::: Star Weekend Magazine :::

Economy

Prosperity in Diversity

Syed Zain Al-mahmood

Bangladesh needs to diversify its export portfolio to sustain growth.

Mushtaq Ahmed loves crocodiles. Standing beside a holding pen at Reptile Farms Ltd, his commercial crocodile breeding facility in Mymensingh, he explains why.

"A two-year-old croc brings $600-800 in the international market. Not only the skin, but also the teeth can be exported. There is less competition -- demand always outstrips supply. It's a good business and can be a money spinner for Bangladesh."

Running an almost paternal eye over the reptiles basking in the sun, Ahmed who is Managing Director of Reptile Farms Ltd, stresses that it is sustainable farming. "It helps ensure survival of the species," he says. "We are registered under the Convention on International Trade in Endangered Species (CITES), and maintain international standards. In the next few weeks we will export our first batch of 67 crocodiles to Germany."

Iman Ali of Gadakhali, Jessore has no affinity for reptiles. He prefers to earn a living by cultivating flowers -- his roses are famous for their fragrance and exquisite shape. Ali's company Messrs. Tropical Flowers has been exporting flowers for the last two years and Ali is upbeat about the prospects of this sector. According to Ali, others in the region are following in his footsteps. About 3,500 farmers in 60 villages of the district are presently cultivating flowers on 800 hectares of land. Farmers in Jessore district produced flowers of different varieties worth approximately Taka 45 crore in the last financial year.

"The international market for flowers is huge. If we can do things right, we can grab our share," says Ali.

Crocodile skins and flowers account for only a miniscule proportion of Bangladesh's annual export earnings. But Mushtaq Ahmed and Iman Ali are among a new breed of entrepreneurs who are thinking outside the box when it comes to export items and destinations.

According to the Export Promotion Bureau (EPB), the country is heavily dependent on a handful of products and a narrow customer base when it comes to exports. "Officially, we export 171 items to 189 countries," says an official of the EPB. "But only four items dominate the 81 per cent of the export -- garments, jute and jute goods, leather, frozen fish and seafood."

Bangladesh's export trade revolves around one item in particular -- the readymade garments (RMG) products. The garments sector is currently responsible for about three-fourths of Bangladesh's annual export earnings and remarkably, the greatest volumes of RMG exports go to a select few countries in North America and Europe. After RMG, the only other export items worth noting are shrimp, leather and jute. But even the destinations of these export items are limited in number. The very narrow spectrum of the country's exports and their concentration on a few markets mean that Bangladesh's export earning is vulnerable to any downturn in the global marketplace. Price fluctuation, reduced demand and other unfavourable developments in a few countries can expose the country's export sector and throw the economy into a tailspin.

According to economist Dr. Shafiq Ahmed, it is high time to exploit export opportunities for the highly prospective agro-products, leather industries, pharmaceutical industries, ceramic industries, light engineering industries, computer software, electric and electronic products and products of horticulture and floriculture. Success in these ventures will require resourcefulness on the part of entrepreneurs and support from the government.

For businessmen used to thinking outside the box, the global downturn has had a silver lining. As the US economy continues to reel under the impact of the global economic slowdown and weakness persists in the European economy, many businesspeople worldwide have been looking to new pastures.

The search for new export destinations could focus on emerging markets such as China, India and Vietnam and could even look at economies that have been ravaged by warfare and need urgent rebuilding.

According to a Bangladeshi national employed in a senior position with the United Nations in Sudan, there is urgent demand for items such as pharmaceuticals, clothing and footwear.

"The whole of the West Coast of Africa including Sudan, Sierra Leone and Ivory Coast is an unexplored market," he says. "Indian and Nepali business-people are flocking to these countries. Bangladesh enjoys a good reputation in this region due to our work with UN Missions. But our entrepreneurs are lagging behind.”

A Maverick Entrepreneur

Imdad Haque

When it comes to thinking outside the box, Imdad Haque is in his element. Arriving in Moscow during the turbulent Yeltsin presidency, the Bangladeshi businessman won a contract to supply computer parts to government offices. Soon he went on to establish a chain of hypermarkets in Moscow and St. Petersburg. Haque, who holds an MBA as well as a degree in computing from the USA, never looked back. Now settled in Moscow with a Russian wife and three children, Imdad Haque is a good example of a Bangladeshi businessman who made good in the intensely competitive world of international business. The Star's SYED ZAIN AL-MAHMOOD caught up with the highflying entrepreneur in Moscow.

What is the potential for Russia as an export destination? Bangladeshi businesspeople have not really explored Russia's potential.
Russia remains by far the biggest unexplored market for Bangladeshi products. The vast majority of the population depend on value items mainly from China. Bangladesh should try to make inroads into this huge market. But there are challenges.

The market here has been grabbed by Chinese and Vietnamese traders. Many of them were students here in Russia, and are fluent in Russian. Bangladeshi businesspeople have to prove themselves in competition with them -- overcome the language and cultural barriers, etc.

You mention Russia's trading culture. What is the modus operandi for doing business in Russia?
Cool cash is best -- in Dollars or Rubles! There was a time during the chaotic 90s when movement of goods in smaller quantities between traders were all in cash and in terms of WYSIWYG (What you see is what you get). While the situation has changed somewhat through government controls, much of the trading is still carried on through direct bank transfers. Most traders are still not comfortable with LC, unfortunately.

So how can Bangladeshi exporters overcome these hurdles?
For Bangladeshi exporters dealing in RMG, leather goods etc, they must have their goods available in a secure custom-cleared warehouse in Moscow. One cannot do this unless one has a company with a bank account in Russia. Obviously you need knowledge of local consumer culture. As a seller you have to be close to where your market is!

The barriers seem formidable. Bangladeshi exporters often complain that they don't get enough support from diplomatic missions abroad that could advise on local trading customs.
This vast market with 145 million people in Russia, 50 million in Ukraine, and 20 million for Kazakhstan -- surely it's worth fighting for? But what I'm saying is, Bangladeshi exporters must approach it in a systematic way.

To gain leverage, trade bodies like BGMEA can develop partnership with an established company with experience and market knowledge in the countries concerned. The government should open trade centres in cities such as Moscow, St. Petersburg, Kiev, etc.

There is huge demand for Bangladeshi RMG, leather goods, shrimp, etc.

You retain extensive business interests in Bangladesh, and visit frequently. What are your feelings when you come home?
I admit there is a feeling of frustration. We have such enormous potential. If only the country were managed better, we could take our place on the world stage! I believe it will happen. But we must bring responsibility and commitment to the tasks ahead.