Bangladesh Enterprise Institute (BEI) and International Business Forum of Bangladesh (IBFB) jointly organized a webinar on “LDC Graduation by 2024 and the Readiness of Bangladesh” on 10th October. Salman F Rahman, private industry and investment adviser to the prime minister, was the chief guest at the event.
Call for deferring Bangladesh’s LDC graduation
FE REPORT | Published: October 11, 2020 10:11:37 | Updated: October 11, 2020 11:21:24
Representational image
Bangladesh should recommend the United Nations for deferring the next year’s LDC (least developed country) graduation triennial review by three more years, considering the adverse impacts of Covid-19 pandemic, experts said.
With the proposal for additional time, the LDCs could get another three years to prepare themselves to overcome the post-graduation challenges and the global economy will possibly be recovered by the time, they said.
Highlighting the importance of bilateral trade agreements to cope up with the post-graduation challenges, they suggested holistic reforms in the policies to make business easier and simpler.
The suggestions came at a webinar on Saturday chaired by IBFB president Humayun Rashid.
The webinar was jointly organised by the International Business Forum of Bangladesh (IBFB) and the Bangladesh Enterprise Institute (BEI) on LDC Graduation by 2024 and readiness of Bangladesh.
Presenting a keynote paper, research director of the Policy Research Institute (PRI) Dr Abdur Razzaque said more than 75 per cent of Bangladeshi export products enjoy tariff preferences in those markets.
He said Bangladesh’s exports keep growing in the markets like the European Union, Canada, China, India and Japan, where the country enjoys zero tariff facility as an LDC.
But things will change in these markets soon after Bangladesh graduates from the LDC club as Bangladesh will be subjected to paying tariff between 8.61 per cent and 17 per cent there.
EU tariffs on Vietnam exports would come down to zero by 2027 because of the EU-Vietnam FTA while such tariff on Bangladesh would rise to about 10 per cent, he said.
“Bangladesh should take a proactive LDC leadership role writing to the UN not to recommend any country for graduation based on 2021 review and wait for the next review in 2024 because of the pandemic,” he said.
Former MCCI president Nasim Manzur said Bangladesh is going to be a victim of its own success because of the loss of trade preferences.
Bangladesh’s export growth has been substantial in the countries where they had preferential access, but it has been insignificant in the markets having no such a facility, he said.
“I think that is a proven fact that we need to maintain this. What will happen if it goes away? The EU-Vietnam FTA shows us what can happen. In fact, 18.5 per cent is what will happen in terms of additional cost of buying garments from Bangladesh and factories will be getting squeezed as the direct impact, ” he said.
Mr Manzur laid emphasis on reducing the cost of doing business and raising competitiveness to overcome the situation.
“Are we competitive enough? The answer is no. Vietnam has lower cost of land, electricity and capital. If we reduce all those costs, we do not need incentives. The only reason we need the incentives because the cost of doing business is artificially high,” he said.
Former BGMEA president Anwar-Ul Alam Chowdhury Parvez said the country’ diplomats need to enhance their negotiating skills on the global stage and suggested the policymakers use the Rohingya issue while negotiating with the developed countries.
He was also recommending reviving the country’s outdated education system and making the workforce in accordance with the requirements of the fourth industrial revolutions.
Distinguished fellow of Centre for Policy Dialogue Professor Mustafizur Rahman said Bangladesh urgently needs to have bilateral agreements with friendly countries like Japan, Canada, China and India.
“There is a TRIPS extension facility for the LDCs. There is a window of opportunity for preferential treatment even if we become a non-LDC. That is why, strengthening our negotiations capacity is extremely important,” he added.
Director General of WTO cell Hafizur Rahman said FTA (free trade agreement) with Bhutan is at the final stage while the same with Nepal will be finalised by December next.
At the same time, they have started the FTA process with Japan, Indonesia, Chile, Malaysia, Thailand and the ASEAN to cope with the possible challenges of the post-graduation regime, he said.
Speaking as the chief guest, Prime Minister adviser on the private industry and investment Salman Fazlur Rahman said the graduation will be taking place as scheduled, which is a matter of pride for the whole nation.
