Strong economic growth in the South Asia region has not translated into structural transformation, as the region remains one of the least trade-integrated in the world with very low intra-regional trade and high barriers to global and regional commerce, experts and economists said on Sunday.
They also add that weak trade integration reinforces macroeconomic fragility by limiting export responsiveness, sustaining import dependence, and trapping resources in low-productivity, highly protected sectors instead of enabling competitive and diversified growth.
These remarks came from a plenary session on "Trade and Macroeconomic Challenges in South Asia" at the 9th SANEM Annual Economists' Conference hosted by the South Asian Network on Economic Modeling (SANEM) at a hotel in the capital.
Dr Franziska Ohnsorge, Chief Economist for the South Asia Region at the World Bank, delivered the keynote presentation online at the event chaired by Dr Zaidi Sattar, Chairman of the Policy Research Institute (PRI), while economists from South Asian countries delivered insight at the event.
The speakers urged focusing on reducing real trade costs through trade facilitation and regulatory reform, while complementing trade liberalization with broader structural measures such as improving the business climate and labour mobility to ensure productivity gains translate into sustained and inclusive growth.
They said that Bangladesh was prominently featured in the discussion as a key South Asian economy with persistently high trade protection, including significant reliance on para-tariffs, low import penetration around 6 per cent of GDP, and a strong dependence on a narrow export base, particularly ready-made garments.
Speakers noted that while the country has benefited from targeted export support and trade facilitation measures, its overall trade regime remains relatively restrictive, contributing to an anti-export bias that continues to limit diversification and competitiveness.
Dr Zaidi Sattar noted that regionally import penetration stands at approximately 20-25 per cent of GDP, compared to 40-50 per cent globally and 40-60 per cent in East Asia, indicating a substantial gap in trade openness.
He further observed that South Asian countries tend to trade more with the rest of the world than with neighbouring countries, reflecting weak intra-regional trade integration.
Dr Sattar also pointed out that in Bangladesh, trade policy reforms have remained largely stagnant over the past two decades, with most major changes occurring in the early 1990s.
He noted that nearly half of Bangladesh's tariff protection comes from para-tariffs, describing it as a remarkable situation, while also observing that Sri Lanka has similar cess-based charges which it is now attempting to reform and reduce.
While presenting her keynote, Dr Franziska Ohnsorge said South Asia stands out in its use of trade policies, relying heavily on industrial and trade-related interventions compared to East Asia, where subsidies are more dominant.
She also said that export-promoting policies have not had a statistically significant impact on exports, while import-restricting measures have clearly succeeded in reducing imports.
Regarding Bangladesh, the keynote reveals that trade policy reforms have remained largely stagnant over the past two decades, with most major changes concentrated in the early 1990s.
"Bangladesh, like Sri Lanka, maintains high para-tariffs, making trade policy in the region heavily shaped by indirect forms of protection," she concludes.
Despite high protection for import-substituting sectors, the indirect costs created by tariffs continue to outweigh export subsidies, creating a persistent policy imbalance for Bangladesh, said Professor Mustafizur Rahman, a Distinguished Fellow at Centre for Policy Dialogue (CPD).
"My concern is that when we talk about trade whether imports or exports, it inherently involves two parties. As importers and exporters, we must recognize that there is always a counterpart, when we import, there is an exporter on the other side," he said.
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