Equal financial policy support and incentives for the non-apparel export sector are very crucial for product diversification, as well as turning around from the economic fallout of the Covid-19 pandemic, experts said on Saturday.
Trade leaders and economists made the comments at a virtual dialogue, “International Trade in Covid Times: Impact and Way Forward for Bangladesh”, organized by Resurgent Bangladesh, an economic recovery initiative put together by MCCI, DCCI, Chittagong Stock Exchange, BUILD and Policy Exchange.
Tofail Ahmed, former commerce minister and chairman of the Parliamentary Standing Committee on the Ministry of Commerce, took part as chief guest.
“Bangladesh’s economic growth is export-led. Every year several products are being added to our export basket but those products cannot survive and are lost from the export product list,” said Zaidi Sattar, chairman of Policy Research Institute (PRI), Bangladesh.
“This is because of an absence of fiscal support. We need to incentivize those products to make them sustainable,” said the economist.
The RMG success model needed to be replicated in non-RMG sectors, said Sattar.
He also said post-Covid policy formulation and reforms needed to be synchronized.
Meanwhile, manufacturers also opined that most of the policy support and fiscal incentives for the garment and textile sector had become barriers to a diversification of products.
Referring to a recent Bangladesh Bank circular, Syed Nasim Manzur, Managing Director, Apex Footwear, said: “The benefit is only applicable for the RMG and textile sector.”
“The country’s exports were not so good before the Covid-19 pandemic. This is because of high export and import costs. To reduce cost and competitiveness, we have to reduce export time and cost of doing business,” said Nasim, who is a former president of the Metropolitan Chamber of Commerce and Industry (MCCI).
On top of that, the value of export was more important than the quantity of export, said Nasim, calling for a strengthening of economic diplomacy to obtain advantages in international trade.
“Most of the trade support caters to the apparel sector. For diversification, focus should be on equal treatment for all other export oriented sectors. Bonded warehouse facilities to the non-RMG sector will also help other sectors to be more competitive in terms of export,” said M Masrur Reaz, Chairman, Policy Exchange.
He also said that technology adaptation and upgradation strategy needed to be streamlined.
Trade policies reforms demanded
Experts and trade leaders, who participated in the dialogue, stressed comprehensive export investment trade policy reforms to boost export competitiveness in a post-Covid situation.
“Due to Covid-19, a window of opportunity will be opened for Bangladesh but we need to be competitive in terms of trade, especially in the ease of doing business index,” said Abul Kashem Khan, chairperson of Business Initiative Leading Development (BUILD).
“If we fail to be competitive, our window of opportunity will not be open for long,” he said.
He also emphasized strengthening backward linkage industries. He also called for establishing a global bonded warehouse system.
Considering the global crisis, Bangladesh needed to reform its export, import, industrial, foreign exchange, investment, taxation and FDI policies, Kashem Khan remarked.
He also urged the government to initiate economic diplomacy with a view to entering the ASEAN region and called upon the government to announce warehouse and logistics as a thrust sector.
Shams Mahmud, president of Dhaka Chamber of Commerce and Industry (DCCI), in his presentation, also laid emphasis on policy reforms and urged the government to postpone its LDCs graduation, when Bangladesh will lose trade benefits.
Many global retailers wanted to shift their orders and investments from China, which was a big opportunity for Bangladesh, said Shams.
He suggested negotiating with export destinations to avoid restrictions on export goods.
Government should consider deferring LDC graduation
“After LDC graduation, Bangladesh will have to export its products to EU markets giving 12% duty, whereas Vietnam will enjoy zero tariffs. Vietnam exported $262 billion last year whereas Bangladesh’s export earning was only $40 billion,” said Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD.)
“We need to turn comparative advantage into competitive advantage, where coordination between industrial strategy and trade strategy is needed,” said the economist.
Emphasizing export diversification, he laid stress on grabbing regional markets, effective implementation of BBIN, One-Belt-One-Road initiative and the need to transform multimodal transport corridors into an economic corridor.
Bangladesh should focus on bilateral FTA but in the form of an economic partnership agreement, said Rahman.
Regarding Bangladesh’s LDC graduation, Rahman said the government might think of the issue seriously and it should think of deferring the graduation or seeking international support measures for 3-4 years after the graduation.
He argued that in the post pandemic situation, the economic situation would be different and it was time to think whether or not we should consider the pandemic in case of LDC graduation .
