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Experts and business leaders on Thursday said that absence of integrated strategy, low competitiveness of new products and lack of bilateral and regional negotiations in securing access to exports and foreign direct investments were the major constraints for Bangladesh to diversify its exports.
The government should extend long-term sector based policy support and a conducive environment for both the local and foreign investors in the country to expedite exports of potential sectors, they said at a seminar on ‘Export Diversification Imperative: Key Sectoral Opportunities and Policy Priorities for Bangladesh’ organised by Policy Exchange Bangladesh held at the Sonargaon Hotel in the city.
‘The necessity of export diversification has been discussed for long but the issue remains unresolved due to the lack of reforms in policy,’ Policy Research Institute executive director Ahsan H Mansur said.
Investment is important for diversification but there is a shortage of capital, he said.
Mansur said that Bangladesh’s savings to GDP ratio was lower than investment to GDP ratio.
‘FDI is very important for export diversification but Bangladesh cannot attract any flagship investment in the country whereas, only one flagship industry Samsung has changed the scenario of Vietnam,’ the economist said.
Mansur said that to remain competitive on the global market Bangladesh would have to invest $24 billion in artificial fibre and the country also needed $5 billion for recycling garment waste but resource constraint was a major problem.
He said that Indian IT companies had been making huge investments in Bangladesh and the government should formulate a policy to ensure joint venture industry to tap into the potential of IT sector.
The economists demanded serious reforms to National Board of Revenue to ensure diversification and FDI in the country.
PEB chairman M Masrur Reaz identified absence of integrated export strategy followed by sector development programme as the key constraint to diversifying the country’s export products.
He also said that the low competitiveness of new products other than readymade garment was another impediment to export diversification.
Masrur said that the competitiveness of the country’s potential non-RMG sectors remained low on the global market due to the lack of FDI, technology upgradation and skills.
He said that the lack of bilateral and regional trade negotiation for securing FDI and export access was another important weakness for Bangladesh.
‘As a least developed country, Bangladesh has usually secured GSP facilities in many of the countries and regions but we have failed to secure any special export market development concession through any bilateral and regional negotiation,’ Masrur said.
Masrur presented key note paper in the event identifying three high potential sectors—agribusiness, digital economy and synthetic footwear– based on its fast growing opportunity in both the domestic and the international market.
Commerce ministry senior secretary Tapan Kanti Ghosh said that ensuring diversification was an important issue and many factors remained involved with the process.
Private sector largely depended on the government but all should change the mindset that the government can provide policy support to remove barriers to business but not financial support, he said.
‘In many cases, export sectors demand cash incentive in the name of policy support,’ commerce secretary said.
It is difficult for the government to maintain balance as it has to protect the interest of domestic industry while at the same time it has to provide incentives to export sector, Tapan said.
‘We all are talking about market economy and at the same time we are expecting incentives from the government,’ commerce secretary said.
Regarding business environment, Tapan said that significant development took place in the last 10 years but still there were many dark areas.
‘I also feel doing business in Bangladesh is tough,’ the secretary added.
Wahid Sharif, president of Bangladesh Association of Contact Center and Outsourcing, said that the country’s IT sector had been unable to show its potential due to lack of required policy.
Foreign investors are not coming to Bangladesh due to the volatile policy as the policy is being changed every year, he said.
Wahid also said there was no specific law for the IT sector as labour law mainly focuses on manufacturing industries.
Nihad Kabir, chairperson of Business Initiative Leading Development, suggested for five to ten years long term policy supports and modernisation of NBR.
Shahadat Ullah, executive director of Maf Shoes Ltd, said that Bangladesh had huge potential to increase synthetic footwear exports as China, the largest exporter of such items, was shifting towards high-tech industry.
India is the second largest consumer of synthetic footwear and the country would reach out to Bangladesh due to shifting from China, he said.
Shahadat said that Bangladesh needed both short and long-term policy support to increase its non-leather footwear exports to $1.5 billion within two or three years from existing $450 million.
Asif Ibrahim, former president of Dhaka Chamber of Commerce and Industry, said that intellectual property rights were important for developing digital economy.
He suggested bringing changes in foreign exchange regulations to tap the potential of digital economy.
Former DCCI president Abul Kasem Khan suggested that the government should go for enhancing cooperation with regional partners for the export diversification and to attract FDI.
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