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Duty-free export market: Bangladesh mulls delay in LDC graduation

Salman Rahman alludes at webinar


| Updated: October 01, 2020 10:11:39


Duty-free export market: Bangladesh mulls delay in LDC graduation

Prime minister's private industry and investment adviser Salman Fazlur Rahman on Tuesday hinted that Bangladesh is considering 'postponement' of its LDC (least-developed country) graduation slated for 2024.

"I'm not in favour of delaying the graduation. …within the WTO rules, I'm sure, commerce ministry is studying some mechanisms of postponement," he said.

Mr Rahman was addressing a concern about the LDC graduation of this country where economic growth has been slowed down due to the Covid-19 pandemic.

"If we take the mechanisms, we'll be able to enjoy duty-free access for a few more years under LDC status," he told a webinar.

Economic Reporters' Forum (ERF), Research and Policy Integration for Development (RAPID) and The Asia Foundation co-hosted the event 'Future of Bangladesh Leather Sector in the Aftermath of COVID-19'.

Speaking as the chief guest, Mr Rahman said the key to having more duty-free access to different markets is signing more free trade agreements (FTAs).

The prime minister has instructed in this regard and commerce ministry is working on that also, he added.

Officially, LDC graduation is due for 2024 and Bangladesh will be given three more years as a grace period for preparations.

That means the country will start facing extra tariffs on exports from 2027.

However, many experts have been advocating that the grace period be at least 10 years because of the devastation of Covid-19 on the global economy.

Mr Rahman said the country should have less dependence on customs duty and restructured tax policies…

He urged the local industries to be more competitive. "When we can be competitive in the world export market, why we can't be competitive in the domestic market."

The industrialist said duty-free access to Chinese market is a great advantage for local exporters.

He said it is still under discussion, "but I heard that there is a condition of at least 40-per cent value addition locally for a product to access China".

If it is 40 per cent, he said, it is good for leather goods and footwear as Bangladesh produces large amounts of rawhide.

Mr Rahman urged the ministry to differentiate leather and non-leather goods for market expansion.

He said foreign investment here should be increased for economic development. "To attract foreign investment, we need a strong and dynamic capital market."

"Those who want to invest will first see if there is a good chance of this investment exit. Whether it's five years, eight or 10 years, foreign investors can ask for an exit from here."

"And in the case of this exit, the capital market is the best system," the adviser observed.

Expressing frustrations over the capital market, he said the capital market is not developing at the similar pace the economy is growing.

The capital market is in a state of non-existence here, the business tycoon uttered.

He said tanneries were relocated hastily to Savar estate which had impacted both production and export.

Mr Rahman said CETP (central effluent treatment plant) is almost functional now. He blamed excess water use for making CETP non-functional there.

He warned tanners of imposing tax on water usage if they do not stop using excess water.

Commerce secretary Dr Md Zafar Uddin said they will sit with rawhide and leather-sector stakeholders next month to reach a decision so they can avoid complications during Eid-ul-Azha.

Apex Footwear Ltd managing director Syed Nasim Manzur said, "We should think and talk when and how LDC graduation of Bangladesh will happen."

He said Bangladesh still gets duty-free access to global markets due to its LDC status. "If LDC graduation occurs in time, we'll lose this advantage."

The purchasing power of people globally has reduced significantly due to the pandemic, Mr Manzur cited.

"Leather goods or footwear are not an essential commodity, so it's obvious that sale of leather goods will be poor in Bangladesh and across the world."

Leather export has slowed down to 21.79 per cent in the country due to the novel coronavirus.

He called for the government and stakeholders to build the country's positive image to increase export.

Mr Manzur said it is true that the domestic leather goods market is increasing but the country cannot consume its 30-million square feet rawhide annually.

"So, we must work on expanding the leather and leather goods export market," he added.

RAPID chairman Dr Mohammad Abdur Razzaque and executive director Dr Abu Eusuf jointly presented a keynote.

Mr Razzaque said the leather sector needs a sector-specific, realistic and modern policy framework to address its longstanding challenges and emerging trends in global and domestic market.

He underscored the importance of understanding the likely significant implications of LDC graduation of Bangladesh and scope for post-LDC export incentives.

Achieving the silver and gold standards by leather working group in terms of ETP quality need more investment and strong commitments, he mentioned.

Mr Eusuf said technical evaluation and compliance of environmental issues of CETP in accordance with the LWG protocol should be ensured to make CETP fully functional and internationally accredited.

He said a five-year plan is needed to revive the leather sector, attain LWG certification and build brand image as a responsible source.

The Asia Foundation country representative Kazi Faisal Bin Seraj, Bangladesh Finished Leather, Leathergoods and Footwear Exporters' Association chairman Mohiuddin Ahmed Mahin and Bangladesh Tanners Association chairman Md Shaheen Ahmed, among other, spoke.

ERF president Saif Islam Dilal chaired the event moderated by general secretary SM Rashidul Islam.

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