Mentioning various reforms in making business easier in the country, he said if they can create an enabling business climate that will help the nation gain from the post-graduation opportunities on a large scale.
“We are working hard keeping all the options open. We are working on FTA, bringing reform in the tax system and others,” he said.
He also said one stop service, Padma Bridge and Matarbari deep seaport will be the game changer for the country in the coming years.
Source: https://thefinancialexpress.com.bd/economy/call-for-deferring-bangladeshs-ldc-graduation-1602389497
Bangladesh Enterprise Institute (BEI) and International Business Forum of Bangladesh (IBFB) jointly organized a webinar on “LDC Graduation by 2024 and the Readiness of Bangladesh” on 10th October. Salman F Rahman, private industry and investment adviser to the prime minister, was the chief guest at the event.
FTA to help Bangladesh’s LDC graduation
In a bid to face the challenge of LDC graduation, speakers on Saturday suggested starting negotiation for free trade agreement (FTA). They came up with the view at a virtual seminar on “LDC Graduation by 2024 and Readiness of Bangladesh,” jointly organised by International Business Forum of Bangladesh (IBFB) and Bangladesh Enterprise Institute (BEI).
Salman Fazlur Rahman, Adviser to Prime Minister on Private Industry and Investment and Chairman of the Board of Governors of Bangladesh Enterprise Institute (BEI) graced the programme as the chief guest with IBFB President Humayun Rashid in the chair.Mustafizur Rahman, Distinguished Fellow, Centre for Policy Dialogue (CPD) said Bangladesh should negotiate from now for the facility to continue and also prepare for free trade agreement. “We need more study and research to build the capacity of the private sector and government officials to negotiate for free trade agreement (FTA)”, Bangladesh Enterprise Institute (BEI) Acting President M Humayun Kabir said.
IBFB and BEI are working in this sector and also support the private sector to enhance the skill of negotiation for better price, added Humayun Kabir.
“Bangladeshi exporters’ negotiation skill is weak. Even though we have green industries in our country, we are unable to negotiate better price. We need to build better skill to negotiate”, BKMEA former president Fazlul Hoque said.
Stressing need for technical skill and good education system, Bangladesh Chamber of Industries (BCI) President Anwar-Ul Alam Chowdhury Parvez thinks that only private sector can’t change the system, government should take necessary steps to change the education system.
Local industries will face more competition from manufacturer of other countries in coming days, said Bangladesh Institute of Development Studies (BIDS) Research Director Dr. Monzur Hossain suggesting to build both the internal and external capacity.“The government is considering for free trade agreement (FTA). Bangladesh has lacking for country branding, we should go for massive publicity through global media,” Adviser to Prime Minister on Private Industry and Investment Salman Fazlur Rahman said.
He also proposed to create a fund of $ 400 million for global publicity and asked the private sector to contribute in the fund. The Policy Research Institute of Bangladesh (PRI) Research Director Dr. M. A. Razzaque presented the keynote at the programme.
In his presentation, Dr. MA Razzaque made a set of recommendations on future trade agreement.
He suggested to consider those FTAs only where export market access is critical and to negotiate with the EU, UK, US, India and China differently.
Bangladesh needs setting up Chief Trade Representative or Negotiator’s office to develop and manage trade negotiation stances and retaining duty-free access in the Indian and Chinese markets should be an important priority, said MA Razzaque.
He also recommended improving in cost of doing business, better exchange rate management and gaining efficiency through better inland transportation and port management.
Farooq Sobhan, Distinguished Fellow, Bangladesh Enterprise Institute (BEI) moderated the virtual seminar.
Among others, M.S. Siddiqui, Legal Economist & Vice President, International Business Forum of Bangladesh (IBFB), Syed Nasim Manzur, Former President, the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI), also joined the programme.
Source: https://www.daily-sun.com/printversion/details/510994/FTA-to-help-Bangladesh%E2%80%99s-LDC-graduation
Bangladesh Enterprise Institute (BEI) and International Business Forum of Bangladesh (IBFB) jointly organized a webinar on “LDC Graduation by 2024 and the Readiness of Bangladesh” on 10th October. Salman F Rahman, private industry and investment adviser to the prime minister, was the chief guest at the event.
