SAFTA, the regional free trade regime launched in early January and is scheduled to switch to financial accounting from July next, is poised to enhance Bangladesh's exports to intra-regional markets like India, reports BSS.
Trade officials told the news agency, that the secrets of the free trade regime lies in 'unborn trade' which is not visible now and may only come to the fore with gradual exploitation of the new business environment under down scale to zero tariff system.
The most important issue here is the entrepreneurial ability to take benefits of the new market opening. "You do not know where the entrepreneurial skill will click to bring you fortune," the officials said referring to the unborn trade.
Indian industry sources, meanwhile said, the strengthening of infrastructure and implementation of tariff reduction under SAFTA will lift the intra-regional trade from US$ 7 billion now to US$ 14 billion by 2010. The question is how Bangladesh will take its legitimate market share of it, he said.
Explaining the new trade outlook, one official said Bangladesh exported copper ware worth US$ 10 million last year, which never flashed out as one of the country's major export items in the past.
Some other trade indicators showed export earnings from plastic products last year stood at about US$ 7 million, from betel nuts US$ 4 million and soap and cosmetic products US$ 3 million.
According to the official, it is really difficult to say exactly, by running studies, how much increase in trade volume may take place in the post-SAFTA situation, except making some guess from country specific perspective.
What the free trade regime can do is to create a favourable situation and take players to exploit it to their mutual benefits in areas where the countries have competitive edge. The trade official said export earnings from India last year stood at US$ 144 million from over 60 million in the late '90s. These exports entered the Indian market despite huge tariff walls and non- tariff and para- tariff barriers.
With the launching of SAFTA, these barriers will be no more in place and the existing exportable and new export items are poised to find easier market access to slowly shore up the country's staggering trade imbalance with India.
Referring to prospects of ready-made garment exports to India from Bangladesh, the trade official said a total of eight million pieces can be exported to India under the SAFTA arrangement.
The source said it is not the quantity of RMG export that matters. The basic question is how much of this export ceiling at zero tariff can be effectively exploited by the country's exporters to the Indian market.
He said there are two ways Bangladesh can proceed.
One is that RMG exporters may enter into joint venture with Indian business houses to make sure somebody is putting money here and taking care of its marketing in India. The other dimension may be to put in the Indian market some new clothing brands originating from Bangladesh.
Marketing of brands can make easier sailing in the market than products going into market without a brand name, he argued.