Home ›› 07 Apr 2023 ›› Editorial
History proves that trade has been the lifeline of nations. The maxim that “No man is an island” stands to support that interactions with people is the only means of survival of human and that is only possible through trade. People interact around world through trade in goods and services. International trade has been a driving force for creating jobs, increasing income and bringing millions of people out of extreme poverty. It has been proved that openness of world economy through trade and investment fostered economic growth. Bangladesh is an example of the benefits of openness of the economy. Her economic growth and development has been attributed to the openness of the trade and investment. During the last 30 years Bangladesh moved from import substitution trade policy to export-oriented trade policy as it has been seen that export is the engine of growth and development. The inward trade policy was adopted only to save foreign currency and production for domestic market to replace foreign competition.
In the 70s many of the East Asian countries (Korea, Taiwan, Hong Kong, Singapore) abandoned the policy of import substitution to accepted the export-oriented trade policy in an intensive scale. The prospect and the benefits gave an incentive to other East Asian nations to form a joint group for development. That gave birth to the Association of South Asian Nations ASEAN. Many of the important cross current buffeting the global trade landscape are prominently playing out across the 10 member nations of ASEAN. On the other hand the US- China strategic competition is being conducted by proxy throughout the region, with each side jockeying for position, eager to demonstrate that they are the most desirable economic and strategic partners.
The US has come late to the party as China long ago displaced the US as the leading trade and investment partner for most of the region. Unease with the China’s heavy weight power and a desire to see the two giants counter balance each other means that the door remains open for the US. The Indo-Pacific Economic Framework ( IPEF ) is the Biden’s administration’s most important regional gambit, but at this stage it is unclear whether it will be a ground breaking new template that put US back in the game. The role played by ASEAN members and the negotiating strategies they pursue will go a long way towards determining which outcome will finally materialize. Under this perspective we now analyze Bangladesh’s trade possibility with ASEAN.
Bangladesh adopted “Look East Policy” to engage with ASEAN to increase trade and investment relations with them. Geographical proximity with ASEAN extends Bangladesh a greater opportunity of mutual cooperation with ASEAN. The member countries of ASEAN have achieved a higher degree of economic growth in the last three decades. Experts believe that the member state will register even higher economic growth in the coming years. Look East Policy has made imports easier, but the exports from Bangladesh failed to make a dent in the ASEAN markets. In 2020 (data beyond 2020 are not available) imports from ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) amounted to USD 7.00 billion. Bangladesh’s export destination is mainly towards EU and NAFTA countries. However, this trend has some risks due to uncertain problems with exports to these countries. If the existing preferential trade is withdrawn exports from Bangladesh might suffer serious setback. Present too much dependence on EU and US market might lead to act as an anti-diversification policy.
Import from ASEAN has increased sharply over the years. Imports in 1999-00 had been TK 57689 million which increased to TK 2,92,966 million in 2009-10. The growth rates of imports from ASEAN over the decades had been 7.44 per cent, 23.59 per cent,and 5.8 per cent, Average growth of imports has been 18 per cent from ASEAN.
Export grew moderately from TK 3921 million to TK 19626 million between 1999-00 to 2009-10. The percentage of export has not changed significantly. Over the last decade export to ASEAN grew at a rate of 1.89 per cent, 1.64 per cent, 1.45 per cent and 2.25 per cent on an average. The average growth rate of export to ASEAN has been 1.6 per cent. Among the ASEAN nations Thailand is the key country in Bangladesh’s “Look East Policy”. Trade relation with ASEAN is mainly concentrated with Thailand, Vietnam, Malaysia, Indonesia and Singapore. From Bangladesh export data it is revealed that no serious effort have been taken in the past even through there is a vast market for Bangladeshi products.
Digital trade is a potential area where ASEAN is poised to play a pivotal role. Greater digital interoperability and more coherent digital trade rules would help the SMEs that pre-dominate the region become global players capable of reaping global profit. Signing digital deals that accomplishes the goal is therefore an important priority, but that will not be easily achieved. There is wide spread support for “nuts and bolts’ issue which is facilitating acceptance of the electronic signature. The ASEAN is the most open as well as most restrictive digital trade region. The policies ultimately taken by ASEAN members will shape digital issues being negotiated across multiple forums like WTO, IPEF and DEPA (digital economy partnership agreement).
Bangladesh with its booming ICT sector could try to join the ASEAN digital hub for export of ICT expertizes. Trade and economic relevance of ASEAN is unquestionable. Some ASEAN members are playing much bigger role to assert themselves in the global geopolitical arena. For example, Indonesia’s politically fraught G-20 Summit last year in Bali suggests that at least some ASEAN members are poised to assert themselves and play a bigger role. So there arises a question “what does ASEAN think” will be posed more frequently in 2023. In such a prospective background Bangladesh should try to have a dent so that relation with South East Nations could be a new hub for Bangladeshi products.
A trade relation with ASEAN would boost not only trade and investment but also would benefit the North Eastern region of India. If Bangladesh could use Indian ports to increase trade with ASEAN, both nations would benefit. Since we want to reduce the dependency of export from West by creating new markets to East and South East Asian countries, we need to look to East.
ASEAN was set up by five original members namely Indonesia, Malaysia, the Philippines, Singapore and Thailand and they together represent the official organization that pursued region economic integration in East Asia. Bangladesh has been trying to build a strong trade link with ASEAN. However, that has not be to a satisfactory level. Volume of trade between Bangladesh and ASEAN has grown steadily. The percentage of export to ASEAN has not changed significantly over the period between1999 to 2010. The average percentage of export to ASEAN has been 1.6 per cent while that of import has been 16 per cent. So the amount of import is more than export and the balance of trade is in favour of ASEAN. Therefore, the unfavourable balance of trade is of great concern for Bangladesh. The export/import average is the ratio of total exports to total imports. It indicates that the export/import ratio of Bangladesh to ASEAN is less than the total import ratio of Bangladesh to the whole world. This implies that the import is very high over export. Only an increase in export could bridge the gap.
Bangladesh needs to diversify its exports to ensure better quality to increase exports to ASEAN. The country should try to have concessionary tariff arrangement. The bilateral relation between ASEAN and Bangladesh should be expanded vide provision of quality goods, non-traditional goods, supply of manpower , providing services including tourism, culture, education and medical treatment. Bangladesh needs to develop communication infrastructure, road, railway and deep sea port. Despite the devastating impact of COVID-19 pandemic, Bangladesh is one of the handfuls of countries that saw a growth in their economy and ascended 8 ranks in the World Bank’s Ease of doing business index 2020.
This rank though emphasizes massive room for improvement with regard to the in efficiency of Bangladesh’s bureaucracy. Bangladesh within its recent economic development progress has been an emerging Asian star. During the period 2017-2019 its economy grew at 7.8 per cent and managed 2.4 per cent in 2020 despite the COVID-19 pandemic, one of the very few countries worldwide to show growth during this time. Bangladesh has the potential as a Supply Chain in addition to China plus One Concept. Bangladesh can serve as a bridge between ASEAN and SAARC. Finally heavy diplomatic lobbying is needed to have an FTA with ASEAN. If that cannot be achieved, Bangladesh can pursue to be the 11th member of ASEAN.
The writer is former Director General of EPB. He can be contacted at [email protected]