Entrepreneurs call for timely measures to tackle post-LDC graduation challenges
Entrepreneurs will need to increase their capacity by 10% to cope with the increased pressure of taxes after Bangladesh’s graduation from LDC status
The cost of transporting goods from Dhaka to Chattogram is higher than a comparable distance in any other country in the world. The prices of land, gas and electricity are also higher in Bangladesh compared to its competing countries. Moreover, the tax burden on honest entrepreneurs is high here due to structural inefficiency.
Entrepreneurs feel these issues will emerge as major obstacles to raising the industrial sector’s ability to cope with the impact of taxes on exports following Bangladesh’s graduation from the list of least developed countries (LDCs).
They mentioned the European Union – the largest market for Bangladeshi products – would impose a 9.9% tariff on 90% of Bangladeshi products after the country’s LDC graduation. Meanwhile, Canada will impose a 17%, China a 16.2%, India an 8.61%, and Japan an 8.71% tariff on Bangladeshi goods.
As a result, Bangladesh’s export earnings will decrease by 14%, they maintained.
Entrepreneurs will need to increase their capacity by 10% to cope with this pressure, but there is not enough initiative in this regard, they observed.
All these issues came up in a joint webinar organised by the International Business Forum of Bangladesh (IBFB) and Bangladesh Enterprise Institute (BEI) on Saturday.
Salman F Rahman, private industry and investment adviser to the prime minister, was the chief guest at the event titled “LDC Graduation by 2024 and the Readiness of Bangladesh”.
Mentioning that Bangladesh lags behind in country branding, he said the government should go for massive publicity through the global media to let the world know about the current investment climate in the country. He also proposed creating a fund of $400 million in this regard and asked the private sector to contribute to this fund.
The country’s graduation from the LDC status is a matter of pride for the nation. The graduation will usher in a lot of opportunities but will also bring in some challenges, he pointed out, adding that the government and businesses must prepare to make the best use of the opportunities as well as to overcome the challenges effectively.
“The government is upgrading the infrastructure of the country to cope with the challenges after the country’s LDC graduation. The transportation sector is improving with the implementation of some mega projects. Matarbari Deep Seaport will bring revolutionary changes in foreign trade,” he said.
Dr MA Razzaque, research director of the Policy Research Institute of Bangladesh (PRI), presented the keynote paper at the event.
He pointed out that losses in trade will be the main concern for Bangladesh after its graduation from LDC status as about 75% of exports from the country are in the markets where it receives LDC facilities.
The European Union (EU) will impose an eight to 9.9% tariff on 91.52% of export products from Bangladesh, he said – adding that countries like Canada, China, India, and Japan also will impose a significant amount of taxes.
Sayed Nasim Manzur, former president of the Metropolitan Chamber of Commerce and Industries (MCCI), said entrepreneurs in Bangladesh’s competing countries have access to land, power and energy at a lower cost, whereas infrastructure constraints are reducing the competitiveness of Bangladeshi entrepreneurs.
Referring to the high costs of transportation of goods, high prices of land, power and energy, he said, “How could exporters increase their competitiveness by 10% to cope with post-LDC graduation challenges?”
He also said the government has a provision to ensure reforms in the taxation system and in the exchange rate. Utilising the huge reserves of the foreign currencies, the central bank could devalue the taka without any risk of inflation, he added.
Fazlul Haque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said Bangladesh may lose a huge amount due to lower levels of negotiation.
The garment sector is losing about 5% of its product value due to shortcomings in negotiation.
Dr Monzur Hossain, research director at the Bangladesh Institute of Development Studies (BIDS) said, “After Bangladesh’s graduation from the list of LDCs, local industries will face more competition from manufacturers in other countries. We should build internal and external capacity to deal with this challenge.”
Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), said the government should start negotiations now with other countries and international forums for the continuation of the facilities it is currently enjoying as an LDC.
He also suggested the government start discussions with other countries to sign free trade agreements.
Md Hafizur Rahman, director general of the WTO Cell, the Ministry of Commerce, said the government is very confident that Bangladesh will meet all of the conditions in the next triennial review in 2021.
