Inconsistent policies and regulations create uncertainty for exporters and make it difficult for them to plan and invest for the long term, standing in the way of export diversification for Bangladesh, according to experts.

"Bangladesh needs a broad base export policy, addressing all bottlenecks and high tariff issues for export diversification," said Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem).

He made the observation at a session on "Challenges of export diversification and structural transformation in Bangladesh" at the 7th edition of the Sanem Annual Economists' Conference (SAEC) at the BRAC Centre Inn in the capital today.

According to Raihan, the overall import tariff line in Bangladesh is 40 percent, which is much higher than in India, Malaysia, and Vietnam.

"Besides, volatile and artificially maintained exchange rates created a bottleneck for export diversification during the last few years."

Syed Akhtar Mahmood, a former lead private sector specialist at the World Bank Group, said in 1995 the economy and the export volume of Bangladesh and Vietnam were almost the same, and in some cases, Bangladesh was ahead of Vietnam. 

"But, during the last 30 years, Vietnam has improved a lot while Bangladesh has remained almost the same."

Vietnam has performed well thanks to its policies and support conducive to foreign direct investments, he said, blaming a lack of necessary policy reforms for Bangladesh's failure to attract an expected level of FDIs.

According to him, around $100 billion of Vietnam's exports come from the electronics sector, which almost accounts for 70 percent of the country's total earnings from the external sector.

"Bangladesh had the same potential. But it did not happen due to a lack of timely policy support." 

Bangladeshi exporters shipped goods worth $55.56 billion in the last fiscal year of 2022-23, which ended in June.

Mahmood also blamed a lack of timely rules and regulatory reforms for Bangladesh's failure to diversify exports, which are dominated by garments.

Syed Nasim Manzur, managing director of Apex Footwear Limited, said the leather and agriculture sectors have the same potential like the ready-made garments to increase the export volume if the former is granted an identical facility and importance.

He said export diversification is developed through relations, connectivity, and value-chain management.

"We need supply chain management and innovative ideas with proper implementation in order to increase product diversification for the export market. It will happen only if policy reforms are put in place."

Zaidi Sattar, chairman of the Policy Research Institute, alleged the anti-export policy and the high tariff on the import of raw materials are preventing the export sector from tapping its true potential.

There are about 1,500 non-garment products in Bangladesh that are not getting facilities like the garment sector despite having an immense potential to contribute to the export sector, he said.

Sattar said the government is keen to diversify exports but there is no particular policy support.

Zahid Hussain, a former lead economist of the World Bank's Dhaka Office, who chaired the session, said exporters face various trade barriers and protectionist measures in international markets, which limit their access to new markets and increase the cost of doing business.

"Export diversification is needed for poverty reduction and employment generation and the government can play the due role to this effect."