International and regional trade is key to faster growth for Bangladesh, says new World Bank report
DHAKA, Oct. 21 (NsNewsWire) — International and regional trade, especially with South Asian and East Asian neighbors is critical for Bangladesh to create more and better jobs for the 2 million youths entering the labor force every year, says a new ‘Diagnostic Trade Integration Study’ launched today by the World Bank. The diagnostic provides a roadmap for strengthening Bangladesh’s trade competitiveness and developing a policy regime that takes full advantage of international markets.
Bangladesh’s exports have doubled their world market share between 1995 and 2012, largely due to the strong export performance in the ready-made garments sector. Since 2009, Bangladesh has become the world’s second largest exporter of garments, after China. There is, however, ample room to expand the RMG sector and to diversify to other exports. For example, if Bangladesh can capture 20 percent of China’s current garment exports, the country’s total exports would more than double, increasing by US$29 billion, and will create 5.4 million new jobs and 13.5 million new indirect jobs.
“To accelerate GDP growth, Bangladesh needs higher volumes of exports to larger and richer markets, beyond its relatively smaller domestic market,” said Johannes Zutt, Country Director, World Bank Bangladesh. “Bangladeshi firms have succeeded in garments, and they can also succeed in other industries with demonstrative competiveness such as jute-based industries, footwear, information and communications technology, shipbuilding, pharmaceuticals, light industry such as bicycles and others.”
The study identifies a number of reform initiatives in high priority areas for enhancing the country’s trade capacity and competitiveness. To accelerate export growth, Bangladesh needs to focus on diversifying regional and global markets, building a wider export base, improving worker and consumer welfare, and strengthening institutional capacity while sustaining sound economic fundamentals. The report also calls for establishing an inter-ministerial committee to help Bangladeshi exporters to succeed in a globally competitive environment.
Foreign direct investment can play a much larger role in many sectors, especially those with technology upgrading needs, such as pharmaceuticals, bicycles, and shipbuilding. Bangladesh will need to expand its linkages with neighboring countries such as China and India as well as other Asian countries like Japan and South Korea, to access underexploited markets and attract greater Foreign Direct Investment. For this, the country needs to address critical bottlenecks such as the availability of serviced land, uninterrupted power supply, congestion Chittagong port, the Dhaka-Chittagong road and rail corridor, customs clearances at land and sea borders, and ease of access to finance.
“A trade policy regime that is more neutral between exports and production for the domestic market, would support the development of new export sectors and small and medium firms,” said Sanjay Kathuria, Lead Economist, Trade and Competitiveness Global Practice, World Bank, and co-author of the report.
The country also needs to prepare its youth with solid foundational education and vocational skills needed to be productive in export-oriented industry. Bangladesh needs to act urgently to tap into regional and global trade as well as FDI to boost its economy and reduce poverty.