“As Bangladesh is leading the group of LDCs, we demanded an extension of some selected facilities for 12 years after graduation, and all of the current facilities for 10 years,” he added.
Humayun Rashid, president of the IBFB chaired the event while Farooq Sobhan, distinguished fellow at the BEI was the moderator.
Source: https://tbsnews.net/economy/trade/entrepreneurs-call-timely-measures-tackle-post-ldc-graduation-challenges-143569
A virtual meeting was convened by U.S. Under Secretary of State for Economic Growth, Energy, and the Environment, Keith Krach, and Adviser for Private Industry and Investment to the Hon’ble Prime Minister of Bangladesh, Salman F. Rahman, MP, on September 30, 2020 with a view to developing a Vision for Advancing U.S.-Bangladesh Economic Partnership. The two high level dignitaries co-chaired the meeting.
1. Strong Economic Partnership, Stronger Ties
The meeting participants noted that the United States and Bangladesh share the common vision of a free, open, inclusive, peaceful and secure Indo-Pacific region with shared prosperity for all, and expressed hope that the two countries would continue to work together to realize this vision. The co-chairs recognized the need for bilateral cooperation to help overcome the global economic disruptions caused by the COVID-19 pandemic and expressed their willingness to work together to advance the U.S.-Bangladesh Economic Partnership to facilitate sustainable supply chains and generate more employment contributing to stronger ties between the two friendly countries.
2. Strengthening Public Health Cooperation for a Safer Economy
The meeting participants recognized that fast economic recovery would necessitate new forms of protection for the workforces and populations, including women and children, and that these changes would require enhanced bilateral and global cooperation. The meeting participants underscored the importance of further enhancing their cooperation and capabilities for public health preparedness, and recommended that a Joint Public Health Experts Response Group be established by the two Governments that would meet urgently and then periodically to find ways for stronger bilateral, regional and global collaboration in terms of (i) Medical Education, (ii) Capacity Building, (iii) Primary Health Care, (iv) Adolescent Health etc. Both sides noted that the knowledge gaps related to COVID-19 may be minimized by sharing strategies using the Joint Public Health Experts Response Group.
3. Investment to Expand Demand and Restore Growth
Having reviewed its post-COVID-19 recovery strategy to expand domestic demand through public investments in infrastructure and service delivery, and to increase the rate of foreign direct investment into export diversifying sectors, the Bangladesh side indicated that U.S. investment and technology in its agro-processing sector, agricultural trade and jute sectors could be beneficial as it could promote food security and address environmental degradation caused by use of polyethylene-based items. The meeting participants observed that efforts should continue to support cooperation in the area of science and technology, including innovative plant breeding technologies, science-based standards, and the principles of risk analysis, to help meet the agricultural challenges and consumer needs of the 21st century.
As discussed in the Trade and Investment Cooperation Forum Agreement (TICFA) Council Meetings between the two Governments, Bangladesh side said that it would welcome investment from U.S. firms in its Economic Zones. The meeting underscored the need for implementing reforms for continued improvement of the investment climate for U.S.-sourced foreign direct investment, including initiating stakeholders consultations on ongoing reforms like competitive payment mechanism and insurance market liberalization, posting all new publicly available regulations and bills in English, and streamlining bureaucratic processes for repatriating profits. The meeting participants expressed hope that fair procurement processes in Bangladesh, in accordance with its Government Procurement Rules, would contribute to further expanding the U.S. trade and investment in Bangladesh. The meeting participants encouraged both the Governments to continue working together in this regard for their mutual benefits.
Consistent with the United States’ commitment to enhancing commercial ties for a free and open Indo-Pacific region the U.S. side described the role the USTDA and the U.S. Export-Import Bank (Ex-Im) could play in generating new economic activities as enablers for U.S. investment in and deals with Bangladesh. The Bangladesh side also welcomed the U.S. Government’s intention to open a Foreign Commercial Service Office in Dhaka, as well as the continuation of a USAID project that would contribute to further improving Bangladesh’s business environment including customs administration, agricultural and other areas in trade, risk management, regional connectivity, and awareness and transparency of trade policies and procedures.
