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THE YEAR IN REVIEW

Stimulus shields exports partly

Some sectors hurt by global recession in 2009 are still in glum mood

Refayet Ullah Mirdha
The first phase of government stimulus has partially pulled the export sector out of recession shocks, but some other beneficiary' sectors are still languishing in the red.
Following setbacks in exports due to the global financial meltdown, Finance Minister AMA Muhith announced an additional Tk 3,424 crore stimulus package for selective sectors as an antidote to the recession fallout in April.
Under the April package, the government increased cash incentives for jute and jute goods to 10 percent from 7.5 percent previously, leather and leather goods to 17.5 percent from 15 percent and frozen foods and fish to 12.5 percent from 10 percent, against individual export performance.
The country's main export sector, ready-made garments (RMG), was not included in the first phase of the stimulus pack-age. It was marked for the second phase. The government rolled out Tk 1,000 crore in the second package in November.
Of the Tk 3,424 crore stimulus, Tk 450 crore was allocated for subsidies to exporters, Tk 1,500 crore for agriculture, Tk 600 crore for the power sector, Tk 500 crore for farm loans and Tk 374 crore for social security.
Exporters started receiving the additional stimulus in April.
Speaking to The Daily Star, Saiful Islam, president of Leather, Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh, said the sector is benefiting from the stimulus package as exports are increasing now.
" Footwear exports are recovering although it will be a while till it reaches expected levels," Islam said.
Musa Mia, president of Bangladesh Frozen Foods Exporters Association (BFFEA), said financial assistance from the
stimulus package is slightly working for frozen food exporters as the sector was severely damaged by cyclone Aila and a drop in demand for luxury foods in the developed world due to global recession.
"We need more financial assistance and policy support to revive the sector, " Mia said.
The stimulus package for jute and jute goods is working well as the exports of such goods are picking pace, said Ahmed Hossain, president of Bangladesh Jute Spinners Association. "I think the golden days of jute are coming back, as the sector is showing strength in exports."
Muhith however said he has no plans to give any more stimuli that will benefit the sectors that were included in the first phase.
"The first phase of the package will continue for a few more months, as the world economy is recovering now," Muhith said.
He said the Aila-hit shrimp sector may further benefit from other government development projects, but the finance ministry has no plans to provide more bailout packages for this sector.
The beneficiary sectors in the first phase of the stimulus package included the jute sector, agroprocessed foods, leather and leather goods and frozen foods.
According to Export Promotion Bureau (EPB) data, jute goods export in July-October increased 20.94 percent from the same period in fiscal 2008-09. In July-April of fiscal 2008-09, jute goods export declined 17.78 percent from the same period of fiscal 2007-08.
In July-October, exports of agro-processed food grew 15.47 percent from the same period in fiscal 2008-09, while in July-April 2008-09, it showed 21.59 percent growth from the same period of fiscal 2007-08.
Raw jute exports increased by 53.86 percent in July-October from the same period last fiscal year, according to data. In July-April of
2008-09, raw jute exports declined by 17.65 percent from the same period of the previous fiscal year.
Exports of leather bags and purses grew by 13.28 percent in July-October from the same period last fiscal year, while it grew by 92.01 percent in July-April in 2008-09 from July-April in fiscal 2007-08.
Exports of leather goods declined by 15.82 percent and frozen foods by 28.57 percent in July-October from the same period in 2008-09. In July-April 2008-09, exports declined by 36.13 percent for leather and 14.26 percent for frozen foods than in the same period in fiscal 2007-08.
The data also shows footwear exports slipped 7.83 percent in July-October from the same period in fiscal 2008-09. In the July-April period of 2008-09, footwear exports gained by 17.48 percent from the same period in fiscal 2007-08.
reefat@thedailystar.net