Policy Research Institute - PRI Bangladesh

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Bangladesh must fix infrastructure for trade

News Published: Tuesday, May 22, 2012

Bangladesh must fix infrastructure for trade
Analysts speak on regional business at a seminar

Tuesday, May 22, 2012
Star Business Report

Bangladesh should fix its wobbly infrastructure to reap the full benefit of the untapped regional trade, said analysts at a meeting yesterday.

They said the global attention has already shifted to Asia. And the Saarc countries are set to account for a large part of the global wealth by 2030.

So, it is right time for Bangladesh to improve its poor roads and rail networks and ports and fix energy crisis to have a larger share of the regional trade and attract investment, they added.

Their comments came at a discussion on "enhancing trade facilitation in Bangladesh" organised by the International Finance Corporation and the Policy Research Institute of Bangladesh (PRI) at Lakeshore Hotel in the city.

William Gain, senior trade logistics specialist of the Investment Climate Department at the World Bank Group, said South Asia is one of the least integrated regions in the world.

Intraregional trade among the Saarc (South Asian Association for Regional Cooperation) countries is less than 2 percent of their gross domestic product compared to more than 20 percent in East Asia.

Lawmaker Anisul Islam Mahmud said there are non-tariff barriers in both India and Bangladesh. "Our own people do not trust BSTI (Bangladesh Standards and Testing Institution). How can then we convince India to trust it? We have to bring in standardisation at the government agency."

"The BSTI has to be upgraded with equipment, skilled human resources and money."

The former foreign minister said trade facilitation would only improve if Bangladesh can perk up its supply side situation.

He said Bangladesh's real bottlenecks lie in the supply side. "Our roads, ports and railway have to be improved. Our gas crisis has to be sorted out. Our land ports should be developed."

Md Mozibur Rahman, chairman of Bangladesh Tariff Commission, said strong infrastructure facilities are needed for trade facilitation. "We also need to build institutions as they are not updated with modern knowledge and know-how."

Ahsan Khan Chowdhury, deputy managing director of Pran-RFL Group, said regional trade is important for Bangladesh and the country cannot afford to look up to the US and the European Union for trade forever.

He said India has opened its border for Bangladesh in a major way. "But if we cannot develop our infrastructure, we will not be able to reap the benefit of regional trade."

"The members of the European Union do a lot of trade within the region. We can do the same in South Asia," he said.

Chowdhury said Bangladesh must prepare all its land ports for trade with India, as businesspeople are not being able to utilise all of them. "We need to open more border ports."

He said the road connectivity is too poor to help trade facilitation.

The official urged the government to keep the existing border ports open for longer hours everyday. "The BSTI should be developed so that importing countries accept certification of the agency."

PRI Chairman Zaidi Sattar said it is the responsibility of both the public and private sectors to improve trade facilitation.

Gain of the Investment Climate Department also said trade facilitation is not easy, and having "one-off' solution to trade facilitation will not help. However, there is potential for high level of trade facilitation with a low level of investment, said Gain.

He said streamlining, simplification and harmonisation of documents and procedures are key to fostering regional trade. There should also be enhancement of risk management for border clearance customs and other regulatory agencies.

A 10 percent reduction in export time increases exports by 5.8 percent in South Asia, said Gain, quoting a World Bank study.

He said Bangladesh should update the list of official fees and charges for imports and exports including commodity specific fees, and identify fees and charges which can be reduced or eliminated.

Gain also said Bangladesh should undertake an in-depth study on risk management at all land border crossings and at Chittagong Port with an eye on developing an integrated approach to managing risks for border clearance.

He said automating the issuance of import and export licences and permits is important for trade facilitation.

PRI Executive Director Ahsan H Mansur also spoke.

Speech