The meeting participants noted the importance of sustainable infrastructure development, responsible and transparent financing practices, and sharing international best practices by all.
The meeting underscored the importance of effective import and export regimes to protect the consumers from risks resulting from falsified or unlicensed products.
The meeting participants noted that Bangladesh may continue to reform the labour sector including the Bangladesh Labour Act, Bangladesh Labour Rules and Export Processing Zones Act in alignment with ILO.
The two sides shared their mutual interest in stable bilateral trade in cotton and related products, and encouraged both the Governments to remain engaged on this issue.
4. Sound Digital Policies
The meeting participants recognized the importance of reliable, and secure internet that facilitates trade and communication. The meeting participants also recognized the importance of an innovative digital ecosystem to facilitate the cross-border flow of information and data based on secure and reliable networks.
The meeting participants encouraged both the Governments to have a senior level conversation regarding sharing information on telecommunications security as they move towards further expanding 4G connectivity and developing 5G networks and services.
The meeting participants appreciated U.S. technical assistance provided to Bangladesh on laws and policies related to these matters by the U.S. Department of Commerce’s Commercial Law Development Program (CLDP).
5. Expanding Cooperation in Blue Economy
The U.S. side praised the Government of Bangladesh for hosting the Third Indian Ocean Rim Association Blue Economy Ministerial Conference in 2019. Both sides noted the importance of sound science, innovative management, effective enforcement, meaningful partnerships, and robust public participation, all being important elements of the blue economy and each contributing to the future prospects of the ocean. The participants expressed hope that both Governments would work together to develop an inclusive blue economy by sharing knowledge, data and ideas, building greater capacity, and enhancing professional collaboration. The Bangladesh side expressed hope that the U.S. Government would provide the Government of Bangladesh with fish detecting technology, either through satellite or SONAR, and transferring technology for fish/seafood processing etc.
The U.S. side congratulated the Government of Bangladesh for joining the international community as a Party to the Agreement on Port State Measures that would aid the United States, Bangladesh, and the other parties in deterring and eliminating illegal, unreported and unregulated fishing.
6. Energy and Ensuring Bangladesh’s Brighter Future
The meeting participants noted that the United States and Bangladesh have a strong history of cooperation in the energy sector and recognized the importance of energy security to promote regional connectivity, and power stability to further advance Bangladesh’s economic growth. The Bangladesh side welcomed the support from U.S. Departments of State, Energy, Commerce, as well as USAID and USTDA in this sector under the whole-of-government Asia EDGE (Enhancing Development and Growth through Energy) initiative. The meeting participants encouraged the relevant stakeholders of the two countries to collaborate and explore the possibility of further expanding the LNG footprint, as an efficient and clean primary fuel for Bangladesh’s power generation.
The meeting was appreciative of the participation of U.S. companies like Excelerate Energy and Cheniere Energy at the early stages of Bangladesh’s journey to the world of LNG. U.S. energy participants hoped that the cooperation in this regard between the two countries would continue to grow in future. The meeting participants noted that the first cargoes of U.S. produced LNG have already been exported to Bangladesh. The meeting participants also noted the signing of a Memorandum of Understanding between GE and Bangladesh Power Development Board in 2018 for a 3600 MW Combined Cycle power plant in the southern part of Bangladesh – Moheshkhali Island – and expressed hope that the two sides would remain engaged in this regard.
The meeting discussed exploring the possibility of establishment of an energy sector dialogue to facilitate commercial engagement with U.S. energy companies, increase the possible use of U.S. products and services that support smarter, more efficient, and more resilient energy systems, and improve access to reliable, affordable energy to Bangladesh. The meeting discussed this potential platform being led by the U.S. Department of Commerce while on the Bangladesh side by the Ministry of Power, Energy, and Mineral Resources. Additionally, the U.S. Department of Commerce announced the creation of the U.S.-Bangladesh Energy Industry Working Group as part of the Asia EDGE Energy Industry Working Group Network, which creates a “one stop shop” for the U.S. private sector to actively participate in Asia EDGE interagency programs and connect to regional market opportunities.
