Diversify products to sustain in export market: ILO expert
FHM Humayan Kabir | Friday, 4 March 2011
FHM Humayan Kabir
Bangladesh should diversify its production base for its sustained export growth and create more employment opportunities as its current one product-based trade is very vulnerable, a trade expert of International Labour Organisation (ILO) said. David Cheong, a trade specialist of the ILO, in an interview with the FE in Dhaka said if the country does not diversify its products horizontally and upward, any shocks, like the last global financial meltdown, could affect its economy. "At this moment, ready-made garment (RMG) production should be diversified. The country has many items in garments sector. In addition, I will suggest manufacturing of high quality and diversified products," he said. The international trade expert said Bangladesh has so many items on garments sector but still there is possibility for expansion, he said adding, "Diversify horizontally, diversify upward. There is still some room for expansion." Praising the expansion of the shipbuilding industry, Mr Cheong, Chief Technical Advisor of the ILO, said it is a piece of welcome news for Bangladesh that it is developing a new arena of export-oriented manufacturing sector. "But as its backward industry is still poor, the country should focus on expansion of some linkage industries to get more benefit in international trade," he said. "As the country has no steel manufacturing industry, it can have some deals with the global steel manufacturers or joint-venture arrangements to supply quality steel to the emerging shipbuilding sector," the ILO expert said. "I always suggest Bangladesh to focus mainly on labour-intensive trade. As the readymade garment (RMG) sector is still largely labour-intensive, its expansion and diversification will be wise to create more employment opportunities," he said. "We are not suggesting to remain limited to the RMG sector. But we suggest expansion of this sector and product diversification," said Mr Cheong, also a former teacher on International Economics of the Johns Hopkins University. The trade expert said ILO is now trying to assess Bangladesh's employment scenario, based on its present trade policy. "After completing the study, we will suggest some policy guidelines to the government on how Bangladesh can undertake an employment-intensive trade policy", he said. "We will suggest that the issues concerning the best trade policy and, which the competitive sector is, will require careful scrutiny before further trade liberalisation is made. Also what the better adjustment mechanism will be after the liberalisation to protect the domestic employment has to be examined" he said. "Have a look at the furniture sector. This sector of Bangladesh is less competitive compared to that of Indonesia. If our study finds Bangladesh is less competitive with its existing capacity, we will suggest how it can flourish further and be competitive," he said. "The furniture-makers should produce something special, something different compared to those of other countries to sustain themselves in business and continue expanding or retaining the employment opportunities", Mr Cheong said. "Bangladesh's tariff structure is still higher compared to those of some other countries. But there are lots of products here with zero tariff," he said. "We will try to suggest some policy guidelines about which products have the scope to reduce tariff and what will happen after the tariff reduction", he added. Mr Cheong said: Bangladesh is trying to go for a free trade arrangement with India. "It has to be examined whether Bangladesh will be benefited if India reduces tariff on some imports. Our observation is that RMG trade will not increase very much as India also produces the item," the trade expert said. "Besides, in India there is local tax, in addition to the national taxes. If Bangladesh exports garment products to a particular state in India, these items will be subject to payment of extra tariff to the local government because of separate tariff structure by the particular state, in addition to the national tariff," he said. But Bangladesh could be benefited from the fisheries products if such items are exported to India, the trade expert said quoting from his study. Bangladesh should have given more emphasis on the international service trade under Mode-4 negotiations at the World Trade Organisation (WTO) as it earns more than US$ 10 billion from its expatriate workers, he said. The developed countries should reduce barriers for ensuring movement of labourers smoothly to any country, he said adding ILO is always aware of the rights of the labourers.
Bangladesh should diversify its production base for its sustained export growth and create more employment opportunities as its current one product-based trade is very vulnerable, a trade expert of International Labour Organisation (ILO) said. David Cheong, a trade specialist of the ILO, in an interview with the FE in Dhaka said if the country does not diversify its products horizontally and upward, any shocks, like the last global financial meltdown, could affect its economy. "At this moment, ready-made garment (RMG) production should be diversified. The country has many items in garments sector. In addition, I will suggest manufacturing of high quality and diversified products," he said. The international trade expert said Bangladesh has so many items on garments sector but still there is possibility for expansion, he said adding, "Diversify horizontally, diversify upward. There is still some room for expansion." Praising the expansion of the shipbuilding industry, Mr Cheong, Chief Technical Advisor of the ILO, said it is a piece of welcome news for Bangladesh that it is developing a new arena of export-oriented manufacturing sector. "But as its backward industry is still poor, the country should focus on expansion of some linkage industries to get more benefit in international trade," he said. "As the country has no steel manufacturing industry, it can have some deals with the global steel manufacturers or joint-venture arrangements to supply quality steel to the emerging shipbuilding sector," the ILO expert said. "I always suggest Bangladesh to focus mainly on labour-intensive trade. As the readymade garment (RMG) sector is still largely labour-intensive, its expansion and diversification will be wise to create more employment opportunities," he said. "We are not suggesting to remain limited to the RMG sector. But we suggest expansion of this sector and product diversification," said Mr Cheong, also a former teacher on International Economics of the Johns Hopkins University. The trade expert said ILO is now trying to assess Bangladesh's employment scenario, based on its present trade policy. "After completing the study, we will suggest some policy guidelines to the government on how Bangladesh can undertake an employment-intensive trade policy", he said. "We will suggest that the issues concerning the best trade policy and, which the competitive sector is, will require careful scrutiny before further trade liberalisation is made. Also what the better adjustment mechanism will be after the liberalisation to protect the domestic employment has to be examined" he said. "Have a look at the furniture sector. This sector of Bangladesh is less competitive compared to that of Indonesia. If our study finds Bangladesh is less competitive with its existing capacity, we will suggest how it can flourish further and be competitive," he said. "The furniture-makers should produce something special, something different compared to those of other countries to sustain themselves in business and continue expanding or retaining the employment opportunities", Mr Cheong said. "Bangladesh's tariff structure is still higher compared to those of some other countries. But there are lots of products here with zero tariff," he said. "We will try to suggest some policy guidelines about which products have the scope to reduce tariff and what will happen after the tariff reduction", he added. Mr Cheong said: Bangladesh is trying to go for a free trade arrangement with India. "It has to be examined whether Bangladesh will be benefited if India reduces tariff on some imports. Our observation is that RMG trade will not increase very much as India also produces the item," the trade expert said. "Besides, in India there is local tax, in addition to the national taxes. If Bangladesh exports garment products to a particular state in India, these items will be subject to payment of extra tariff to the local government because of separate tariff structure by the particular state, in addition to the national tariff," he said. But Bangladesh could be benefited from the fisheries products if such items are exported to India, the trade expert said quoting from his study. Bangladesh should have given more emphasis on the international service trade under Mode-4 negotiations at the World Trade Organisation (WTO) as it earns more than US$ 10 billion from its expatriate workers, he said. The developed countries should reduce barriers for ensuring movement of labourers smoothly to any country, he said adding ILO is always aware of the rights of the labourers.