Bangladesh urgently needs to address export diversification, weak financial institutions, an unskilled labour force, poor foreign direct investment and forex reserves and a low tax-GDP ratio for its graduation, businesses said at a seminar on Saturday.
They made the comments at a program titled "Bangladesh’s Export Readiness: Post-LDC Graduation Perspective" organized by Dhaka Chamber of Commerce and Industry at the chamber’s office in the capital Dhaka on the day.
Selim Raihan, executive director, South Asian Network on Economic Modeling (Sanem), said that Bangladesh’s export sector was heavily reliant on ready-made garments, which posed a risk due to its high concentration.
He pointed out that Bangladesh has added only nine new export products in the last 15 years, compared with 41 by Vietnam and 31 by Thailand in the same period.
To ensure sustainable development and reduce risks associated with overdependence on a single product, Raihan urged diversification of the export basket.
He identified major obstacles faced by export-oriented firms, including price and availability of raw materials, customs, trade and tax regulations, port facilities, skilled labour, finance and the court system.
He highlighted high import tariffs in Bangladesh as a barrier to exports, along with ineffective monetary policy and improper management of the exchange rate.
Bangladesh’s regulatory quality and rule of law are very poor compared with that of other neighbouring countries like India, Malaysia, Thailand and Vietnam.
Raihan suggested several measures for export readiness after LDC graduation, including harmonization of monetary and fiscal policies, regulatory efficiency and quality, reduction of non-performing loans and ensuring long-term financing from the capital market.
He emphasized the need for improving labour productivity through skill development, requiring increased public expenditure in the education sector.
Ashraf Ahmed, president of DCCI, expressed the government’s commitment to supporting the business community but emphasized the need for sustainable policy reforms.
Asif Ashraf, director of the Bangladesh Garment Manufacturers and Exporters Association, raised concerns about reduction of special incentives to the RMG sector and emphasized the need for a favourable exchange rate.
Malik Talha Ismail Bari, senior vice-president of DCCI, stressed the need to diversify industries by establishing new sectors while maximizing the potential of existing industries.
He said: "Bangladesh needs to diversify its industries by establishing new sectors like FMCG, plastic goods, light-engineering, IT&ITES and Halal products, while simultaneously maximizing the potential of high-priority billion-dollar frontier industries like leather and footwear, agro-processing, jute and jute products, pharmaceuticals, and home-textile, replicating the successful RMG model."