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Export earnings of the top ten items from Malaysia will be doubled if Bangladesh can manage to boost its competitive strength, said President of Bangladesh-Malaysia Chamber of Commerce and Industry (BMCCI) Syed Almas Kabir to The Business Post’s Rafikul Islam in an exclusive interview
Malaysia observed its 65 years of National Day. There has been a trade relationship of 50 years between Bangladesh and Malaysia. How much Bangladesh has been enabled to take the benefits through the relationship?
The two countries have celebrated 50 years of anniversary of diplomatic bilateral relations this year. Malaysia was among the first countries in the world to recognize Bangladesh as an independent country on 31 January 1972.
The mutual respect, fraternity and cooperation particularly in development activities are increasing with the passage of time.
We have signed a lot of bilateral trade agreements on maritime, transport, technical, taxation, information, investment promotion and protection and LNG during this long-standing trade relation between the two countries.
Both export and import scenarios are now on an upward trajectory. It’s around $2 billion, which will surpass $3 billion mark in the next 2 years if we can keep pace with the recent growth.
Our export market is more diversified than ever. Thus, Bangladesh is now ‘more’ enabled to take the benefits from Malaysia.
Please, tell us about BMCCI’s success stories here?
The BMCCI always tries to enhance collaboration between its members and the Malaysian business community to expand their trade ties.
We give effort in arranging trade promotion activities like Power Lunch, organizing seminar on burning issues, business forums, trade fairs, exchange of business delegations, symposiums, etc as a strategy for escalating trade and investment opportunities between Bangladesh and Malaysia.
BMCCI successfully organized ‘Showcase Bangladesh’ in Malaysia to brand a positive image, heritage and culture with the theme of ‘Made In Bangladesh’.
Through BMCCI’s relentless effort, export from Bangladesh is on an upward trajectory and have remarkably increased.
During the last 25 years, the exports of Bangladesh to Malaysia have increased at an annualized rate of 12.4 percent from $10.9 million in 1994-95 to $337 million in 2021-22.
Imports have also risen in tandem – in 2015 this was $1004.2 million which went up to $2259.1 million in 2021. Thus, in 2021, Bangladesh’s trade deficit with Malaysia stood at about $ 1945.3 million.
What kind of challenges do you face in trading between the two countries?
Import duty on potential Bangladeshi export items in Malaysia is low, but in Bangladesh duty on import items from Malaysia is relatively high.
The import duties imposed on top ten Bangladeshi export items in Malaysia show that the MFN (Most Favored Nation) import duties on all these items are zero.
Of the top imported items from Malaysia, seven face import duties in Bangladesh to varying degrees.
Discussion in this regards any bilateral trade agreement with Malaysia will need to take this trade structure into account as duty-free market access will cause significant revenue loss for Bangladesh.
How can Bangladesh do better in Malaysian market? What types of products have more demand there?
About one million Bangladeshi workers are staying in Malaysia and another half million workers will enter the Malaysian labor market by 2025. This is where we see a huge market emerging from Bangladeshi consumers who have a huge demand for Bangladeshi products.
Bangladesh can capitalize on its diversified export products to meet up the growing internal market demand in Malaysia. Bangladeshi agricultural products, mango, apparel, services and different types of local variants of fruits could be a good exportable product for Bangladeshis in Malaysia.
Besides, exporting of mutton and beef to Malaysia can be a key to entering a huge halal market. Hence, appropriate quality control and price competitiveness need to tap the market.
How Bangladesh can encourage Malaysian investors to invest more in Bangladesh?
Bangladesh is potentially a significant market, especially with access to South Asia and South-East Asia. Initiatives to establish 100 Special Economic Zones (SEZs) by 2030 also gave FDI a great boost.
Bangladesh’s growing housing, construction, furniture and chemical sector offer good opportunity for Malaysian.
Besides, Bangladesh’s some mega infrastructure projects like Padma Bridge, Rooppur Nuclear Power Plant, and Dhaka Metro-Rail Project, etc also offer good environment here. These can attract Malaysian investors. The total FDI stock of Malaysia in Bangladesh is $800.84 million as of the end of March 2022. Currently, a total of 123 Malaysian companies are registered under BIDA.
Customs duty exemption on capital machinery and import duties on raw materials used for producing goods for export, five to 10 years of tax holiday, reduced tax, 100 percent tax exemption on software development, telecommunication and information technology-enabled services and also on income and capital gain for certain projects under PPP for 10 years with all other facilities can also be good opportunities for them. So, it is high time for all overseas investors to be proud investors in an investment paradise like Bangladesh.
Malaysia has reopened its labor markets to Bangladesh after several years. What is the latest status of manpower market?
Malaysia is one of the most popular destinations for Bangladeshi workers. Bangladeshi expatriates in Malaysia fetched more than $ 2.0 billion in remittance from the country in the FY2021-22.
Malaysia reportedly has expressed its willingness to recruit half a million workers over five years with 200,000 going to that country during the next 12 months.The first batch of 53 workers reached Malaysia on 09 August 2022.
Who will be more beneficiary if the FTA between Bangladesh and Malaysia is inked?
As a testament to strong bilateral relations both Bangladesh and Malaysia have agreed to sign a bilateral Free Trade Agreement (FTA) that would encourage trade and cross-border investment between the two friendly nations.
FTAs help to enhance our competitive advantage, increase market assessments for goods and services, strengthen investors’ confidence and to a large extent build Bangladesh’s economic sustainability.
The issue of signing a bilateral FTA between Malaysia and Bangladesh has been under discussion since 2010. Instead of sticking to the revenue loss issue, Dhaka should sign FTA with Kuala Lumpur to attract investment, raise export and ensure job opportunities for Bangladeshis in Malaysia.
Bangladesh should proactively explore opportunities of signing FTA and Comprehensive Economic Partnership Agreement (CEPA) with ASEAN, RCEP and other countries in the region.
Do you seek government policy support to ease and strengthen the trade relationship between the two countries?
Countries that are open to international trade tend to grow faster, innovate, improve productivity and provide higher income and more opportunities to their people.
Open trade also benefits lower-income households by offering consumers more affordable goods and services. Integrating with the world economy especially Malaysia through trade and global value chains helps drive economic growth and reduce poverty, locally and globally.
So, it is now mandatory to sign FTA with Malaysia so that Bangladesh may enter into ASEAN market through this. It can widen the vision and also our export capacity.
By signing the agreement, Bangladesh may enter the Malaysian high-value service sector. As we can see from our experience complicated regulatory environments discourage new investments. So, it’s important to take measures to simplify unnecessary regulatory hurdles.
The government should give moral support to domestic producers to produce diversified exportable products through financial incentives to small and medium entrepreneurs to create interest in the products of Bangladesh among Malaysian importers and local citizens.
What is your plan for the future?
Malaysia is considered a regional hub of trade among the ASEAN. But the true potentials of the two countries have not been exploited fully so that a new height and momentum can be created.
BMCCI started full-fledged activities with a strengthened research cell to collect, analyze and disseminate data and information among the members of BMCCI as well as the business community of both countries.
It is now vital to encourage more investment from Malaysia to Bangladesh by ‘branding Bangladesh’ and carrying out trade and investment summits on regular basis making space for the chamber to contribute to the government policy-making process and development of the bilateral relationship between Bangladesh and Malaysia.
