Bangladesh’s exports could increase by more than 7% if logistics costs fall
By reducing inland logistics costs by 17%, it is possible to increase Bangladesh’s exports by 7.4%, however, 35% of products are damaged at ports due to infrastructural deficiencies, experts said on Wednesday.
They were speaking at a panel discussion titled “Improving Trade Facilitation for Export Competitiveness: Progress, Lessons and Policy Priorities for Bangladesh” organized by the Bangladesh Policy Research Institute (PRI).
Salman Fazlur Rahman, Advisor to the Prime Minister for Private Industry and Investment, was present as guest of honour.
Regarding export diversification, Salman F Rahman said that although the ready-to-wear (RMG) sector is successful in exporting, other sectors face many obstacles.
Exports from all sectors of the country could increase if bureaucratic complexities were reformed. There were changes in the bureaucratic mindset at the highest level, but they prevailed at the grassroots level, he also said.
“The Prime Minister (Sheikh Hasina) has repeatedly asked why other export sectors are not as successful as the RMG industry. It’s because people in other sectors say they don’t get benefits like RMG. We need to seriously focus on other sectors, like we did on RMG’s exports,” Rahman also said.
“To increase exports, you need to increase port facilities. The capacity of the port of Chittagong will be further increased. Work is underway on the deep water port project in Matarbari. Once this is done, exports can be further increased. Now I am working on how to attract more investment from the local and foreign private sector,” he informed.
In his keynote address, Policy Exchange Bangladesh (PEB) Chairman, Masrur Reaz, said the gains from trade are highly relevant to Bangladesh’s development trajectory and aspirations.
High quality products, services and inputs result in good visibility and improve technical capability. Access to a larger market encourages companies to invest in R&D and foster innovation, he also said.
Trade Facilitation (TF) emerges as a key driver of trade competitiveness. It makes it possible to ensure the predictability of operations and thus contributes to the competitiveness of a country, he also specified.
“Lower-tier and developing countries stand to benefit more. Vietnam’s spectacular success in export-led growth has benefited enormously from its improvements in TF, Reaz also pointed out.
“Boosting TF will be critical to achieving Bangladesh’s development priorities and growth aspirations. We are doing well in RMG, but when it comes to non-RMG sectors, we have many opportunities to increase our export revenue,” the PEB Chairman also said.
“If we look at the share of non-RMG exports compared to other Asian countries, we find that in the agriculture and ICT sectors, our growth is very weak,” he observed.
Zaidi Sattar, President of the PRI, said that after wasting two decades of prevarication and lack of direction in trade policy, in the 1990s Bangladesh chose to pursue the policy of export-led trade development .
This was done by shifting from a predominantly inward-looking, import-replacing trade policy to an outward-looking, export-oriented trade policy by liberalizing trade, rationalizing and reducing tariffs and quantitative restrictions, moving from fixed exchange rates to flexible exchange rates, adopting partial current account convertibility, while supporting market-oriented reforms like deregulation of investment, etc., also underlined the Economist.
Following the shift to trade openness, Bangladesh has been described as a “globalizer” among developing economies.
The trade-to-GDP ratio rose from 19% in FY90 to 38% over the next 15 years, peaking at 49% in FY11.
However, trade growth has not kept pace with nominal GDP growth; consequently, the trade-to-GDP ratio declined to 30% in FY21, Sattar said.
“Make no mistake, Bangladesh’s global integration is not just limited to trade in goods. Much of our trade is in the export of factor services, such as the services of our migrant workers, under the auspices of the WTO’s General Agreement on Trade in Services (GATS),” he said. he also stated.
This brings in large amounts of foreign currency remittance income to fund our bloated import bill. Improving trade facilitation must therefore cover not only trade in goods, but also increased trade in non-factor services, such as ICT, financial services, including digital and electronic transactions, and services factors, i.e. remittances from migrant workers, he added.
Abdul Mannan Shikder, VAT (Implementation and IT) member at the National Board of Revenue, said: “We have many projects underway, in which the World Bank is supporting us. There are bond management projects that are taking off very well.
Asif Ibrahim, Director of BGMEA and Chairman of the Chittagong Stock Exchange, said, “We are facing a lot of customs issues when it comes to bonded warehouses. When we want to introduce a new product into bonded warehouses, we always face problems. »
Ahsan H Mansur, Executive Director, PRI, Selma Rasavac, Head, Market Creation Advisory, IFC, Md Hafizur Rahman, Additional Secretary (Director General), Ministry of Trade, WTO Cell, Habibullah N Karim, Deputy Chairman, MCCI, MD and CEO, Technohaven Company Ltd and others were also present.