Bangladesh needs to diversify its export basket first to benefit from the possible Free Trade Agreement (FTA) with Malaysia, said an economist and business leaders.
One of the business leaders think signing an FTA with ‘certain restrictions’ instead of ‘large scale’ ones will bring in more benefits for Bangladesh as it has currently ‘limited’ products to export to Malaysian market.
The government is now working on having bilateral FTAs with a number of countries, including Malaysia, in an effort to help boost its exports.
FTA is a legally-binding agreement between two or more countries to reduce or eliminate barriers to trade, and facilitate the cross-border movement of goods and services between or among the territories of the parties.
“It (FTA) creates an opportunity, but the benefits won’t come automatically. There has to be a market study to diversify the export basket,” economist Dr Mustafa K Mujeri told UNB.
He said Malaysia has a prospective commodity market and it can import from Bangladesh instead of other countries if Bangladeshi exporters can give them an advantage in terms of quality and prices.
“We need to target their import basket and penetrate their (Malaysian) commodity market,” said Dr Mujeri, also the Director General of the Bangladesh Institute of Development Studies (BIDS).
Bangladesh’s export basket is not that much diversified right now. “So, export diversification is a must to harness the opportunity properly,” he said.
Supporting FTA with Malaysia, Syed Moazzam Hossain, former President of Bangladesh-Malaysia Chamber of Commerce and Industry (BMCCI), said the FTA with Malaysia should not be signed on a large scale.
“We won’t be benefited that much if FTA is signed in a wider way. It’s the right time to sign FTA but it needs to be signed with certain restrictions,” Hossain said adding that it will not bring that much benefits without having enough products in the export basket.
He, however, said there are some ‘highly-taxed’ products like ceramics and others that go to the Malaysian market, and FTA with Malaysia can bring in benefits for Bangladesh in that case.
Responding to a question, the business leader said Bangladesh’s export to Malaysia could be boosted if products as per their demand are produced in Bangladesh. “But are we ready to produce such products?”
He said manpower export to Malaysia should be tagged with FTA so that the problems related to this can be resolved.
Former BMCCI president Syed Nurul Islam said, “Personally, I’m not in favour of signing FTA with Malaysia right now.”
Nurul Islam, also the Chief Executive Officer of Well Group of Industries, explained his stance saying Bangladesh doesn’t have enough products to send Malaysia right now. “We need to ensure a win-win situation.”
Meanwhile, Malaysia is an edible and fossil oil-producing country apart from its strong footing in electronics, petrochemical and light engineering products, he added.
Nurul Islam also supported tagging manpower export with the FTA if it is signed ultimately.
An official at the Commerce Ministry said the government has targeted countries like Argentina, Fiji, Macedonia, Malaysia, Mali, Mexico, Nigeria, Sri Lanka Turkey and Venezuela for signing FTAs in the coming days.
The government is also interested to have FTAs with the African and South American countries where Bangladesh does not enjoy duty-free market access.
According to BMCCI data, Bangladesh exports commodities such as camera parts, knitwear, home textile, crabs, woven garments, frozen fish, shrimps, bags, other manufactured goods, bicycle, shop towels, pharmaceuticals, textile fabrics, terry towels, jute yarn and twine, leather, cigarettes, dry food, vegetables, potato, handicrafts, printed materials, ceramic tableware, cap, indicator lamps, raw jute, leather bags and purses, electric wires, melamine tableware, other primary commodities, salted and dehydrated fish, shark fins and fish maws, furnace oil, cosmetics, jute carpet, luggage and fashion goods, tobacco and footwear.
Malaysia’s export items to Bangladesh are palm oil, textiles and clothing, chemicals and chemical products, electrical and electronic products, non-metallic mineral products, iron and steel products, manufactures of metal, manufactures of plastics, rubber products, machinery, appliances and parts, wood products, scientific equipment, processed food, paper and pulp products and transport equipment.
Malaysian officials have long been saying that there must be a demand for Bangladeshi products and Bangladesh must create a demand for its products in Malaysia.
Source: UNBConnect