Recognizing the importance of renewable energy technologies, the Bangladesh side noted that USAID, in partnership with the National Renewable Energy Lab (NREL), has completed NREL’s wind resources study that would help advance Bangladesh’s goal of 10 percent electricity produced from renewable energy, in addition to the planned $15 million USAID Asia EDGE activity to support Bangladesh in deploying advanced energy systems, mobilizing private sector investments in energy, and strengthening regional power markets. The Bangladesh side also noted that the U.S. Department of State announced support for a Battery Storage Development & Adoption Program to assess the value of adding storage to Bangladesh’s electricity grids, and the South Asia Carbon Capture Project to help reduce environmental impacts of fossil fuel consumption.
7. Enhancing Connectivity
The meeting participants noted with appreciation that the Governments of the United States and Bangladesh have signed the U.S.-Bangladesh Open Skies Air Transport Agreement. The Bangladesh side expressed hope that the continued positive engagement between the U.S. Federal Aviation Administration (FAA) and the Civil Aviation Authority of Bangladesh (CAAB) would help Bangladesh’s efforts to regain Category 1 status under the FAA’s International Aviation Safety Assessment (IASA) program, which would signify an important milestone in the process for Biman Bangladesh Airlines to resume non-stop services to the United States. This joint engagement will support CAAB’s efforts to establish and implement an effective aviation safety oversight system in compliance with safety standards established by the International Civil Aviation Organization (ICAO). The Bangladesh side said that its Government is interested to have Hazrat Shahjalal International Airport designated as a last point of departure airport by the Transportation Security Administration. The meeting expressed optimism that both the Governments would continue to work together to achieve these goals and thereby improve connectivity between the two countries.
The meeting noted with satisfaction the long-standing partnership between Biman Bangladesh Airlines (Biman), the national flag carrier of Bangladesh, and Boeing, and applauded the completion of delivery of 10 Boeing commercial aircrafts to Biman following a 2008 deal.
The Bangladesh side shared that the Government has reviewed its Delta 2100 Plan and would procure high quality dredgers of appropriate categories for inland waterways management in the country. Recognizing Bangladesh’s efforts, USTDA announced a reverse trade mission that will bring a delegation of public and private sector Bangladeshi officials to the United States in 2021 to explore U.S. best practices and advanced technologies for dredging. The Bangladesh side expressed hope that well-regarded U.S. companies would continue to participate in the international tender process, where a level-playing field for all is ensured by the Government.
The Bangladesh side described the steps taken by the Government of Bangladesh to reduce congestion and improve operations at the Chittagong port, and informed that the Government of Bangladesh had signed a memorandum of understanding on a techno-economic feasibility study by U.S.-based container logistics firm EagleRail to carry out a pilot project of its automated overhead container handling system at Chittagong Port to ease congestion, reduce emissions, and enhance the capacity of Bangladesh’s major port. The findings of the feasibility study would be placed in a National Workshop.
The U.S. side was highly appreciative of the Government of Bangladesh for concluding a financing agreement that enables its Ministry of Finance to purchase 70 locomotives for Bangladesh Railway for use at routes of both East and West zones, where meter gauge lines exist. A U.S. company, Progress Rail, is to provide design services and critical components for the $239 million project primed to enhance regional connectivity among Bangladesh and its neighbors in the Indo-Pacific region. The meeting noted that USTDA announced plans to launch a training program for railway engineers from Bangladesh Railway, in conjunction with leading U.S. railway experts and suppliers of railway equipment, to further advance the development of a safe and efficient railway system in Bangladesh.
8. Building a Better Future
In light of COVID-19, the meeting participants noted that it was important for Bangladesh to further enhance its resilience to withstand future economic shocks. This could be done through a more solid economic base ensuring greater participation of people in economic activities. The participants noted that, through greater cooperation, they could help to ensure a more sustainable future for the next generations, with the goal of establishing better public financial management; safeguarding the rights of workers; providing continued support for vulnerable Bangladeshi communities affected by the Rohingya crisis; and coordinating to improve natural resource management by supporting water and energy security, sustainable trade and investment, agriculture, forestry and fishing.
