$950 million came to Bangladesh from RCEP-listed countries in FY2019-20
Bangladesh receives about one-third of its FDI from RCEP member countries every year
The impacts of the RCEP agreement may worsen after Bangladesh loses its duty-free export facility when it graduates from a least developed country to a developing one
Bangladesh's Embassy in Beijing has called for strengthening trade relations with RCEP members, the European Union and US, before the graduation by signing free trade agreements and bilateral or multilateral agreements
Vietnam's inclusion in the Regional Comprehensive Economic Partnership (RCEP), the world's largest trade bloc, will have a negative impact on Bangladesh's exports. In addition, foreign direct investment (FDI) in Bangladesh from the major Asian economies included in the agreement may decrease, fears the Bangladesh embassy in Beijing.
The impacts of this agreement may worsen after Bangladesh loses its duty-free export facility when it graduates from a least developed country (LDC) to a developing one.
So, the embassy advised the authorities concerned to sign free trade agreements (FTAs) with the European Union and US, before the graduation.
The embassy also opined in favour of strengthening trade relations with RCEP members, including China, by signing FTAs or bilateral or multilateral agreements.
In a report sent to the commerce ministry on 2 December this year, Mohammad Monsour Uddin, commercial counsellor at the Bangladesh Embassy in Beijing, said, "RCEP will not only boost trade and liberalise tariffs among its members but also create a conducive environment for investment and development value chains and production networks."
"Therefore, countries such as China, Japan and South Korea will be inclined to invest in RCEP member countries due to the preferential market access and the common standards offered by RCEP. This would increase some challenges for Bangladesh to attract FDI from these countries," he added.
According to the Bangladesh Bank, FDI of $3,232 million came to Bangladesh in the fiscal year 2019-20. Of this amount, $950 million came from RCEP-listed countries like: Singapore, China, Japan, South Korea, Thailand, and Malaysia. That means, Bangladesh receives about one-third of its FDI from RCEP member countries every year.
On 15 November, 15 countries – including Australia, New Zealand and 10 members of the Association of Southeast Asian Nations (Asean) – inked the RCEP deal, which covers 2.2 billion people with a combined GDP of $26.2 trillion.
Meanwhile, a committee set up by the commerce ministry to assess RCEP's impact and review Bangladesh's inclusion in the multilateral agreement will meet for the first time on Monday.
Shahidul Islam, head of the committee and additional secretary to the ministry, told The Business Standard that the committee would determine the scope of work at the meeting. Later, the committee will prepare a report with recommendations after meeting the stakeholders.
Dr Mostafa Abid, a member of the committee and Bangladesh Trade and Tariff Commission, told TBS, "There is a concern that the RCEP may affect our exports and FDI. After our graduation from LDC, exports may suffer more."
"A comprehensive study is needed to assess the impact of the RCEP. The committee will meet with the public and private sectors and make recommendations to the government on their views," he continued.
"Bangladesh will not be able to join the RECP in the next 18 months, even if it wants to be included in it. So, we have to be fully prepared within this time. To be included in the RCEP, we need to make major changes to our trade policy," Dr Abid added.
The embassy report also said, "Different from Vietnam – who has signed various Regional Trade Agreements such as RCEP, the Trans-Pacific Partnership and The Comprehensive and Progressive Agreement for Trans-Pacific Partnership – Bangladesh, after graduation, is not guaranteed free trade access to these markets."