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Bangladesh is trying to establish itself as the next rising star in South Asia for foreign investment. The government has implemented a number of policy reforms designed to create a more open and competitive climate for private investment -- both foreign and local -- in order to accelerate its export basket.
The country was very quick to undertake major restructuring for establishing a market economy, with the major thrust coming from the private sector. It enjoys modest but steady economic growth. Its current development strategy is based on the premise that the creation and distribution of wealth occurs through the acceleration of growth driven by competitive market forces, with the government facilitating growth and making a clean break from the practices of a controlled economy where private investment is constrained.
With this end in view, the government has been gradually withdrawing its involvement in the industrial and infrastructure sectors and promoting private sector participation. It has moved speedily to translate its policy pronouncements into specific reforms. It has been consistently pursuing an open-door investment policy and playing a catalytic rather than a regulatory role.
Regulatory controls and constraints have been reduced to a minimum. The government has steadily liberalised its trade regime. Significant progress has been achieved in reducing non-tariff restrictions on trade, rationalising tariff rates and improving export incentives.
Against this backdrop, country's export potentials were being explored both by public and private sectors. Overall exports are making steady growth. Main export earnings come from ready-made garments (RMG) sector that has brought about significant change in the country's socio-economic forefront. However, due to recent phase-out of the textile quota regime, uncertainties loom large on the country's share of the RMG exports to the US and the European Union (EU).
The second and third performers in country's export regime are frozen food and leather goods sectors. Bangladesh is trying to diversify the export potentials of such sectors by improving quality of the products --up to the international standard. Overseas markets are now mainly concentrating on the quality and lead time. If these are diligently maintained, chances are remote that there will be no more export orders even after the expiry of the Multi-Fibre Arrangement (MFA) regime.
According to the Export Promotion Bureau (EPB), country's overall export performance during the last five months (July-November) is deemed satisfactory as it achieved 15.25 per cent growth over the previous fiscal. During the period, Bangladesh exported products and services worth US$ 3.42 billion against $2.97 billion during the corresponding period of the last fiscal.
Meanwhile, the commerce ministry blamed the consular offices in London, Tokyo and Paris for poor performances in achieving their export targets. Despite repeated warnings, their performances did not improve over the past six months.
A meeting held to review their performances was told that London, Paris and Tokyo missions lagged behind by 0.92 per cent, 3.50 per cent and 7.55 per cent respectively from the export targets set for the period between July and October.
If the performances of these consular offices do not improve the ministry will summon the consular chiefs to the country for explanations. The meeting decided to hold the ambassadors and high commissioners responsible for the failure of the consular offices from now on.
The chiefs of the consular offices have been instructed to send their performance reports through the ambassadors and high commissioners so that the commerce ministry can take appropriate action. It also decided to ask them to explore new export markets for the country.
The ministry is now examining the potentiality of establishing consular offices in around 20 new destinations including some African, West African, Central Asian and North American countries. Out of 46 missions, 25 have failed to achieve the export target during the same period. Berlin, Rome, Brussels, Dubai, Islamabad, Bangkok, Cairo, Singapore, Beijing, Kuala Lumpur, Kuwait, Katmandu, Nairobi, Yangon, Brunei, Amman and Colombo are the places where the consular offices have failed to achieve the target other than London, Paris and Tokyo.
The target of these countries was nearly US $ 1.58 billion for the period between July and October. But they achieved nearly $ 1.46 billion, down by 7.58 per cent. However, 21 consular offices performed well and achieved the target. Washington, Madrid, Ottawa, Ankara, Mascot, Hong Kong, Seoul, Moscow, Doha, New Delhi, Riyadh and Jakarta are among the destinations. Bangladesh exported nearly $ 1.36 billion against the target of $ 1.16 billion in those countries.
Country's Export processing Zones (EPZs) have been playing a vital role in boosting the country's exports. There is a widespread need for rapid industrialisation of the country. Since countrywide development of infrastructure is prohibitively expensive and structural reforms would need time on account of socio-economic and political realities, establishment of EPZs was considered as an important strategic tool for expediting the process of industrialisation and enhancing country's exports.
The country has achieved phenomenal success in the export sector through the EPZs. Annual growth rate of export earnings from the EPZs has been more than six times higher than that of the total national export earnings and more than four times higher than that of the total national export earnings from manufactured goods implying that export performance of the EPZs is much more impressive than others.
A study conducted by the Bangladesh Institute for Development Studies (BIDS) noted that the EPZs in Bangladesh have been instrumental in creating salutary direct benefits in terms of flow of foreign investment, employment generation, export and foreign exchange earnings and value added and limited indirect benefits in terms of technology and skill transfer and linkages.
The study found that the government's macro-economic policies have been well sustained in the EPZs operations. Low labour costs and labour-intensive activities are some of the factors that affect EPZ programme. A clear foreign investment policy regime, duty-free access to imported inputs and capital goods, rapid customs clearance, speedy response of BEPZA to investment applications and a liberalised foreign exchange regime are some of the factors that make the EPZ programme a success. Country's exports are getting significant boosts through these EPZs.
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