Cut cost of doing business to compete on post-LDC era
Bangladesh must reduce the price of conducting business locally to be more competitive globally on the post-LDC era as the country will face duties in exports as a result of the erosion of trade privileges, said a noted economist yesterday.
"Local businessmen should be facilitated simply by offsetting costs in the domestic markets to ensure that they can remain competitive in the international markets even after graduation from the LDC," explained Mustafizur Rahman, a distinguished fellow of the Centre for Insurance policy Dialogue (CPD).
As immediate actions, Bangladesh should also get a partnership with some key trading partners such as for example Canada, Japan, China and India to extend preferential market access similar to the EU, both bilaterally and as a member of the graduating least-developed countries, he stated.
The EU will continue duty privileges for three years more after 2026.
China is giving an identical kind of duty privilege to Samoa even after its graduation while Beijing has a special arrangement with the island nation, according to Rahman.
Bangladesh should negotiate with the key trading partners for extending the tenure in least for five years. If it's extremely hard, the tenure ought to be for at least 3 years like that provided by the EU, he explained.
"Similarly, Bangladesh should aggressively pursue signing of In depth Economic Partnership Agreement with India to get and present duty privileges," Rahman explained.
Rahman was presenting a good keynote paper at a virtual dialogue on "Moving right out of the LDC group: Approaches for graduation with momentum", organised by the CPD. It had been attended by a minister, government high-ups, researchers, policy-makers, exporters, and business people.
He called for taking measures, including building active pharmaceuticals element (API) parks functional shortly so that Bangladesh can keep making cheap life-saving drugs just after graduation.
Locals will need to buy insulin in eight times higher prices from the existing level following the expiry of the arrangement on the Trade-Related Areas of Intellectual Real estate Rights (TRIPs). Prices of medicines will also head out up in the neighborhood markets after graduation, he explained.
Bangladesh took a good Tk 100-crore project to build up an API park in 2008. The park is likely to be operational from 2023.
"The completion of the API park is important. Otherwise, the pharmaceuticals sector will be in big trouble together with the local people," Rahman said.
Local pharmaceuticals companies need to import $1 billion worth of raw materials in the lack of an API park.
The Tk25,000-crore local pharmaceuticals industry meets more than 95 % local demand and exports medicines worth $130 million annually.
The trade expert needed opening a negotiation cell beneath the commerce ministry to help make the country competitive.
"Preparations should begin right now in order that after 2026, we don't find one excellent morning that nothing offers been done to compete after graduation."
Some 70 per cent of Bangladesh's global exports are covered by preferential access, one of the highest on the planet. So, Bangladesh will probably face the highest rise in tariffs among the 12 graduating LDCs.
Rehman Sobhan, chairman of the CPD, said Bangladesh had been celebrating pre-matured graduation as being the ultimate graduation did not happen yet.
The United Nations Committee for Development Plan (UN CDP) recommended Bangladesh for graduation as the united states has fulfilled all three criteria.
"Bangladesh possesses statistically graduated. However the country needs to be graduated in real life," said Prof Sobhan.
After graduation, Bangladesh will probably compete with Vietnam, China and India. "But, the problem remains just how much Bangladesh can contend with these countries?" he explained.
The pharmaceuticals industry will face a big challenge as Bangladesh will eventually lose the TRIPs facility after graduation, Prof Sobhan said.
He suggested diversification of the market and technological upgradation.
An extension of the Everything but Hands (EBA) scheme of the EU is necessary at least for 7-10 years to sustain the desired growth, said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
The EU accounts for 61 per cent of Bangladesh's exports. The united states doesn't have to pay any duty.
The impact of Covid-19 and Bangladesh's endeavour towards global peace-keeping and humanitarian response measures just like sheltering of Rohingya refugees, women empowerment and combating terrorism is highly recommended with credited importance, Huq said.
Bangladesh's economic growth possesses been suffering a sharp downturn following a outbreak of Covid-19, which has reversed years of economical development and has made Bangladesh's businesses heavily reliant on the EBA to survive, she also said.
"The EBA is critical for Bangladesh to market economic and societal improvement, and devote assets to achieve significant insurance policy objectives praised by the EU, including advancing human and labour rights."
Terminating the EBA without taking into account the vulnerabilities of the country and the detrimental effects it has on the economic climate and people runs unlike EU fundamental rules, the BGMEA chief said.
Huq said extending Bangladesh's usage of the EBA scheme was regular with the last practice of both EU and other key economies, which ensured the countries graduating from the LDC group had satisfactory time to changeover and adjust to the new trade landscape without experiencing any significant export losses.
A good Matin Chowdhury, a former president of the Bangladesh Textile Mills Association, said Bangladesh faced various challenges earlier.
For example, the textile and garment industry faced the Multi-Fibre Arrangement (MFA) in 2005 when the quota system eliminated. Following the MFA, Bangladesh started investing in backward linkage industries heavily and possessed overcome the difficulties, he said.
Chowdhury, as well the managing director of Malek Spinning Mills Ltd, needed checking foreign investment in the high-end textile and garment sector for getting technology knowhow and ensuring better market access in the post-LDC period.
"We also have to improve labour relations," he added.
Md Shahriar Alam, express minister for overseas affairs, said some different opportunities such as more overseas loans at affordable prices and more overseas direct investment would arrive to Bangladesh as graduation would increase the country's image.
The federal government has formed a high-powered team to formulate a solid strategy roadmap for the transition period and face challenges in the post-LDC period, he said.
Tuomo Poutiainen, region director of the International Labour Organisation, Naser Ezaz Bijoy, ceo of Normal Chartered Bangladesh, and Kazi Nabil Ahmed, an associate of the parliamentary position committee on the ministry of foreign affairs, also spoke.
