Services sector: UNCTAD suggests imprpovement in five areas

Services sector in Bangladesh is growing day by day. Currently, half of the country's Gross Domestic Product (GDP) comes from the services sector.  Economics literature categorises services sector as the third of the three parts of the economy. The primary sector generally covers farming, mining and agriculture business activities -- although in Bangladesh, mining is considered a component of secondary sector that covers manufacturing and business activities for producing tangible products. The third sector is services, also known as tertiary sector producing intangible goods. This sector actually covers the largest portion of the economy.  
As the services sector is growing, so the trade in services. According to the World Trade Organisation (WTO) data available in the organisation's World Trade Statistical Review 2016, global exports of the commercial services stood at $4.68 trillion last year. Developing countries accounted for 26 per cent of the total trade in the commercial services.
Trade in commercial services usually covers three modes of services. These are: mode one (cross-border trade), mode two (consumption abroad) and mode three (commercial presence). So, services trade data is incomplete to some extent. Foreign Affiliates Trade in Services (FATS) statistics usually measures the 'commercial presence abroad of service suppliers through affiliates in foreign markets.' So, the picture of mode three is available from FATS statistics which is again closely related to the statistics on foreign direct investment (FDI).
Nevertheless, trade in services, commercial services to be precise, has been increasingly important for the developing and Least Developed Countries (LDCs), including Bangladesh. The country's earnings from export in services stood at $1.68 billion last year which was $1.02 billion in 2007. On the other hand, payments on import of services rose from $2.30 billion in 2006 to $8.4 billion in 2015.  These data in the WTO statistical review do not fully tally with the Balance of Payment (BoP) statistics prepared by the Bangladesh Bank (Table-1). Again, there is no authentic data on FATS in Bangladesh as well as many other LDCs.
Thus, data deficiency and discrepancy become a major challenge for the developing countries and LDCs in their services trade. Moreover, appropriate policy planning to streamline the export-oriented services sector is another big challenge to tap the growing market of services across the world.
UNCTAD REVIEW: Against this backdrop, the Bangladesh government asked help from the United Nation Conference on Trade and Development (UNCTAD).  The UN body released last month a two-part document, named 'Services Policy Review of Bangladesh'.  It analyses five priority segments in services. These are: Information and Communication Technology (ICT) and ICT; tourism; accounting and auditing; architecture and engineering; and nursing and midwifery.  
The review has identified 'ICT service has the brightest immediate prospects' in the country. Among the four other professional services, 'best bets for exports are accountants and engineers.' The review stressed on building the domestic supply and delivery of the services of nurses and midwives on a priority basis.
 ICT sector is really growing at a phenomenal pace where young talents are contributing despite barriers at both policy level and ground infrastructure. The Digital Bangladesh initiative is based on the development and expansion of the ICT sector. The Seventh Five Year Plan (7FYP) says: "The strong progress with the implementation of the Digital Bangladesh Initiative during the Sixth Plan provides a solid foundation on which the Seventh Plan can build forward. Notwithstanding past progress, the road ahead is immense."
The 7FYP document has outlined a detailed strategic plan for boosting the ICT sector. The UNCTAD review may supplement the medium-term plan. The review rightly says: "Digital Bangladesh includes clearly defined targets. The implementation of these activities would bring the country a long way towards achieving the Digital Bangladesh vision. A logical next step would be to review implementation of the listed targets to assess progress to date and priorities for future action."  
Besides ICT, tourism has also been given significant importance in the 7FYP document. But the three other sectors of professional services, reviewed by the UNCTAD, are yet to get required attention in the Plan document or any other policy planning document.
Bangladesh has been successfully producing some world-class engineers and architects over the years where the Bangladesh University of Engineering and Technology (BUET) makes the major contribution.  Nevertheless, BUET doesn't have any position in global 1,500 top engineering and technology institutions. The country still has a long way to go in this field.
Accounting and auditing professions are also growing in the country as business is expanding. But professional standard is still under question. There are only about 1,000 Chartered Accountants (CAs) in Bangladesh. The Institute of Chartered Accountants of Bangladesh (ICAB) is the main body to train the CAs. There are also cost management accountants, regulated by the Bangladesh Institute of Cost and Management Accountants of Bangladesh (ICMAB). And there are chartered certified accountants who are trained by the Association of Charted Certified Accountants (ACCA). The government has passed a law to establish Financial Reporting Council (FRC) to regulate and ensure quality of accounting and auditing professions. Almost one year has passed but the council is yet to be formed fully. Delay in the functioning of the council will be a stumbling block for the advancement of these professions.
Again, nurses and midwifery are two related professions which have good global demand. But, performance of these professionals is not at all satisfactory due to low quality service and inadequate trainings. There are around 30,000 registered diploma nurses/midwives across the country which is inadequate to meet the demand.  That's why, the UNCTAD review report rightly suggests that Bangladesh should give more importance on the domestic supply and delivery of the services of nurses and midwives. In fact, domestic capacity building is the pre-requisite to increase the international presence. When the service delivery can meet the internal demand efficiently, it will also open the avenue of exports. The government has already decided to establish the Bangladesh Nursing and Midwifery Council to ensure quality and professionalism in these professions.
RECOMMENDATIONS: UNCTAD's review and observations provide a comprehensive understanding of the overall services sector of the country in the context of global situation. Secondly, it presents a broader picture of the potential priority sectors to provide clear idea about the sectors. Thirdly, it analyses the weakness and strengthens of these sectors. Fourthly, it presents a set of recommendations for future actions.
UNCTAD suggests that the government should set clear sectoral targets to achieve optimal benefit from the priority sectors. It has underscored the need for improvement of quality of education in services sector.
Regarding manpower exports, the policy review rightly recommended to 'initiate bilateral agreements with host countries to protect the human rights of migrants.' This is a critical issue. UNCTAD has recommended establishing migrant wings in Bangladesh missions abroad and a permanent institutional mechanism to deal with issues.
Finally, keeping the export potential in mind, the UNCTAD review has suggested skilful negotiation in services trade. In this regard, providing trade negotiators with information in advance on the economic impact of varying negotiating options has been emphasised.
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