Development assistance, investment, remittance and prospect of overseas employment are likely to be affected, at least temporarily
Like the rest of the world, Bangladesh has its watchful eye on the development in the United Kingdom, the fifth largest economy in the world, which is going through a rough patch over the Brexit issue.
The term “Brexit” refers to the UK’s move to pull out of the European Union (EU), a powerful bloc of 28 developed European countries, following a referendum in June 2016 in which the British people voted to leave the EU by a very small margin.
As things stand now, the UK will have to leave the EU by 11pm, UK time, on March 29 in accordance with the negotiations that started on March 29, 2017.
The UK has found itself in a limbo after Tuesday’s vote at the House of Commons, where the deal negotiated by Prime Minister Theresa May was rejected by the lawmakers 432 to 202 votes – the largest such defeat a government conceded in a century.
Now, the UK, one of the five permanent members of the UN Security Council, has three choices: get a new deal, which is unlikely according to the EU27; leave the bloc without a deal; or remain in the union.
According to experts and senior diplomats both at the Ministry of Foreign Affairs and the Bangladesh High Commission in London, Bangladesh has reasons to be concerned about the happenings in the UK, as it is one of Bangladesh’s largest development partners with significant trade and investment, as well as a sizeable diaspora.
Earlier, it was believed that Brexit would not affect Bangladesh, but Tuesday’s vote seem to have made the policy-makers think differently, as the Dhaka Tribune has learnt.
Bangladesh will not be affected largely if the UK leaves the EU with a “good” deal or decides to stay back, they observed. However, the diplomats and experts said it would be a cause for concern for Dhaka if London got out of the EU with a deal – or no deal – that might affect the UK economy, a notion made by many experts and a majority of lawmakers in the UK.
They further said if Britain landed in an economic “chaos” due to a bad deal, it is all but certain that development assistance would go down, remittances sent by the expatriates would reduce, investment would be affected, and prospects of employment of Bangladeshis in the UK curry industry would subside.
All in all, a bad Brexit is the last thing Dhaka will want, they said, striking a notion of optimism that even if Bangladesh faced problems, it would be temporary because the British economy is still one of the strongest in the world.
Trouble likely, even if for a while
“During our strategic dialogues in 2017 in Dhaka and last year in London, we were told that Brexit would not affect Bangladesh. Besides these official talks, we have been given the same assurance from time to time,” a senior diplomat told the Dhaka Tribune, requesting anonymity.
“In fact, UK leaving EU may benefit us further because within the EU, London cannot do certain things even if it wants to due to common EU rules and regulations. For instance, on issues like migration and climate change, the British are much more liberal than some other members of the bloc,” he added.
However, another senior diplomat said things seemed to be different now after Tuesday’s vote.
“The sheer size of the defeat has weakened the (UK) government, and there is little chance of renegotiation. We hope things will eventually turn out smoothly,” he added.
Former foreign secretary Md Touhid Hossain believes Bangladesh is likely to suffer for a short period of time given the current situation, but Britain will fix the problems in the long run.
“Britain is one of the top economies in the world. They are quite able to manage their economy,” he told this correspondent. “The EU will not let the UK economy to be badly affected.”
Delwar Hossain, professor of international affairs at Dhaka University, however, thinks the Brexit aftermath will be troublesome for Bangladesh.
“There is no doubt that there will be some adverse effects on us if there is a bad deal or no deal. The vote at the House of Commons reflects that most of the lawmakers, including over 100 from the treasury bench, consider it a bad deal,” he told the Dhaka Tribune. “The Bangladeshi diaspora will feel the first pinch, which is most likely to extend to Bangladesh.”
He urged the policy-makers to be prepared for the likely scenarios.
Business leaders and experts believe things may not be as problematic as feared.
“Since the UK government has clearly said it will try to maintain the same level of commitment on trade facilities for the LDCs as the European Union even after the Brexit, the possibility of impact on Bangladesh exports to the UK is limited,” said MA Razzaque, research director at the Policy Research Institute (PRI).
However, if the Brexit process is prolonged due to the rejection and hits the EU business, the market may slow down, which in turn is likely to cut demands of goods, leading to a slower export growth for Bangladesh, the economist said.
Abdus Salam Murshedy, president of the Exporters Association of Bangladesh, said: “I think the delay in the execution of Brexit will not have any adverse impact on Bangladesh exports to Britain, as it has already assured Bangladesh of providing a duty-free market access, like it did as an EU member.
“Nevertheless, Bangladesh should continue negotiation with the UK for the continuation of trade facilities after the Brexit,” said the former BGMEA president.
Bangladesh currently enjoys duty-free market access in the UK under Generalized System of Preferences (GSP) facilities as a EU member.
In first half of the current fiscal year, Bangladesh exports to the UK saw a slowdown.
According to the Export Promotion Bureau, in the July-December period of 2018-19 fiscal year, Bangladesh earned $2.04 billion, up by 3.16% from the earnings during the same period a year ago, which was $1.98 billion.
However, in the last fiscal year, Bangladesh export earnings from the UK saw an 11.76% growth, to $3.99 billion, compared to the previous year’s $3.57 billion.