Nov 6, 2008
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Bangladesh exporters urge govt to depreciate taka

Nov 6, 2008

By Serajul Islam Quadir

DHAKA, Nov 6 (Reuters) - A Bangladesh export group called on Thursday for the government to allow a depreciation of the taka against the U.S. dollar so the country can better compete against rivals on world markets.


Anwarul Alam Chowdhury Parvez, president of Bangladesh Garment Manufacturers and Exporters Association, said the government should depreciate the currency to 71 taka per dollar, or about 3.3 percent from current levels, because the currencies of rivals have fallen giving them a competitive advantage.

The ready-made garments sector is Bangladesh's biggest export earner. Government measures could help boost earnings, Parvez said.

"If the government support us with financial policies, along with other major critical issues, we will be able to increase export earnings from this sector by nearly 22 percent to $13 billion in the fiscal year to June 2009," said Parvez.

The taka has fallen just 0.13 percent against the dollar so far this year, while some of Bangladesh's export rivals have seen their currencies fall much more.

That means they can sell their exports in world markets at cheaper prices in dollar terms.

The Indian rupee has fallen 17 percent and the Pakistan rupee by some 24 percent since the end of 2007, swept lower by the impact of rising raw materials prices earlier this year and more lately the global financial crisis.

Parvez said it was difficult to compete against the likes of India, Pakistan, Thailand, Sri Lanka and Vietnam unless the taka was depreciated.

In a speech to a ready-made garments exhibitions, he singled out Vietnam, noting that the volume of Vietnam's apparel shipments to the United States in the first half of 2008 increased by more than 26 percent compared with the year earlier.

Bangladesh's shipments to the world's biggest economy increased by less than 1 percent over the same period. Since the end of 2007, Vietnam's currency has fallen close to 5 percent against the dollar.

He also said a shortage of electricity and natural gas, skilled labour and managers were holding the sector back.

"We will require 1.4 million skilled labour and adequate electricity to produce quality products along with competitive prices," Parvez said at an international exhibition of ready-made garments.

Mirza Azizul Islam, finance adviser of the interim government, said the administration would try to help.

"We are serious to address the problems faced by the exporters and it will definitely be looked into," he said.

He said the Asian Development Bank and World Bank will provide loans of $165 million and $350 million, respectively, for Bangladesh to develop the power and energy sector.

The government will also provide 10.5 billion taka ($153 million) in export subsidies.

"The central bank will also examine other issues raised by the exporters including lowering the bank's interest rate," Azizul said.

(Edited by Neil Fullick)

($1= 68.65 taka)

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