The South Korean embassy in Dhaka is trying to come up with a list identifying areas of high tariffs imposed on raw materials and intermediate inputs that impedes further growth of Bangladesh’s otherwise-burgeoning manufacturing sector.
The Republic of Korea’s envoy to Bangladesh Ambassador Park Young-sik told Dhaka Tribune that soon they would send the list to the Commerce Ministry, and hoped the high tariff of the items on the list will be reduced in the next budget.
“Graduation from LDC means that Bangladesh should make not the quantity, but the quality of economic growth. Exposure to global competition without thorough preparation could bring down the existing manufacturing sector. Therefore, the Bangladesh government must pay attention to consolidate the foundation and increase the productivity of the manufacturing sector. High tariffs imposed on raw materials and intermediate capital should be reduced.”
He also said that the quality of growth should be made through innovation, knowledge and technology that foreign companies can provide and that is why Bangladesh needs foreign direct investment.
However, Ambassador Park noted, Bangladesh is having the lowest foreign direct investment (FDI) in terms of the GDP ratio. It’s only 0.9% in Bangladesh, while 1.7% in India and 4.7% in Vietnam.
Manufacturing has driven Korea's rapid economic development, transforming it into a global industrial giant. It is one of the world's largest shipbuilders, fifth largest car maker, and sixth largest steel maker.
South Korea's largest industries are electronics, automobiles, telecommunications, shipbuilding, chemicals, and steel.
Referring to his speech delivered at a March 6 seminar on investment in the city, Ambassador Park said that South Korean companies were close partners of Bangladesh from the very beginning, helping Bangladesh’s RMG industry to grow and flourish.
“In recent years, there have been some noticeable and significant developments in diversifying areas of cooperation beyond the RMG, including the manufacturing and infrastructure.”
He further said that the trade ministries of both countries are currently discussing the possibility of starting the negotiations of bilateral Economic Partnership Agreement (EPA).
If concluded, he hoped, bilateral trade and Investment will increase dramatically.
Collaboration
“Collaboration in the RMG sector has been a driving force in the development of bilateral relations over
the past fifty years. It is my strong hope that the bilateral EPA could be the next motor engine to take bilateral relations to a step further in the next fifty years.”
Looking to the future, Bangladesh is marching towards graduation from the LDC status in 2026 and Smart Bangladesh as a developed nation by 2041. Both journeys offer great opportunities and challenges simultaneously, he added.
“Bangladesh has great potential to achieve both journeys. We have already witnessed a tripling of Bangladesh’s per capita income in the last decade.”
On the other hand, Ambassador Park said: “Overcoming the problems after LDC graduation requires a lot of hard work by both the government and the private sector.”
Noting that there are many EconomicProcessing Zones (EPZs) in Bangladesh but, foreign companies located in EPZs face many problems. “Especially, arbitrary enforcement of customs clearance standards by officials prevent foreign companies from running stable and reliable operations in bonded areas.”
He also emphasized that improving the business climate, such as visa issues, customs clearance, rational tax and tariff policies, and repatriation of profits, was more important than offering investment. He, however, expressed confidence that Bangladesh Investment Development Authority (Bida) will play a crucial role in improving the business climate.
He suggested developing a mechanism for regular discussion of the business climate twice a year. Bida’s one-stop services will serve as a platform to facilitate the resolution of difficulties. “Still, we can encounter difficulties and solve them through the mechanism.”
Ambassador Park said both countries can promote bilateral cooperation and collaboration in new areas -footwear, ICT, pharmaceuticals, shipbuilding and shipbreaking, blue economy and deep-sea fishing, agriculture and agricultural machinery, etc.
“Korean companies have new technologies, while Bangladeshi companies can start new businesses. One of them is brick making technology.”
Referring to news reports that severe air pollution causes the loss of 5 to 6% of GDP and accounts for 20% of premature deaths, Ambassador Park said: “The introduction of new technology in brick-making factories can greatly reduce air-pollution. I expect that new type of investment combined with technology and capital will flourish in Bangladesh.”
