Speakers at a webinar on Sunday underscored the need for a time-befitting trade policy to face the challenges Bangladesh’s LDC graduation will entail.
They also stressed the need for taking concerted steps including promoting export competitiveness, reducing dependency on imports, raising the tax-GDP ratio as well as expanding the tax net, and putting an utmost priority on the trade policy options with EU and the UK.They suggested for prioritizing those FTAs only where export market access is critical, become selective about FTAs as "mad rush" to any FTA will not yield good results.
The speakers made the observations at a webinar titled ‘getting ready for LDC graduation”, jointly organized by Research and Policy Integration for Development (RAPID), The Asia Foundation and the Economic Reporters Forum (ERF).
Planning Minister MA Mannan spoke at the webinar as the chief guest while Executive Chairman of the Bangladesh Investment Development Authority (BIDA) Md Sirazul Islam and Commerce Secretary Md Jafar Uddin spoke as special guests. The programme was chaired by ERF President Sharmeen Rinvy.
Chairman of RAPID and Director of Policy Research Institute (PRI) Dr Mohammad Abdur Razzaque made the key-note presentation while Dhaka University Professor and Executive Director of RAPID Dr M Abu Eusuf and Country Representative of the Asia Foundation Kazi Faisal Bin Seraj gave the welcome remarks. ERF general secretary SM Rashidul Islam moderated the webinar.
As a testimony to its impressive economic performance, sustained over the past decades, Bangladesh is set to graduate from the group of least developed countries (LDCs). In 2018, Bangladesh for the first time met the LDC graduation qualification criteria.
The next United Nations triennial review will take place in February 2021 and Bangladesh is almost certain to satisfy the criteria again, leading to its official graduation to ‘developing country’ status—after a three-year transition period—in 2024.Speaking on the occasion as the chief guest, Planning Minister MA Mannan suggested the Ministry of Commerce for boosting communication with EU and the UK for taking maximum benefits from them after the country graduates from the LDC status.
He also stressed the need for taking continuous efforts to boost trade and commerce with Canada, China and even with neighbouring India.
The Planning Minister said it would be a whole new world after the post-COVID-19 situation while there would be massive changes at the political and business arenas.
He suggested the authorities concerned and stakeholders become more competitive in trade and intensity training programmes to boost technical capabilities and the use of technologies.
Replying a quarry, Mannan said he does not want the country to stay any longer with the LDC tag.
“I am very much in favour of coming out from the LDC status. Although there is a fear of getting slipped, there are also thousands of opportunities. We'll have to keep in mind that keeping pace with the world is our destination.”
BIDA Executive Chairman Md Sirazul Islam said they are hopeful of bringing down the ease of doing business index to double-digit by the next year which will positively impact the attraction of both local and foreign direct investment (FDI).
He said once Bangladesh is fully graduated from the LDC status, the image of the country would be further brightened in the world, the FDI would increase so as the employment generation and thus the country's economic progress would be expedited.
Noting that LDC graduation is indeed a challenge for Bangladesh, Sirazul said: "But, we want to welcome it, there is no reason to get frightened."
The BIDA Executive Chairman also suggested for taking all the necessary preparations for successful LDC graduation, increasing the tax-GDP ratio and further expanding the tax net, increasing efficiency, ensuring human resource development, putting emphasis on export diversification and the services sector.
Commerce Secretary Md Jafar Uddin said although LDC graduation would pose a "challenge" for the country, the government is ready enough to face this challenge.
"There is no reason to get frightened. We are continuing with our efforts to get duty and quota-free access from many countries," he added.
Jafar said the government has been continuing discussions with the EU and other countries for extending the transition period after LDC graduation while efforts are on to strike some 11 FTAs and PTAs by next year. Such bilateral instrument with Nepal is likely to be signed by January 2021, he said.
The Commerce Secretary said with the formulation of the Halal Food certification authority, its export could be enhanced to $10 billion from the current level of $1 billion and thus it could help to gain a surplus of $3 billion as the LDC graduation is expected to incur a loss of $7 billion.
He also informed that the government has been putting due importance on leather, plastic products, light engineering, agro-based products, jute and pharmaceuticals to increase the competitive edge of those items.
Dr Abdur Razzaque in his presentation showed that Bangladesh could make 10 per cent cost saving through exchange rate adjustments, reducing the cost of doing business, productivity improvement, technological upgradation, efficiency gains through improved customs procedures, inland transportation system, capping interest rates - despite its other consequences - will also help boost competitiveness.
He also suggested for continuing efforts to gain GSP plus facility from EU through proactive influence, continuing persuasion for gradual phasing out of facilities as the tariff for Bangladesh could even rise up to 9.5 to 10 per cent after the graduation, and seeking extended transition period from China.
Noting that the "mad rush" for FTAs is not a good sign, he said the country definitely needs to sign more FTA and PTAs, but those should have to be done considering their benefits for Bangladesh.