digitalbinosExport Diversification Strategies Beyond RMG in Bangladesh
Bangladesh’s economic success story has long been closely tied to its Ready-Made Garment (RMG) industry. Accounting for more than 80% of the country’s total export earnings, the RMG sector has positioned Bangladesh as the second-largest apparel exporter in the world after China. However, this overwhelming dependence on a single sector presents significant risks. Market fluctuations, changing global demand, and geopolitical shifts can quickly impact export earnings and employment.
To build long-term economic resilience and increase export revenues, Bangladesh must diversify its export portfolio beyond RMG. In this blog, we explore key strategies, promising sectors, and policy frameworks essential for achieving sustainable export diversification.
Why Export Diversification Matters
Export diversification helps an economy by:
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Reducing vulnerability to sector-specific shocks
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Expanding into higher value-added industries
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Creating broader employment opportunities
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Attracting diversified foreign investment
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Improving balance of trade and foreign exchange stability
Current Landscape of Non-RMG Exports
Despite the dominance of the RMG sector, Bangladesh has several emerging export sectors, including:
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Pharmaceuticals
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Leather and leather goods
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IT and software services
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Agro-processed foods
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Jute and jute products
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Light engineering and electronics
But these sectors still face challenges in scaling and competing globally.
1. Strengthening Non-RMG Industries
a. Pharmaceuticals
Bangladesh’s pharmaceutical industry has grown rapidly, fulfilling 98% of local demand and exporting to more than 150 countries. The TRIPS (Trade-Related Aspects of Intellectual Property Rights) waiver has enabled Bangladesh to manufacture generic medicines without patent constraints until 2033.
Key Strategy:
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Encourage joint ventures with global pharma companies
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Invest in research and development
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Facilitate faster regulatory approvals
🔗 Bangladesh Association of Pharmaceutical Industries (BAPI)
b. ICT and Business Process Outsourcing
Bangladesh is one of the top 10 countries for freelancing and outsourcing, earning more than $500 million in 2023 from the ICT sector. With a young, tech-savvy population and competitive labor costs, the country has enormous potential.
Key Strategy:
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Strengthen IT education and training
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Provide tax benefits and infrastructure in high-tech parks
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Promote “Digital Bangladesh” branding globally
🔗 Bangladesh Hi-Tech Park Authority
c. Agro-Processing and Food Exports
With an agrarian backbone, processed food exports offer a valuable opportunity. Products like frozen fish, spices, and packaged snacks are gaining traction in the Middle East and Southeast Asia.
Key Strategy:
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Improve food safety and compliance with international standards
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Invest in cold chain logistics and food technology
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Facilitate certifications (HACCP, ISO)
🔗 Export Promotion Bureau (EPB)
d. Leather and Footwear
Despite being one of the country’s oldest industries, the leather sector is underperforming due to environmental and compliance issues.
Key Strategy:
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Relocate and modernize tanneries with effluent treatment plants (ETPs)
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Rebuild brand reputation with ethical practices
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Explore newer markets beyond Europe
🔗 Leather Sector Export Data – TBS News
2. Policy Support and Incentives
Export diversification needs robust government support in terms of policy, infrastructure, and access to finance.
a. Special Economic Zones (SEZs)
SEZs are being developed to provide incentives, modern facilities, and ease of doing business for exporters in targeted sectors.
🔗 Bangladesh Economic Zones Authority (BEZA)
b. Simplified Regulatory Framework
Non-RMG exporters often face more complex licensing, customs, and compliance issues.
Suggested Reforms:
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One-stop export clearance services
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Digitalized documentation
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Sector-specific export incentives
3. Market Diversification
Apart from product diversification, Bangladesh also needs market diversification. Over 60% of exports still go to the EU and US.
Target Emerging Markets:
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South East Asia
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Africa
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Latin America
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Middle East
Trade Agreements & Initiatives:
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BIMSTEC
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D-8 Organization for Economic Cooperation
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Regional Comprehensive Economic Partnership (RCEP) – potential future engagement
🔗 Ministry of Commerce, Bangladesh
4. Improving Quality and Branding
Non-RMG products often struggle due to poor branding and inconsistent quality.
Strategies:
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Develop “Made in Bangladesh” branding for diversified products
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Invest in global certification, packaging, and marketing
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Collaborate with international trade bodies for knowledge sharing
🔗 Bangladesh Standards and Testing Institution (BSTI)
5. Developing Human Capital
The workforce for new industries requires specialized skills and digital literacy.
Solutions:
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Invest in Technical and Vocational Education and Training (TVET)
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Public-private partnerships in skill development
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Encourage innovation through universities and incubators
🔗 Skills for Employment Investment Program – ADB
Conclusion
Export diversification beyond RMG is no longer an option but a necessity for Bangladesh’s long-term economic resilience. By investing in potential sectors, reforming policies, modernizing infrastructure, and enhancing global market access, Bangladesh can reduce dependency on garments and unlock new sources of export revenue.
The journey won’t be easy, but with strategic foresight, collaboration between public and private sectors, and a commitment to innovation, Bangladesh can reimagine its role in global trade and secure a sustainable economic future.
Further Reading: