pay the increased 'factory inspectors', not to talk about any allocation for `factory relocation', 'separate industrial zone development' or worker rationing support. The Finance Minister seemed to be limited to the 'prayers' for the salvation of the departed souls and wishing for no recurrence of the same type of incidents in future. Apparel industry as a whole deserves a 'soft landing pad' and helping hand from the government, no matter whether a section of our garment owners has come out to be 'blood sucker' due to 'continuous squeeze' by the buyers or not. While a new wage board or BGMEA-recommended continuous review of the workers wage in view of market rise or fall is a good idea, their owners deserved some policy support from the government, too. Now with falling Rupee and rising Taka, their life is going to be further tough.
The BB is seen continuously buying US Dollar from the banks to support our exports and inward remittances. However, this may not be enough in view of fast falling imports and increasing inward remittances. We need a few more steps like 'interim package', 'a few extra bucks', 'interest subsidy' or may be tax breaks or tariff reduction for the major export-related imports for our exporting friends. Along with these we must develop a dynamic process to immediately react to any policy changes in our competing countries, specially India, with regard to their ready-made garment exports. More exports mean more employment generation, more employment generation means more poverty reduction.
Falling Rupee, rising Taka: We must protect our exports :: Financial Express :: Financial Newspaper of Bangladesh
