Despite counting revenue loss in the short-term, Bangladesh should sign free trade agreements (FTAs) with its key trading partners for better export growth over the long haul, speakers said at a seminar on Saturday.
They also called on government agencies and businesses to get ready to compete in the global export market after Bangladesh's graduation from least developed country (LDC) by 2024.
The suggestions came at a seminar on 'Fostering Global Free Trade Relations' organised by Commonwealth of Independent States-Bangladesh Chamber of Commerce and Industry (CIS-BCCI) at a city hotel.
Commerce Minister Tipu Munshi addressed the programme as the chief guest while Principal Secretary to the Prime Minister Md Nojibur Rahman, Dhaka North City Corporation (DNCC) Mayor Atiqul Islam, former chairman of National Board of Revenue (NBR) Abdul Majid, Centre for Policy Dialogue (CPD) Distinguished Fellow Professor Mustafizur Rahman also spoke with CIS-BCCI president Md Habib Ullah Dawn in the chair.
In his speech, the commerce minister said Bangladesh now enjoys zero-tariff facility for many export items in different countries exploiting its LDC status but the scenario will change after 2024 when the country will graduate from LDC.
Stressing the need for adequate preparation to sustain in the global competition, he said, "We should go for bilateral FTAs with major export destinations considering future sustainability in export trade."
Referring to his recent visit to Brazil, home to over 210 million people, the minister said Brazilian entrepreneurs are keen to import RMG products from here in exchange of exporting beef.
But traders rejected the offer showing an excuse of adverse effects on local beef industry, he said, adding, "We should assess how much the country will gain or loss due to such agreement in the long run."
Describing importance of FTAs with CIS countries, Mr Munshi said, "We should sign FTAs with CIS countries especially Russia to grab a US$4.0-$5.0 billion RMG market through removing banking constraints."
The country may face revenue loss for a short time but it will be profitable for the export industry in future, he added.
Mr Mustafizur said the government should explore other options as the World Trade Organization (WTO) is almost 'dead'.
Beyond 2034, Bangladesh would have to pay duty while exporting its items to the developed world due to LDC graduation, he said, adding that FTAs and other bilateral agreements with countries and regions will be the answer to sustain in a more competitive global market.
In terms of the GDP size, Vietnam is somewhat equal to Bangladesh but the country's export volume is over $200 billion comparing our $40 billion, he said. "Vietnam has so far signed 26 FTAs with different countries while we have signed none."
He said the competition will be tough to expand export market in future as 12 countries will also graduate from LDC with Bangladesh by 2024 while another 15 countries by 2027.
The economist also said because of FTA, some export sectors will be affected but it should also be scrutinised how much major export sectors would gain.
Speaking at the programme, former NBR chairman Abdul Majid said the authority making policy should never execute it but in Bangladesh, NBR does both, which should be changed.
The Ministry of Commerce, Ministry of Industries, central bank and other relevant departments should make policies while NBR should remain as the revenue collecting authority, he added.
He also suggested diversifying export product basket and raising skills on the supply side for sustainable export growth in the future.
Mr Nojibur, also a former NBR chairman, said Bangladesh is quite stable in terms of business environment due to continuation of the government and it will put FTA with CIS countries in the table discussion.
He also called the businesses to keep a close eye on the situation to be arisen after post-Brexit era in the EU and Bangladesh's graduation from LDC.
The DNCC mayor, also a garment maker, said there is a $20 billion market of RMG products in the CIS countries where Bangladesh holds a negligible market share through third parties.
The government should take proper initiatives to open corresponding banks in CIS countries especially in Russia as per 1st Russia-Bangladesh Protocol to commence direct export to the region tapping the potential of a market similar to EU.
To ensure level playing field for local RMG makers in the global market, Mr Atiqul said, "Our government should raise the question internationally why Accord and Alliance are in the country but nowhere else."
In a presentation, CIS-BCCI adviser Manzur Ahmed said considering the trends and practices of competing exporting countries, Bangladesh needs to take proactive action plan to ensure predictable and sustainable destinations of export products within the period between 2019 and 2024.
The country should sign FTAs with Russia, region of Eurasian Economic Union (EAEU), USA, Canada, European Union, post-Brexit UK and ratify D-8 PTA 2006.
It should also join African Continental Free Trade Agreement (ACFTA), Association of Southeast Asian Nations (ASEAN), Asia-Pacific Economic Cooperation (APEC), MERCOSUR (Southern Common Market) and Regional Comprehensive Economic Partnership (RCEP) negotiations, he said.
Mr Manzur said the Ministry of Finance, Ministry of Commerce and Bangladesh Bank should work together in consultation with CIS-BCCI and other stakeholders for streamlining financial and banking cooperation with the CIS region especially with Russia as per the 1st Russia-Bangladesh Protocol.
Commerce Secretary Dr Md Jafar Uddin, Embassy of the Russian Federation in Bangladesh First Secretary Andrei E Bankaev, and CIS-BCCI vice-president Mohammad Ali Deen also spoke on the occasion.