‘BD fails to exploit duty-free access to China’
Bangladesh can't reap benefits of duty-free market access fully in China in the absence of its aggressive export-promotion measures. In addition, the country's large concentration on RMG items and failure to meet the demand for high quality products serve as major drawbacks to its export success i
‘BD fails to exploit duty-free access to China’
FE REPORT | Published: June 09, 2022 09:55:44 | Updated: June 09, 2022 11:12:55
Bangladesh can't reap benefits of duty-free market access fully in China in the absence of its aggressive export-promotion measures.
In addition, the country's large concentration on RMG items and failure to meet the demand for high quality products serve as major drawbacks to its export success in the Chinese market.
Other obstacles include Bangladesh's less integration with retailers and lack of participation in marketing, sales and after-sale services, cultural and language barriers, and China's stringent labelling and packaging regulations.
Bangladesh, however, can earn additional US$27 billion from exporting quality and diversified goods to China by raising its market share to 1.0 per cent in the Chinese market.
But raising the share is not possible depending only on readymade garment items as China imports only $10 billion worth of garment items.
Therefore, Bangladesh should adopt aggressive export promotion strategies targeting the Chinese market that include attracting Chinese market oriented investment, diversifying exportable products and signing trade agreements between the two countries.
The observations and suggestions came at a seminar on 'Making the Most of Market Access in China: What Needs to be Done?' Bangladesh China Chamber of Commerce and Industry (BCCCI) and the Research and Policy Integration for Development (RAPID) jointly organised the event at the Pan Pacific Sonargaon in Dhaka on Wednesday.
Commerce Minister Tipu Munshi attended the seminar as the chief guest, with the BCCCI President Gazi Golam Murtoza in the chair.
The minister said there was no alternative to increasing exports, in order to reduce the huge trade gap between Bangladesh and China.
Terming the Chinese market a huge one, Mr Munshi expressed hope that China would extend its duty-free facility until 2029.
"We can take trade benefits by signing FTA with different countries and a joint working committee is working in this regard with China," he noted.
Bangladesh's share in total Chinese goods import is a minuscule 0.04 per cent, said RAPID Chairman DR MA Razzaque.
"Raising this share to just 1 per cent could lead to $27 billion worth of additional exports for Bangladesh," he observed while presenting his keynote paper.
Since 2021, China has provided Bangladesh duty-free market access in almost 98 per cent of tariff lines. Prior to that, Bangladesh used to get similar market access in 61 per cent of Chinese tariff lines.
Explaining the reason why Bangladesh's export to China is not increasing, Dr Razzaque said due to the small Chinese apparel import market of about $10 billion, it was difficult for Bangladesh to achieve export success in this market based on clothing items only.
The $330 billion Chinese domestic market is catered by highly competitive domestic manufacturers, he added.
While Bangladesh's export is concentrated on RMGs, China mainly imports electrical machinery and equipment (25 per cent of total imports), mineral fuels (15 per cent), ores, slag and ash (10 per cent), mechanical appliances (9 per cent), plastics (3 per cent), mentioned Dr Razzaque, suggesting that Bangladesh diversify its products beyond RMG.
China is leading in the area of science and technology and it imports annually worth around $2.7 trillion - so, it is a huge market, he noted.
Bangladesh's exports to China have seen setbacks coinciding with the Covid-19 outbreak; after reaching a peak of $950 million, exports to China fell to $680 million in FY21, he said.
With LDC graduation in 2026, the duty free benefits will end, he said, recommending signing a free trade agreement with China.
Joining the Regional Comprehensive Economic Partnership (RCEP) can be an alternative to an FTA with China as RCEP, being the largest trade block, can help Bangladesh promote export and welfare by trade and investment facilitation, Dr Razzaque noted.
Speaking at the event, Chinese Ambassador to Bangladesh Li Jiming said the trade volume of the two countries reached $25 billion, though the trade imbalance was a concern for Bangladesh.
"Trade imbalance is one of the problems and it is important for us to address it. That's why we are gathering here to find out what we need to do," he said, adding that Bangladesh was ready in many ways to increase its export to China.
To get the benefit of duty-free market access, Bangladesh needs to encourage more Chinese investment targeting the China market, he recommended.
Emphasising the need for signing FTA between the two countries, he said FTA was not only related to trade and business but also related to investment, tourism, education and so on.
He hoped that Bangladesh would be a member of RCEP in future.
The envoy also sought cooperation from the Bangladesh government and business community in setting up a Chinese commercial bank in Dhaka for deeper financial cooperation.
Export Promotion Bureau Vice Chairman AHM Ahsan spoke at the seminar, moderated by RAPID Executive Director Dr M Abu Eusuf.
Munni_fe@yahoo.com