The participants noted with appreciation the increased senior level engagement between the two Governments and beyond in the recent past and particularly the warm exchanges between U.S. President Donald J Trump and Bangladesh Prime Minister Sheikh Hasina in the “Mujib Year” (March 17, 2020 to March 26, 2021) to celebrate the 100th Birth Anniversary of Father of the Nation of Bangladesh Bangabandhu Sheikh Mujibur Rahman. The participants expressed optimism that the two friendly Governments would continue to engage at political and senior official levels to further deepen the cooperation and consolidate the ties, and devise ways and means to overcome the challenges posed by COVID-19 and restore impressive economic growth rates.
The virtual meeting was held in a friendly and cordial atmosphere, and the participants concluded by expressing a great deal of optimism that both the Governments would remain meaningfully engaged through different institutional mechanisms and beyond and take concrete actions to realize this Vision for Advancing the U.S.-Bangladesh Economic Partnership in the coming days.
Thorough exercise to outline a meaningful LDC graduation
The development journey of Bangladesh reached a new height when the country became formally eligible to leave the Least Developed Country (LDC) league in 2018. Three years back in 2015, the country also elevated to the category of Lower-Middle Income Country (LMIC) from Lower-Income Country (LIC) category. While the LDC criterion is set by the United Nations (UN), lower or middle-income status is set by the World Bank. No doubt, both types of status have varying significance for Bangladesh and change in these statuses reflect the onward journey of the country with many opportunities and challenges. The book titled Navigating New Waters: Unleashing Bangladesh’s Export Potential for Smooth LDC Graduation tries to explore these opportunities and identify the challenges in the external trade front of the country.
Edited by Dr Mohammad Abdur Razzaque, it primarily focuses on export trade as it is critical for the country’s employment and revenue generation. The editor argues: “For Bangladesh, the most important change that LDC graduation is likely to bring will be associated with preferential market access for exporters. Within the set of LDC-related privileges, Bangladesh has primarily benefited from unilateral trade preferences granted by many developed and developing countries under their respective Generalised System of Preferences (GSP) schemes. Amongst the least developed countries (LDCs), only Bangladesh has been able to utilise the trade preferences in a commercially meaningful way, although such utilisation has largely been limited to some important markets. Currently, Bangladesh enjoys preferential market access in at least 46 countries. Almost three-quarters of Bangladesh’s export earnings are sourced from the countries that offer tariff preferences.” (P. 3-4)
Divided into three thematic parts, the first part of the book deals with the preparation of LDC graduation. The authors highlight some of the longstanding challenges facing the country’s export sector and try to shed light on the possible effects of graduation from the perspectives of the private sector. They rightly say: “Graduation from the group of LDCs also means a substantial loss of policy space in supporting the private sector. Having recognised their supply-side constraints and weak economic capacities, LDCS are often exempted from making commitments and implementing provisions of stringent agreements. WTO members are also generally reluctant about raising concerns or lodging official complaints about individual LDCs’ policy support measures that would otherwise be deemed inconsistent or non-compliant with international trade rules and regulations. As an LDC, Bangladesh has made significant use of such policy space in supporting the private sector. LDC graduation will require making the necessary adjustments for the conformity with WTO agreements” (p-67). In fact, over the years, the country’s private sector has enjoyed many waivers in international trade. Some sectors have taken the advantages of the waivers and also earned additional benefits in the domestic market and avoided fare competition. These discourage efficiency and compel consumers to pay excessive prices. LDC graduation is likely to address the issue in the near future, and the beneficiary sectors will face some shocks initially. In this connection, the book presents several existing direct policy supports which will be curtailed or lessened due to LDC graduation.
The second part focuses on export promotion during post-graduation period and analyses the country’s current bilateral trade relations with four major trading partners. These are the European Union (EU), the United States (EU), India, and China. While the first two partners are two major export destinations of Bangladesh, last two partners are two major sources of import.
