Bangladesh, Australia sign TIFA

Bangladesh has entered into an agreement -- Trade and Investment Framework Arrangement (TIFA) -- with Australia to strengthen economic relations through bilateral trade and investment, thereby reaping the opportunities to its fullest.

Commerce Minister Tipu Munshi and Australian Trade, Tourism and Investment Minister Dan Tehan signed the deal virtually on Wednesday on behalf of their respective government.

The treaty aims at promoting and deepening bilateral economic relations on the basis of mutual benefit and in accordance with the laws of both countries.

Under the TIFA, foreign investment would accrue to each party a series of positive benefits in the form of growth, job creation, and through enhancing economic development.

“Bangladesh is an important place for investors. The deal will pave the way for enhancing Australian investment here and create benefits for both countries,” said Commerce Minister Tipu Munshi after signing the deal.

There are 100 economic zones in the country while the government is trying to attract foreign investment through easing investment process, he added.

Australian is big export market for Bangladeshi RMG products and after graduation from the Least Development Country status; the island country will extend its duty-and quota-free access facility further for Bangladeshi clothing items.

Signing the TIFA, Australian Trade Minister Dan Tehan posited that trade and investment will rise on the part of both countries.

He maintained that Bangladesh has some growing sectors like ICT, light engineering, plastic and education and it will continue to reap opportunity in terms of RMG export to Australian market.

The deal would encourage and put in place favourable conditions for long-term development, diversification of trade and investment, facilitation of private sector engagement through fostering an open and transparent environment for a greater international economic cooperation.

Both countries will establish a joint working group on trade and investment which will meet within six months following the agreement and also sit once annually.

Both countries will seek to enhance trade and investment in all mutually arranged sectors including, but not limited to, the areas of textile and apparel, agriculture, agribusiness, fisheries, food and beverage, energy and minerals, manufacturing, information and communications technology services, skill development and education services.

Under the treaty Bangladesh and Australia will discuss relevant economic reform and cooperation initiatives.

The agreement will take effect on the date of signing and will remain in effect for five years unless both parties decide to extend it by mutual consent.

Until June 2020, the Australian investment in Bangladesh stood at $ 845 million which mainly went to gas and petroleum sectors. In Fiscal Year 2019-20, Bangladesh exported goods worth $ 678 million to Australia and $ 805 million in the previous year. Bangladesh’s import from Australia was $ 649 million in FY 2019-20, up from $ 597 million in the previous fiscal.

Economist Mustafizur Rahman sees the deal as a pragmatic step to enter into a wider economic cooperation with the G-20 member Australia.

“TIFA is a primary step to enter into a wider trade and investment relation. The working group under the arrangement has to identify investment and trade opportunities between Dhaka and Canberra, “Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD) told the Business Post.

“We have to identify areas where investment opportunities lie for Australian businessmen in Bangladesh.”

As Bangladesh is going to lose duty- free market access after the graduation from the LDC status, the issue of trade facility erosion has to be taken into consideration at bilateral meetings with Australian counterpart, Rahman said further.

As the production cost is high in Australia, Bangladesh can attract investment from Australia in manufacturing sector, said the economist. “Australia is a big market for us and our export to the country is below $1 billion. If we can ensure duty- free market access through TIFA meetings, then it will make huge economic sense for Bangladesh,” he added.