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Study: Bangladesh needs to focus on service exports in preparation for LDC graduation

  • Published at 10:33 pm May 16th, 2018
Study: Bangladesh needs to focus on service exports in preparation for LDC graduation
Bangladesh is currently heavily reliant on the export of goods Rajib Dhar

According to a study by the Bangladesh Foreign Trade Institute (BFTI), the country needs to concentrate on service exports as it is not only the most dynamic segment of global trade, but also because Bangladesh will lose preferential trade facilities after graduation from LDC status.

The BFTI study, titled “Export Potentials of Trade in Service in Bangladesh,” was revealed at a workshop at the CIRDAP auditorium in Dhaka on Wednesday.

In last fiscal year, the service sector contributed $3.42 billion to Bangladesh’s total exports of $34.83 billion. Currently, 56% of Bangladesh’s GDP comes solely from the export of goods. Comparatively, 66% of the global GDP comes from trade in services, as does 60% of global economic activities, 44% of global employment, and 33% of worldwide FDI.

Speaking at the workshop, Bangladesh Institute of Development Studies Senior Research Fellow Dr Nazneen Ahmed said: “We have to think about what we will do after graduation from LDC status, as there will be no LDC waiver for us in the world market.”

She also expressed concern that local e-commerce services such as Ajker Deal and Chal Dal were being bought out by international e-commerce giants like Alibaba and Amazon.

However, Dr Nazneen said she held hope for the tourism industry, which was on an upward trend due to the establishment of modern resorts.

On the other hand, Md Hafizur Rahman, director-1 (joint secretary) WTO Cell of the Ministry of Commerce, criticized the accommodation system for international tourists in Bangladesh.

“There are only 13 five star, 4 four star, and 7 three star hotels available here, which is completely inadequate for attracting foreign tourists,” he said.

Also criticizing security for tourists in the country, he added there are only 180 cops for around 200,000 tourists - an abysmal state of affairs.

Speaking as the chief guest, Ministry of Commerce Secretary Shubhashish Bose said the ministry had set a target to earn $3.5 billion from the service sector this year, adding that he was optimistic about the sector’s prospects.

The study identified four main segments of the service sector which needed to be focused on: Tourism and travel-related services, computer and IT services, freight transportation services, and health services.

The discussants highlighted various strengths and weaknesses of each of these aforementioned services and made recommendations for their development, such as calls for a harmonized internet pricing policy to help the IT service sector.

Furthermore, the study also discussed the potential for service exports from Bangladesh under regional trade agreements such as the SAARC Agreement on Trade in Services (SATIS), APTA Framework Agreement on Trade in Services (AFATIS) and the ASEAN Framework Agreement on Services (AFAS)

General challenges to the export of services identified in the study include the special nature of services, the four modes of supply, an underdeveloped GATS regime, as well as various limitations to market access, inadequate knowledge and experience in services trade, and stringent domestic regulations relating to services.

“We need to enhance our capacity because we are graduating so we need trade related capacity building.” said Md Munir Chowdhury, director general (WTO Cell) of the Ministry for Commerce.

Education, proper language, and cultural training, and specialized training for the service sector were also discussed at the workshop.

Bangladesh Foreign Trade Institute Director Dr Amitav Chakraborty, USAID-BTFA Project Customs Specialist Dr Mohammad Abu Yusuf, and USAID-BTFA Project former chief of party Dr Md Khairuzzaman Mozumder were present at the discussion, among others.