Need for comprehensive economic partnership with partner countries
Creating a transparent, hassle free and congenial investment regime is a major challenge for Bangladesh or any other country
Md. Joynal Abdin
Most popular news since last few years is that, Bangladesh is going to be graduated from the Least Developed Country (LDC) list by 2024. It makes us happy and hopeful about economic future of the nation. Many international studies forecasted Bangladesh as Next eleven / N-11, Fortier -5, 30th largest economy, and 28th largest economy so on and so forth. All of these findings are forecasting not the irrevocable fat. These forecasting could be reality if we work together to achieve those otherwise, we may fail to reach into any of the above-mentioned destinations. It is very true that we have potentials but have to undertake preplanned development initiatives to make those forecasting colourful reality. Lets try to understand what will be the scenario soon after the LDC graduation happens. Bangladesh will lose all sorts of tariff preferences into international market which we are enjoying now. It will take three years i.e. by 2027 Bangladesh will lose all LDC tariff preferences into international market.
One study showed that, Bangladesh will lose 8 per cent of its total export due to preference erosion from 2027. Bangladeshi products will face addition 6.7 per cent duty to enter into the developing markets. CPD showed that the preference erosion loss could be worth of USD 2.7 billion. It is not like that only preference erosion will be the main challenge. Another major challenge will be compliance of products standards to enter into various developed markets. Now Bangladeshi exports are getting special consideration from many standard and regulatory compliances due to an LDC country. For example, LDC countries are weaved from intellectual property rights like patent, design, trademark, GI etc. implementation but graduated Bangladesh will have to face to implement those rights. It will require additional infrastructural development to impose IPR relevant provisions at home and abroad.
Currently Bangladesh is getting grants and other development assistance from the development partners. But developing Bangladesh will not qualify to avail grants and development projects will be limited in numbers. As we know all these changes will be in place after LDC graduation why not we take prior preparation to face these challenges and ensure a flawless development of the country. For instance, Bangladesh can sign bilateral free trade agreement with all major export destinations like the USA, European Union, Canada, Australia etc. Getting GSP Plus facilities in EU markets is a much discussed topic now. But to get GSP Plus Bangladesh have to meet up certain criteria. Therefore, we have to plan how those criteria will be met up from now. This is for the GSP Plus facility in EU member countries. But single major export destination is the USA and others like Canada, Australia, UK etc. Major exporting destinations have to be taken care of individually.
To ensure flawless export Bangladesh should immediately sign free trade agreement with developed export destination countries. FTA with those countries will not be harmful for our local industries. Because those developed countries are focused to high-tech industries and not our competitor at home or abroad. But FTA with them could facilitate existing market expansion and entrance of new products from Bangladesh to those markets. On the other hand, Bangladesh is not in a position to offer FTA with all trade partners especially countries we import in mass scale. For example, Bangladesh used to import all sorts of commodities from India, China, Thailand, Malaysia etc. countries in mass scale. These countries are not only our major import sources but also competitor in many international markets with similar products. As Bangladeshi manufacturing companies are also producing same products, if Bangladesh goes to sign FTA with them then our local market can be captured by their products and make local producers uncompetitive.
Therefore, Bangladesh has to be more conscious to sign any agreement with those countries. But question remains what about the import of export oriented raw materials from those countries? If raw materials are not available at a competitive price, if Bangladeshi manufacturers fail to be part and parcel of international or regional value chain then again, our industrial development will be hampered. Therefore, Bangladesh may think of signing Preferential Trade Agreement (PTA) with them on a positive list basis. Moreover, Bangladesh lags behind in case of research and innovation. As a result, we need technology to remain competitive in the market. But no one will transfer their technical know-how without a win-win benefit. Bangladesh needs more investment to maintain its projected GDP growth and ensure employment to its workable young force. Investment may come from local private sector as well as foreign investment as FDI and joint venture.
Creating a transparent, hassle free and congenial investment regime is a major challenge for Bangladesh now. If lo`cal investor does not have confidence to take new investment project how foreign investors will come forward? Once Bangladeshs doing business ranking was ahead of Vietnam or Malaysia etc. countries. But today Bangladesh ranks even worst than the war affected Afghanistan. If we can not make doing business easy then employment generation, GDP growth, export earnings everything will be hampered. List of licences, permits and registration have to be cut down, otherwise local investors will fly away instead of foreign investors attraction. Bangladesh has 3 million plus unemployed manpower and another 2 million educated jobseekers are entering into this list every year. But Bangladesh is paying more than USD 10 billion per year by employing Indian, Sri Lankan and other mid-level professionals. It is because our local educational institutions are failing to produce qualified mid-level managers to meet the demand of local industries. All the educational institutions are producing jobseekers but none of them are producing job providers i.e. entrepreneurs. As a result, job seekers line is going to be longer every year but we are searching for foreign investors or entrepreneurs to come in and provide employment to our graduates. Why government is not taking project to create entrepreneurs? Foreign entrepreneur attraction should be the second options by placing local entrepreneurs creation programme in the first priority position. By this statement I am not undermining need for foreign investors attraction because foreign investment comes with updated technical and managerial knowledge. It could be a great source of technology transfer and employment creation. Therefore, Bangladesh should sign investment agreement into a broader head Comprehensive Economic Partnership Agreement (CEPA) including predetermined investment commitment with major development partner countries. Thus, signing FTA, PTA, and CEPA etc. tools could be used to establish a congenial economic partnership relationship with our major trading and investment partners to ensure flawless economic development of the country even after graduation from the LDC. A preplanned partnering environment will help us to diversify export products and export destinations as well, it is another major priority to ensure inclusive, flaw less and sustainable economic development of Bangladesh.
In my final statement I would suggest the government should target each of the case of doing business parameters and make those congenial to the local investors first. Thus, foreign investment attraction, technology transfer, employment generation, GDP growth, diversification of export items and export market etc. everything will be followed up. Otherwise only policy dependent trade facilitation, offering fiscal and non-fiscal incentives will not make Bangladesh a suitable investment ground to local or foreign investors and all the above-mentioned forecasting will be bound to be failed in near future.
The writer is a contributor to
The Independent
