The Bangladesh Frozen Foods Exporters Association (BFFEA) has called on the government to raise the exchange rate for US dollars for processed frozen shrimp and fish exports from Tk 118.90 to Tk 125.50. This appeal was made in a letter submitted to the finance ministry on Tuesday, highlighting the growing challenges faced by the sector.
Concerns Raised by Exporters
The BFFEA outlined several issues affecting the shrimp and fish export sector, including:
- High interest rates on bank loans.
- Rising electricity bills.
- Increasing costs for packaging and a lack of ancillary services.
According to the association, raising the exchange rate for export receipts would benefit exporters in several ways. It would not only ensure the sustainability of export-oriented companies but also help to boost export earnings and contribute to stabilizing the foreign exchange market. The association argued that the current exchange rate is insufficient for the long-term viability of the sector.
Importance of the Frozen Shrimp and Fish Sector
The frozen shrimp and fish industry is 100% export-oriented, playing a vital role in the national economy. It has been contributing significantly for over five decades, exporting to around 55 countries worldwide. The sector is a crucial source of foreign exchange, helping to alleviate poverty and generate employment, particularly in rural areas.
Current Exchange Rate and Market Discrepancy
Currently, banks are paying exporters Tk 118.90 per dollar for their export bills, while the market price of the dollar is around Tk 129. The discrepancy arises from the fact that banks are purchasing dollars from exporters at a lower rate and then selling them at Tk 127 for import bills. This situation leaves exporters at a financial disadvantage, further compounding the difficulties they are already facing.
Export Decline
The BFFEA emphasized that raising the repatriated dollar rate to Tk 125.50 is essential to help exporters remain competitive in the global market. The frozen shrimp and fish export sector has been experiencing declining performance in recent years due to various factors, including static production, recessions in key export destinations, and a lack of competitive products.
According to the Export Promotion Bureau, exports of frozen shrimp and fish dropped to $376 million in FY’24, down from $421 million in FY’23. Additionally, export volumes have decreased significantly from 55,000 tonnes in 2016 to just 25,000 tonnes currently.
Conclusion
The BFFEA’s request to adjust the exchange rate for shrimp and fish exports is a bid to ensure that the sector remains competitive and sustainable in the long term. By raising the exchange rate, they believe the sector can better navigate the challenges it faces, maintain its vital contribution to the national economy, and secure employment opportunities in rural areas.
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