The government is set to shelve the move to sign Free Trade Agreement (FTA) with Malaysia, officials said.
"A feasibility study has found that the FTA in no way will be beneficial for us. Rather we will incur a significant revenue loss if the deal is signed. So, we are thinking over putting it on hold," a senior official at the ministry of commerce (MoC) told the FE.
He said the MoC had asked the Bangladesh Tariff Commission (BTC) to study the pros and cons of striking the deal with Malaysia. "The BTC study shows the deal won't bring any benefit for us rather deny us a good amount of revenue."
The official said there are provisions of signing FTA on goods, investment, and services sector. In fiscal year 2014-15 the country's revenue earnings on import from Malaysia stood at US$375 million. It is almost 2.0 per cent of the total annual import revenue of the country.
"If the FTA on goods is signed, we will lose such a big amount, or more, every year," he said, adding that Bangladesh's export to Malaysia is not significant and has very little chance to grow with such a small product basket.
He also said nearly 30 per cent of country's total revenue earnings come from customs duty which will receive a big blow if the duty-free market access was granted for Malaysian products.
The official said as a least developed country Bangladesh is still enjoying tariff preferences in the newly industrialised country (NIC). "If we sign an FTA deal with Malaysia, we also have to offer them tariff cut, leading to significant revenue loss."
He mentioned that Bangladesh early this year signed an agreement for sending 1.5 million labourers to Malaysia. Through the deal Malaysia has opened its all sectors like services, agriculture, construction, housemaid and plantation for Bangladeshi jobseekers.
"Though the deal is yet to come into force, sooner or later it will be effective and we will be able to send labourers under this government-to- government-plus scheme," he said, adding it is clear that there is no need of signing an FTA on services sector.
The official, citing BTC study, said already there are some investments from Malaysia in Bangladesh. "One can't make prediction how much investment will come from there if the FTA is signed with Malaysia. When the country can't provide adequate energy and infrastructural facilities to local entrepreneurs, there is no rationale for opening our market in the name of FTA to get investment from there," he noted.
Bangladesh and Malaysia have already exchanged templates on FTA deal. Dhaka had opted to sign the deal after Kuala Lumpur in 2007 banned recruitment of workers from Bangladesh.
Last November, Malaysian Minister for International Trade and Industry Dato Sri Mustapa Mohamed in a letter to commerce minister Tofail Ahmed reminded that during the Malaysia-Bangladesh joint trade commission meeting in May, both the countries agreed to commence negotiations to expedite move to sign the proposed FTA deal.
At the same time, Malaysia also nominated a senior director for Multilateral Trade Policy and Negotiations Division as chief negotiator to open FTA talks with Bangladesh. The Malaysian minister also expressed interest in hosting the first negotiation meeting in Kuala Lumpur and requested Mr Ahmed to nominate a chief negotiator to kick-start the talks.
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