Bangladesh needs to focus on bolstering trade ties with the Asia-Pacific regional economic blocs, which have become the centre of global trade and commerce, in order to strengthen the country's foreign trade and handle the post-LDC graduation challenges, business leaders and economists have observed.
Exports to these countries have been much less than imports and Bangladesh has not been able to attract investment from countries in the region, they said at a webinar titled "Asia & Pacific and Bangladesh: Harnessing Economic Potentials" on Friday.
Besides, Bangladesh does not have any bilateral or multilateral free trade agreements (FTAs) within the region, they said at the event jointly organised by the Ministry of Commerce and the Dhaka Chamber of Commerce of Industries (DCCI) on the 4th day of the Bangladesh Trade & Investment Summit 2021.
They recommended that Bangladesh work more on policy reforms, product and market diversification, business process simplification, competitive tax and tariff regime and infrastructure development to harness the related economic potentials.
DCCI President Rizwan Rahman, who moderated the webinar, said, "Bilateral trade between Bangladesh and the Asia Pacific region hovered around $36 billion in FY20, of which Bangladesh's export was only $5 billion."
He suggested that the rules of origin be relaxed by the Asia-Pacific Trade Agreement (Apta) for export growth of the least developed countries (LDCs). More bilateral and multilateral agreements need to be made to leverage the untapped markets of the Asian countries.
"Bangladesh is always in favour of regional integration and action in order to go for more Preferential Trade Agreements (PTAs) and FTAs towards addressing a possible export growth after its graduation from LDC status," he added.
Nihad Kabir, president of the Metropolitan Chamber of Commerce and Industries (MCCI), said, "We shy away from signing FTA because of revenue loss."
She said, "Foreign investors want to know how long it takes for disputes to be resolved. In Singapore disputes are resolved in 60 days, whereas in Bangladesh it takes 1,500 days."
She added that the tax regime is a big issue. Tax compliance is more important than tax rates. Due to this problem, traders from Dhaka and Chattogram are moving to other areas.
"To start a business you have to get a hundred approvals, you have to wait for months," she said.
She also referred to issues, including tariff and non-tariff barriers, transparency of regulation, energy and power issues and lack of quality education.
Syed Nasim Manzur, Managing Director, Apex Footwear Ltd, said the economy of the Asia-Pacific region will lead the global economy in the near future. He cited an example of the leather sector and said that out of 10 top market leaders in the global footwear industry, six are from Asia.
"We need to look into Asia for foreign direct investments (FDI)," he added.
He also stressed the need to link Bangladesh's economy with the regional blocs and strengthen trade relations, taking them to a new level. He pointed out that the National Board of Revenue needs to be overhauled.
He also emphasised a timely implementation of various policies, simplification of rules, improvement of logistics services, including at airports, and maintaining confidence in traders.
Ito Naoki, ambassador of Japan to Bangladesh, said that his country considers Bangladesh as the China-plus destination and called on Bangladesh not to shy away from FTA.
He informed the webinar that Japan's Mitsubishi Motor Company has already completed a feasibility study for a CKD plant in Bangladesh. The Japan Economic Zone in Araihazar will soon be open for investment and will accommodate 100 companies.
The Japanese ambassador also laid emphasis on the recognition of customs clearance telegraphic transfers (TTs).
Dr Masrur Reaz, Chairman, Policy Exchange of Bangladesh said, "Regional blocs or trade blocs are playing a catalytic role in enhancing businesses. China, India, Thailand, Philippines, Malaysia, Vietnam and a few other Asian countries are growing tremendously and it is an opportunity for Bangladesh to be part of it."
Md Tofazzel Hossain Miah, secretary of the Prime Minister's Office, who was present as the chief guest, said, "LDC graduation is a sign of Bangladesh's proven macroeconomic strength and resilience as well as our readiness. Bangladesh is located in a strategic location close to two big economies like China and India and it is an opportunity for us. Besides, our domestic market is also a very lucrative and attractive destination for investment.
He added that Bangladesh has competitive generous incentive packages in South Asia.
Fatima Yasmin, secretary, economic relations division of the Ministry of Finance said, "Bangladesh offers a liberal investment regime in South Asia for attracting FDI. Bangladesh is in discussion with 10 more countries on signing PTAs or FTAs and two will be signed soon."
Dr Rajan Sudesh Ratna, Deputy Head and Senior Economic Affairs Officer, UNESCAP (South and South West Asia Office), suggested process simplification to start a new business, improving ease of doing business, and an easy certification process. He also said that Bangladesh can go into negotiations for a continuation of existing facilities for a few years more even after its LDC graduation.
He said trade costs in Asia are higher than in Europe because we are lagging behind in infrastructure.
Abdul Matlub Ahmad, chairman, Nitol Niloy Group, spoke among others at the webinar.