Trade key to faster growth for Bangladesh: WB report
Tofail urges neighbours to remove non-tariff barriers to trade
BSS
International and regional trade, especially with South Asian and East Asian neighbours is critical for Bangladesh to create more and better jobs for the two million youths entering the labour force every year, says a new report of the World Bank (WB).
The report - Diagnostic Trade Integration Study - was launched in the capital yesterday at a city hotel, with commerce minister Tofail Ahmed attending it as the chief guest, reports BSS. Addressing the launching of the report, the commerce minister put high importance on increasing trade for expediting economic growth towards achieving the middle income country status by 2021.
The minister expected that the country would accelerate its GDP (gross domestic product) growth to 7.4 per cent in the next five years if trade increases amid stable economic and non-economic factors. He urged neighbouring countries including India for removing tariff and non-tariff barriers for Bangladesh products so the bilateral and multilateral trade relations strengthen further. Commenting on the report through video conferencing, WB Country Director Johannes Zutt said Bangladesh needs higher volumes of exports to larger and richer markets, beyond its relatively smaller domestic market to accelerate GDP growth.
Bangladeshi firms have succeeded in garments, and they can also succeed in other industries with demonstrative competiveness such as jute-based industries, footwear, information and communications technology, shipbuilding, pharmaceuticals, light industry such as bicycles and others, he said.
The WB reports also provides a roadmap for strengthening Bangladeshs trade competitiveness and developing a policy regime that takes full advantage of international markets.
It also identifies a number of reform initiatives in high priority areas for enhancing the countrys trade capacity and competitiveness.
The report suggests that Bangladesh needs to focus on diversifying regional and global markets, building a wider export base, improving worker and consumer welfare, and strengthening institutional capacity while sustaining sound economic fundamentals to accelerate export growth.
It calls for establishing an inter-ministerial committee to help Bangladeshi exporters to succeed in a globally competitive environment. Emphasising on connectivity, the WB said Bangladesh would need to expand its linkages with neighboring countries such as China and India as well as other Asian countries like Japan and South Korea, to access underexploited markets and attract greater Foreign Direct Investment (FDI). For this, the country needs to address critical bottlenecks such as the availability of serviced land, uninterrupted power supply, congestion Chittagong port, the Dhaka-Chittagong road and rail corridor, customs clearances at land and sea borders, and ease of access to finance, the report said.
The report also notes that Bangladeshs exports have doubled their world market share between 1995 and 2012, largely due to the strong export performance in the Ready-Made Garments (RMG) sector. Since 2009, Bangladesh has become the worlds second largest exporter of garments, after China. There is, however, ample room to expand the RMG sector and to diversify to other exports, the report said, adding if the country could capture 20.0 percent of Chinas current garment exports, the total exports earning from this sector would $29 billion while the apparel sector would create 5.4 million new jobs directly and 13.5 million jobs indirectly.
Foreign direct investment can play a much larger role in many sectors, especially those with technology upgrading needs, such as pharmaceuticals, bicycles, and shipbuilding.
Sanjay Kathuria, Lead Economist, Trade and Competitiveness Global Practice of WB and co-author of the report said a trade policy regime that is more neutral between exports and production for the domestic market, would support the development of new export sectors and small and medium firms.
The country also needs to prepare its youth with solid foundational education and vocational skills needed to be productive in export-oriented industry. Bangladesh needs to act urgently to tap into regional and global trade as well as FDI to boost its economy and reduce poverty, the report said.
