Though the existing market facility will remain unhurt for the next two years, Bangladesh’s export to the United Kingdom may face pressure ‘to some extent’ as Britain voted to leave the European Union (EU).
“It’s a comfort zone for us that there’ll be no change in terms of market facilities in the next two year,” economist Dr Khondaker Golam Moazzem told UNB on Friday.
Dr Moazzem, however, thinks Bangladesh’s export may fall under a bit pressure due to internal changes in Britain although market facilities will continue as usual.
“We’ve been witnessing a good number of changes within Britain (financial market) including shares and pound plunged on leave vote,” explained the additional research director of the Centre for Policy Dialogue (CPD).
The London stock market plunged in the wake of the UK’s referendum vote to leave the EU. Banks were also hard hit, with Barclays and RBS falling about 30 percent.
Earlier, the pound fell dramatically as the referendum outcome emerged. At one stage, it hit $1.3236, a fall of more than 10 percent and a low not seen since 1985.
Dr Moazzem said if the ‘volatility’ continues in Britain’s internal economy, such situation may discourage import in Britain. “In that case, there might be an impact on Bangladesh’s export.”
Former caretaker government adviser Dr AB Mirza Azizul Islam also said Bangladesh’s export might be affected to some extent.
“If the value of both British pound and Euro falls, there’ll be a negative impact on Bangladesh’s export,” he told UNB.
Bangladesh is now enjoying full duty- and quota-free access to the EU for all of their exports with the exception of arms and armaments under EU’s ‘Everything but Arms’ arrangement.
Since the UK left the EU, Bangladesh will have to renegotiate with the UK after two years. The decision of leaving the EU will come into effect after 2018.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is also monitoring the evolving situation in the UK.
“It seems that our export to Bangladesh’s big market — the UK will be under pressure. We seek government support so that we can maintain smooth export,” BGMEA Vice President (Finance) Mohammed Nasir told the news agency.
He also urged the government to incorporate their proposals in the proposed budget to keep the export sector vibrant, especially keeping the tax at source on export at 0.60 percent instead of the proposed 1.5 percent.
Explaining the changes in the UK, CPD economist Moazzem said the government should monitor the changes being taken place in Britain. “We need to see how Britain’s economy reacts in the coming days.”
He also thinks that there might be the beginning of change a bit in British companies’ fresh investment in Bangladesh and the existing investment. “Things will depend on how British companies re-stratise.”
On a positive note, the economist, however, said Governor of the Bank of England Mark Carney, following the EU referendum result, kept ready financial package for managing the ‘volatility’.
The total export and import volumes between Bangladesh and the UK during the year 2014-15 was US$ 3205.45 million and US$ 330.72 million respectively, according to available data.
In a statement, Mark Carney said the people of the United Kingdom have voted to leave the European Union and inevitably, there will be a period of uncertainty and adjustment following this result.
“There will be no initial change in the way our people can travel, in the way our goods can move or the way our services can be sold,” he said.
UK banks have raised over £130bn of capital, and now have more than £600bn of high quality liquid assets.
Source: Prothom Alo
