Speakers during a discussion at the “Conference on Recommendations by the Taskforce on Restrategising the Economy,” organised by the Centre for Policy Dialogue (CPD) on 24 February. Photo: TBS
Economists have predicted that Bangladesh will encounter major obstacles in its export-driven development after leaving the least developed nation (LDC) category. They have also stated that the country cannot advance to the next stage until its high import tariff structure is reduced. They did however issue a warning that import liberalization shouldn’t happen before institutional capacity is strengthened. They said these things today February 24, at a discussion at the Centre for Policy Dialogue’s (CPD) “Conference on Recommendations by the Taskforce on Restrategising the Economy.”
Dr. Mustafizur Rahman, Distinguished Fellow at CPD, cited Singapore and Haiti as two opposing instances of import liberalization. He said that “While Singapore has strong export and institutional capacity, making liberal imports beneficial to its economy, Haiti presents the opposite scenario.” He cautioned that there are serious institutional capacity shortages in Bangladesh in areas like policymaking, revenue collecting, and implementation. “Without addressing these weaknesses, import liberalisation could be risky.”
Additionally, Dr. Rahman pointed out that although the average import tax in the US and Europe is less than 4%, they impose 11–18% on imports of clothing. Bangladesh needs to concentrate on bolstering its own export strategy because it isn’t exporting high-value goods with reduced tariffs to these markets. “Bangladesh lacks a coordinated and effective strategy for industrialization and attracting investment,” said Dr. Selim Raihan, executive director of the South Asian Network on Economic Modelling (Sanem).
He claimed that one of the main causes of the inability to fully realize the potential of the nation is fragmented policies and initiatives. Former Commerce Minister Amir Khosru Mahmud Chowdhury emphasized the need for a significant economic rebalancing during the event. He emphasized that the government had long focused solely on money and had undertaken numerous incorrect policies. He emphasized that rather than coming from VAT and other regulatory fees, revenue should come from significant enterprises in a thriving private sector. Additionally, he cautioned that export incentives would not be able to propel exports past a certain threshold in the absence of import liberalization.
During the previous government’s time, the macroeconomy was under a lot of strain due to extensive corruption and money laundering in the banking industry and infrastructure development, according to Commerce Adviser Sheikh Bashiruddin. He went on to say that increasing labor productivity, boosting logistical efficiency, and guaranteeing a steady supply of energy at reasonable rates are now the biggest obstacles. The Ready-Made Garment (RMG) industry in Bangladesh has profited from duty-free access to international markets, but this will no longer be available after LDC graduation, according to economist Dr. Abdur Razzaq, head of the Research and Policy Integration for Development (Rapid). He emphasized that in order to preserve this benefit after December 2027, negotiations with the European Union are urgently needed.
In addition, he advocated for quick action to conclude an FTA with Japan and criticized Bangladesh for failing to create bilateral free trade agreements. Dr. Razzaq emphasized that exports and remittances need to be reconsidered in order to lessen the strain on the macroeconomy. He noted that among countries with a dominant population of 18-20-year-olds, only Ethiopia and Pakistan have lower exports than Bangladesh. Companies that produce goods for the local market currently receive 30–40% of government subsidies. Furthermore, high import taxes account for 30% of revenue, he claimed.
According to the economist, 75% of Bangladesh’s total exports currently rely on LDC privileges, which will expire once graduation is complete. Dr. Razzaq emphasized that export subsidies will no longer be available after graduation. He also noted that there haven’t been any major changes to trade policy since the 1990s, and that careful changes and action are desperately needed.
Source: The Business Standard
