EU offer to Myanmar a threat to local exporters

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Jasim Khan
The European Union (EU) move to grant Myanmar goods duty-free and quota-free market access rang the alarm bell for the local exporters, as they apprehend a long term effect of it.
The European market access could pose a serious threat to Bangladesh's emergence as a major exporting nation. Because, the facility could transform the once pariah nation into a magnet for labour-intensive factories, they feared.
The local exporters do not see any immediate threat from Myanmar as the southeastern neighbour still lacks the kind of logistics that Bangladesh has built up over the decades, but they're worried the European Union's latest gesture could dent their future prospect in a bigger way.
They expressed their fear a day after the European Commission, the secretariat of the EU, on Monday offered to reinstate the trade preference facility for Myanmar to help support the country's political reforms.
If reinstated, the facility would ensure duty-free and quota-free access to the 27-nation EU market for all products from Myanmar, except arms and ammunition, the commission said. Under the facility Myanmar would be brought back under the EU's 'Everything But Arms' preferential trade regime.
Leading exporters of garments, frozen foods and leather products said Myanmar blessed with the abundant cheap labour and land, low electricity price and huge gas reserves could eat into the advantages that Bangladesh has been enjoying in the EU market over the last decade.
"Because of the duty-free and quota-free access, our exports to EU have been growing at a double-digit rate since the late 1990s," said Abdus Salam Murshedi, a leading apparel exporter.
"But if EU offers the same trade preferences to Myanmar, they will need just two-three years to emerge as a major competitor of Bangladesh. They have unlimited land, cheap power and labour and are sitting on one of Asia's largest gas reserves. All they need is foreign investment," he said.
Murshedi said Myanmar already wooed major investors from Japan, China and Thailand, while others waiting in the wings would rush to set up labour-intensive factories in the nominally-democratic country.
"I won't be surprised if in ten years Myanmar overtakes us in garment export," he said, adding Bangladesh's growth was already facing a serious setback due to the lack of land, paltry foreign investments and a deeply-entrenched energy crisis.
"We are aware about Myanmar's market access to EU. We are not much worried about granting the facility. If our government can solve the gas and electricity problems, it will take a long time for Myanmar's apparel sector to compete with us," Md Shafiul Islam Mohiuddin, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told the FE Tuesday.
The country's apparel sector needs low bank interest rates, dedicated road networks connecting ports and training for workers to retain its competitive edge and do better further.
Echoing Mohiuddin's view, knitwear sector leader Mohammad Hatem said the country's apparel sector was trying to find new export destinations instead of Europe due to their recession.
"Europe is no more a lucrative place for exports, because the buyers are arguing more and more for cheap products," Hatem said.
On the other hand, frozen foods and leather goods exporters are worried over the latest development.
"We will be hit hard if Myanmar gets back the duty and quota-free market access to Europe. They have vast land for supplying quality shrimp at a lower cost,' Shahnewas, president of Bangladesh Frozen Foods Exporters Association (BFFEA), said.
He said the sector was already facing a stiff competition with Vietnam, Thailand and India.
If Myanmar comes forward with their products at a cheaper rate, Bangladesh may face a tough situation in the European market.
Bangladesh Finished Leather and Leather Goods Association's former president Harun-ur-Rashid said the sector was already facing tough time in Europe due to a drastic price fall. Though Myanmar would take four to five years to develop their infrastructure, they would be one of the toughest competitors for Bangladesh in terms of leather products, he observed.
In 1997, Myanmar was suspended from the GSP scheme as a result of the country's serious and systematic violations of core international conventions on forced labour.
Apart from the EU, in June this year, the International Labour Organisation (ILO) also proposed withdrawal of restrictions on the country.
Myanmar's exports to the EU accounted for Euro 169 million in 2011- approximately 3 per cent of the country's total exports to the world, and 0.01 per cent of the EU's total imports.
The economy of Myanmar) is one of the least developed in the world, suffering from decades of stagnation, mismanagement and isolation.
Myanmar's GDP stands at $42.953 billion and grows at an average rate of 2.9 per cent annually - the lowest rate of economic growth in the Greater Mekong Sub-region.
In recent years, both China and India have attempted to strengthen ties with Myanmar.