The authors of these chapters identify scopes of engagement with these partners ‘in the light of LDC graduation realities.’ For instance, analysing the apparel exports to the EU and policy options for adapting to competitive challenges, the relevant chapter of the book finds ‘that graduation from LDC status is likely to dent Bangladesh’s competitiveness in the EU.’ It is not unlikely that readymade garment (RMG) industry, the leading export item and disproportionately subsidised over the decades, will face the significant blow. To counter the possible setback, the authors outline some strategies. These include: securing a favourable trading arrangement with the post-Brexit UK, industrial up-gradation for moving up the global value chain, ensuring compliance as expected from credible suppliers for global consumers and attracting foreign direct investment in the RMG sector. In a similar vein, the book suggests exploring a free trade agreement (FTA) deal with the United States as an option to ensure market access along with other options like conditional non-reciprocal market access. Again, the authors argue: “To improve export market prospects, reinvigorated policy initiatives, including consultations with India, will have to be undertaken to address non -tariff barriers (NTBSs) and non-tariff measures (NTMs) including the recent imposition of anti-dumping duty on Bangladesh’s jute product” (p-189). Finally, the book suggests a comprehensive bilateral framework for cooperation with China in the medium and long run.
The final part presents the export potential of leather, plastic, furniture, pharmaceutical, jute, and services and outlines ‘the policy support needed to expand exports from those sectors.’ This part of the book also identifies a number of difficulties and limitations of these sectors.
Regarding leather sector, it says: “Despite its long presence, strong backward integration, and good product quality, Bangladesh has not been able to realise much of the potential of the leather sector. The decline in exports after the relocation of tanneries of Savar has become a cause for concern. This call for revisiting the leather-sector specific policies as well as other general factors affecting overall exports competitiveness.” (p-262)
Again, the book rightly points out, though very briefly, the environmental issues associated with the production and recycling of post-use plastic products. Environmental hazard originating from plastic is a growing concern globally, and it will be a big challenge for Bangladesh to unleash the export potential of plastic goods. On pharmaceuticals, the book argues that despite a dynamism in the industry, the sector is far from realising its export potentials and entirely focusing on the local market. Observing a rosy potential of jute and jute goods exports in the global market, the researchers stress on active promotion of the diversified and high-value-added goods rather than traditional items. It is also interesting to note that they recommend reviving the Bangladesh Jute Mills Corporation (BJMC), the public entity designated to deal with production and exports of jute goods.
An important addition in the book is a dedicated chapter on services exports which is side-lined over the years. The country’s trade in services is growing, and Covid-19 has already shown that services will be more critical in the near future.
The book is an outcome of rigorous exercise by a group of economists and analysts. They are: Ahsanuzzaman, Parvez Abbasi, Hamim Akib, Abu Eusuf, Emran Hasan, Nafiz Ifteakhar, Mahfuz Kabir, Rabiul Islam Rabi, Jillur Rahman, Mahtab Uddin, and Mohammad Abdur Razzaque. The work has been completed under a project of Bangladesh Enterprise Institute (BEI), a Dhaka-based think-tank. Dr Razzaque, the editor, is a professional economist who started his carrier as a teacher at the Economics department of Dhaka University and later joined the Commonwealth Secretariat and served in various capacities there for more than a decade. Having strong command on international trade and development economics, Dr Razzaque is now research director of Policy Research Institute of Bangladesh (PRI) and chairman of Research and Policy Integration for Development (RAPID). In the overview, he argues: “Bangladesh is likely to graduate in 2024 and in a number of instances there are provisions for a transition period of varying years. Therefore, there are several years in hand to prepare for a graduation process, thereby containing any adverse consequences while building the overall economic resilience through improved competitiveness. A renewed focus on developing productive capacities in the export sector and promoting its external competitiveness, thus now constitutes one major broad policy priority.” (p12)
Nevertheless, the graduation path of Bangladesh is now facing some uncertainties due to the outbreak of deadly coronavirus (Covid-19). A debate is already there on whether the country should lobby for deferment of graduation. Economists and experts are placing their arguments and analyses in the debate. It is, however, yet to get any space at the policy agenda. The policymakers need to take the debate seriously. For them, the analysis and suggestions in the book, though completed before the pandemic, will be a guideline to set a revised strategy on LDC graduation during the post-Covid period.
Source: https://thefinancialexpress.com.bd/views/thorough-exercise-to-outline-a-meaningful-ldc-graduation-1599147906
