Home ›› 19 Jan 2023 ›› Editorial
Bangladesh has to work harder to close the existing trade gap with many countries and bring it to a more acceptable level. At the same time we have to take all steps possible to increase trade volume in terms of export. Trade imbalance affects local currency value, price fixation, foreign currency reserve and it causes many other upsets for the economy. Every government therefore remains ever alert to increase export volume and decrease dependency on import. The trade gap however is becoming narrower with some countries, which used to be wide only a decade ago. It is happening because of the government support for infrastructure development, and robust business and export activities coupled with export incentives to genuine exporters. In the recent years, different export fairs organised by the private sector, and the biggest of them all that is organised by the Export Promotion Bureau namely Dhaka International Trade Fair (DITF), have been immensely successful in attracting foreign buyers to many of our non-traditional products. Every year, Bangladesh receives spot orders from such fairs worth millions of dollars.
Besides organising fairs at home, more and more of our entrepreneurs are venturing out from near to far-off countries to strike short term and long term deals. From East to West and North to South our businessmen are busy exploring new business possibilities. They are organising expositions of our products in those countries. At the same time, increasing the export volume of traditional items like Readymade Garments, Jute, Tea and Hide in newer destinations is helping the country earn substantial amount of foreign currency, and thereby closing the trade gap even further.
Let us have a look at the performance of Bangladesh with EU countries. The EU website says:
“Bangladesh has been a WTO member since 1995 and benefits from the EU's "Everything but Arms" arrangement, which grants duty free, quota free access for all exports, except arms and ammunition.”
The EU is Bangladesh's main trading partner, accounting for around 25 per cent of Bangladesh's total trade since 2015. EU imports from Bangladesh are dominated by clothing, accounting for over 90 per cent of the EU's total imports from Bangladesh. EU exports to Bangladesh are dominated by machinery and transport equipment (49 per cent). EU imports from Bangladesh have almost trebled from €5,464 million to €15,145 million, which represents nearly half of Bangladesh's total exports.
“Bangladesh benefits from the most favourable regime available under the EU's Generalized Scheme of Preferences (GSP), namely Everything But Arms (EBA) arrangement. EBA grants the 48 LDCs – including Bangladesh – duty free quota, free access to the EU for exports of all products, except arms and ammunition.
In July 2013, in response to the collapse of the Rana Plaza factory complex which killed scores of workers, the EU took the initiative of launching a Sustainability Compact for Bangladeshwith the aim of improving labour rights and factory safety in the ready-made garment industry. The initiative brought together the EU, the Government of Bangladesh, the USA, Canada - i.e. the main markets for Bangladeshi garment production - as well as the International labour Organisation (ILO). The Compact is based on short and long term commitments related to three inter-linked pillars:
* Respect for labour rights;
* Structural integrity of buildings and occupational safety and health; 8 Responsible business conduct.
The Compact has contributed to tangible improvements in workplace safety. But regarding workers' rights issue all stakeholders have to work together to reach an amicable solution.”
To ensure further closing of gap in our trade with other countries, we shall need more investment in the industrial sector for the overall growth of the economy. At the same time we shall need to increase our export volume to earn more foreign currency.
International Monetary Fund (IMF) had helped Bangladesh with $987 million Extended Credit Facility to cope up with the shortfall in the balance of payments. The IMF scheme was conditional as it imposed obligations in financial sector reforms, enacting prudent macro-economic policies, boosting private investment and raising domestic production.
Unless we add a good number of value added items of decent quality and diverse products to our export profile, there is no way exports can take a quantum leap.
Bangladesh needs to push up exports and substitute imports with local products IMF outlined that good growth is possible if there is political calm and constraints on private investment are eased. Over the three years of the scheme, macroeconomic stability has been buttressed: growth is strong, inflation has eased, the public debt-to-GDP ratio has remained stable, and foreign reserves remain adequate. The key to success is: the wheels of economy must keep moving so that markets remain vibrant all year round. The public and private sector will have to work in cohesion to supplement each other’s responsibilities. At the same time, the government will have to offer various kinds of incentives to the entrepreneurs including the SME sector to boost export of non-traditional items.
To be able to achieve the goal of closing the existing trade gaps all avenues for business will have to be kept open. At the same time all obstacles on way to establishing industries or commercial enterprises will have to be removed or the procedures of obtaining permissions etc., should be made easy so that foreign investors get encouraged to come to Bangladesh to invest.
This may not be directly related to establishing new businesses and increasing exports but the Tourism sector has to be escalated to international level to keep foreign currency at home. Foreign investors and buyers fly out to Bangkok or Singapore on holidays instead of staying back to tour sites within Bangladesh. The lack of super class tourist vehicles, sub-standard living accommodations, not so palatable food and on top of all very bad roads and traffic jam on highways are responsible for keeping foreigners away from our tourist sites. We have to keep in mind that we need to bring more and more overseas buyers to the country and offer them international standard hospitality.
The writer is a journalist. He can be contacted at [email protected]
