FTA, diversification a must: Economists

Bangladesh should move for the Free Trade Agreement (FTA) with different developed countries and concentrate on export diversification to increase foreign currency earnings and expedite economic development, said economists.

Diversifying the export basket can accelerate sustainable economic growth in the country after the economic fallout caused by the Covid pandemic, they said.

They also urged the government to stop financial irregularities in the banking sector to arrest soaring default loans.

They made the observations at a panel discussion at the annual conference of the Bangladesh Institute of Development Studies (BIDS) at a city hotel on Saturday.

The economists said that if the scam in the banking sector and huge bank borrowing cannot be contained and the number of default loans cannot be decreased, the tax-GDP ratio will never increase in the country. The tax-GDP ratio is around 9 per cent in the country. But other countries’ tax GDP ratios are over 12 per cent.

They said there is no possibility of a food crisis in the country as our production of food is sufficient.

Currently, the country has 18 lakh metric tonnes of rice stock at present which is more than the previous year’s stock, they added.

At the event, Policy Research Institute Chairman Zaidi Sattar said the government should ensure free trade facilities for the RMG sector and diversify the export products which will help to develop the economy in the country.

Commerce Secretary Tapan Kanti Das said, “Bangladesh is trying to enter into new markets with diversified products. Already we are trying to diversify the export basket in Canada, India and Japan which will accelerate our economic growth.”

Distinguished Fellow at the Centre for Policy Dialogue Professor Mustafizur Rahman said Bangladesh cannot move forward without ensuring accountability in the financial sector.

“The government provided the opportunity to whiten the black money with a 7 per cent tax exemption. If we cannot ensure accountability, there is no scope for the economic development of the country,” he said, adding that the government should revise the 8th Five-year plan for sustainable economic development.

Budget support and foreign aid will help Bangladesh recover from the economic crisis triggered by the Covid pandemic, he said.

Dhaka University Economics Department Chairman MM Akash said, “If we cannot stop the banking scam and loan defaulting, it will not be possible to increase the tax-GDP ratio in the country.”

Distinguished Fellow at the Centre for Policy Dialogue Debapriya Bhattacharya said huge bank borrowing should be stopped to increase the tax-GDP ratio.

Private Industry and Investment Adviser to Prime Minister Salman F Rahman said that the China-USA trade war has provided huge opportunities for the country’s RMG sector

ERD Secretary Sharifa Khan said the government has given more importance to the agriculture sector to ensure food security in the country.

Planning Division Secretary Mamun Al Rashid said the government is very much cautious about undertaking any mega project and spending funds on the ongoing project during the ongoing economic crisis.

Former Bangladesh Bank governor Atiur Rahman said the government must be aware not to stop importing essentials into the country; rather the government should focus more on a long term plan for the economic development of the country.