Dhaka decides not to open its service sector for now

Bangladesh has decided not to open up its service sector immediately for the South Asian countries after examining the pros and cons of the more. The Ministry of Commerce (MoC) has decided not to commit any service sub-sector to the SAARC member countries in the upcoming expert group meeting on the SAARC Agreement on Trade in Services, to be held in Kathmandu from March 28 to March 31, sources said. "We are not opening up our service sector right now for the SAARC member countries, as we are not convinced yet that the move would bring much benefit for us," a high official in the MoC said. "The local service sector, which is yet to flourish and become competitive, would be seriously affected, if the same is opened to outsiders now," he added. He said the preliminary assessment, conducted on the strength and weaknesses of the service sector by MoC last year, failed to project a concrete picture on the issue. As a result, the MoC has recently asked the Bangladesh Tariff Commission (BTC) to conduct another study in this regard, he added. The study will focus how the country would be benefited after opening up its service sector for FDI, and how far the local investors would be interested in investing in the service industries of other SAARC countries. Besides, the study will analyse the potential threats to the local service industry in a restriction-free environment for foreign investment, sources said. However, a top trade official said Bangladesh cannot remain isolated from other countries for long, but, at the same time, it needs to protect its own interest. "We have to open the service sector later, as Bangladesh is a signatory to the SAARC Agreement on Trade in Services. Besides, the country is going to sign another agreement on trade in services with the APTA (Asia Pacific Trade Agreement) member countries soon," he said. "The taking of some more time on the issue will give the policymakers a breathing space for making right decisions, and also prepare the local businessmen for future competition," the official added. Meanwhile, India has sought to enter some major areas of Bangladesh service sector, including banking, insurance, construction and health. The areas India wants to enter include accounting, audit, urban planning, medical and dental services, advertising, electronic media, rail transport, pipeline transport, construction and related engineering services, education, environment and financial sector. The eight member countries of the South Asian Association for Regional Cooperation (SAARC) inked the deal on trade in services in 2010. The agreement will follow the formula of positive list approach in opening up markets to each other for trade in services. It will be contrary to the negative list method, now being practiced for trade in goods under the South Asian Free Trade Area (SAFTA) agreement, a trade official said. Bangladesh, Afghanistan, Bhutan, Nepal, India, Sri Lanka, Pakistan and the Maldives are the members of the SAARC. Enhancing investment in service sector among the countries and increasing local competitiveness and expertise in service-oriented businesses are some of the factors that inspired the Bangladesh policymakers to sign the deals along with other South Asian economies, trade officials said. However, an official at the MoC said the government must be careful at the time of negotiations for opening up the service sector. He said a liberal approach in opening up the country's service sector might affect the local players, including physicians, advertising firms, radios and televisions, rail transport authority, educational services, banks and insurance companies. He also said the granting of wholesale opportunity to the Indian service sector to enter Bangladesh would pose a serious threat to domestic operators concerned. The signatories to the agreement are not allowed to make any discrimination against any of the contracting states in terms of doing or allowing business, while they will avoid causing unnecessary damage to the commercial, economic and financial interests of other contracting states, the agreement said. MoC officials said the foreign investment to be made in the areas of service sector will get 'national treatment' as per the regulations of the World Trade Organisation (WTO).