BD connectivity with neighbours holds key to facing challenges

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Doulot Akter Mala | Published: March 23, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

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Bangladesh needed to move forward to enhance connectivity with neighbouring countries to face the upcoming challenges of market access and investments from developed countries, said Mr Kei Kawano, JETRO country representative in Dhaka.
It would have to keep pace with the Asian countries that moved to upgrade their networks from bilateral to multilateral or mega FTAs (Free Trade Area) through Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP), he also observed.
"Bangladesh remains blank in the scope of TPP and RCEP. This means Bangladesh will be isolated from the Asia-wide business map, in other words, skipped from supply chain network of Asia," the country representative of Japan External Trade Organisation (JETRO) under the ministry of economy, trade and industry of the government of Japan told the FE in an exclusive interview at his office in the city recently.
"We do not urge Bangladesh to join the Mega FTA so soon, since Bangladesh is yet to get ready to compete or differentiate itself from others. But, Bangladesh must have its own path to develop and needs to seek its own way to attract FDI."
He suggested re alignment of the external policy of Bangladesh by adopting the 'LOOK EAST' strategy.
"Development of East Asia should be taken into consideration while formulating the external policy of Bangladesh. It needs to adopt 'LOOKEAST' approach to follow the development of Japan, China and ASEAN countries," Mr Kawano said.
He termed connectivity with the neighbouring nations very important, especially with India, Myanmar and China.
He said foreign investors were finding Myanmar, Cambodia and Vietnam as their suitable destinations, although all those are smaller nations compared to Bangladesh.
"Zero tariff access, accumulation of value-added TPP enables Vietnam's tax free access to US and RCEP enables Myanmar and Cambodia's indirect tax free access to India or China or Japan," he said.
JETRO saw some Japanese firms regretted to Bangladesh and set up factories in Cambodia in consideration of those facilities, he added.
Japanese business is distributed in every corner of Asia. 30,000 in China, 8,000 in Thailand, 3,000 in Indonesia, 2,000 in Vietnam, 1,500 in India. Japan is the biggest investor and exporter in China, Thailand, Indonesia and India against only 176 in Bangladesh. "We are in 5th or 6th position in Bangladesh," he disclosed.
"Such poor investment is not because of negligence of Japanese investors but due to a lack of connectivity and accessibility of Bangladesh," he said.
Being a low-income nation Bangladesh is so far safe from the high-level of market competition among the middle-income countries. But, it will be exposed to the competition in near future as Bangladesh vowed to be a middle-income nation by 2021.
"Export business of Bangladesh is surviving thanks to the GSP facilities which may be grabbed by other competitors like Vietnam," he said.
Asia is changing faster than North America and the EU. Asian nations are "proactively struggling to convert themselves from standalone or demanding developing nations to a self-sustained unilateral region" by diversifying economy and by ensuring regional integration, he said.
RCEP covers 50 per cent of world population, 40 per cent of intra trade, 30 per cent of world output. Besides, ASEAN FTA (AFTA) will be upgraded to the ASEAN Economic Community (AEC), a unilateral market where free trade, investment, movement of people, intellectual property and competition are liberalised and harmonised.
He saw Bangladesh in a suitable position geographically and strategically for the upcoming Asian highway, the New Silk Route and BIMSTEC.
Mr Kawano said apart from trade barriers, the investment climate in Bangladesh also needed to be improved to attract FDI.
 "Infrastructure is not a single reason. There are still skeptical views against FDI in this country," he said.
FDI brings technology, diversification, market and employment, improves the balance of payment, increases the foreign exchange reserve and ensures risk-free money flow.
He suggested preparation of the country's FDI policy ensuring a fair competition between local companies and foreign companies.
Citing examples of China and ASEAN countries, he said the countries provided a set of FDI incentives like exclusive concessional tax, industrial estates for FDI, liberalised foreign loan access and so on.
Those countries encouraged FDI by visiting and listening to investors and provided one stop services to avoid any hassle with the authority or local industry concerned to ensure a congenial environment for investors.
"Right now, most of business and international diplomacy is coming from the West, namely US, EU and sometimes India. But there is no reason to look only West," he said.
According to an IMF survey, developed economies contributed more than 80 per cent of the world growth in 90s but now dynamics have changed. About 60 per cent of world growth is now sourced from the developing economies.
As East Asia is absolutely a growth engine of world economy in the 21st century, he saw connectivity with neighbours most important to realise economic integration.
 "We are pleased to observe that this country starts to look outside and discuss about external policy," Mr Kawano said.
People of Bangladesh now feel comfortable to speak about not only internal matters but also external matters, he added.