Bangladesh faces significant hurdles in benefitting from duty-free market access to China, the world’s second-largest economy, due to various systemic and strategic issues. Business leaders emphasize the necessity of signing a Free Trade Agreement (FTA) with China to boost Bangladeshi exports. A recent study by the Research and Policy Integration for Development (RAPID) revealed that Bangladesh could potentially earn an additional $27 billion by exporting quality and diversified goods to China, provided its market share increases to 1 percent. However, the report also identifies several critical barriers preventing this growth. Bangladesh to seek $7 billion fund from China to boost trade in business summit during PM's visit One primary obstacle is Bangladesh’s heavy reliance on the ready-made garment (RMG) sector. Although China imports $10 billion worth of garment items, Bangladesh’s inability to meet high-quality standards limit its export success. “China is the top garment exporter to the USA, EU, and UK, while Bangladesh’s exports rely 84 percent on garments,” noted Dr. MA Razzaque, Chairman of RAPID. Dr. Razzaque highlighted that China prefers high-quality garments from Italy and other European countries, importing around $10 billion of such products. To penetrate the Chinese market, Bangladesh must diversify its exports and improve product quality. He emphasized the need for aggressive policies, including attracting China-oriented investments and signing trade agreements. Bangladesh holds the right to decide on Teesta project; China to accept any decision: Ambassador Yao Other significant barriers are: - Lack of integration with Chinese retailers. - Insufficient participation in marketing, sales, and after-sale services. - Cultural and language barriers. - Stringent Chinese labeling and packaging regulations. Dr. Razzaque also pointed out the price competitiveness issue, noting that Chinese products often have lower prices than similar quality Bangladeshi products. The burgeoning e-commerce sector in China represents another challenge, as Bangladeshi entrepreneurs need better skills to tap into this market effectively. Dr. Razzaque suggests that encouraging Chinese investors to set up manufacturing hubs in Bangladesh could be a strategic move. These factories could produce goods for export back to China and other countries, thus boosting Bangladesh’s export volumes. PM Hasina’s upcoming visit to boost China-Bangladesh cooperation on bilateral, regional and global issues, says Ambassador Al-Mamun Mridha, General Secretary of the Bangladesh China Chamber of Commerce and Industry (BCCCI), echoed these sentiments. He mentioned that some Chinese investors are considering shifting their manufacturing industries to Bangladesh, recognizing it as a significant market for Chinese products. To attract more Chinese investment, Bangladesh is organizing a trade and investment summit in Beijing during Prime Minister Sheikh Hasina’s state visit from July 8 to 10. Mridha hopes that establishing Chinese factories in Bangladesh will eventually increase the volume of Bangladeshi exports to China. Currently, Bangladesh imports around $24 billion annually from China, while its exports to China remain below $1 billion. To address this trade imbalance, Bangladesh plans to offer lucrative incentives to Chinese investors in sectors such as ceramics, leather, pharmaceuticals, electric cars, high-end garments, and household appliances. Enhancing Bangladesh’s access to the Chinese market requires strategic diversification, quality improvements, and strong bilateral trade agreements. The upcoming summit and potential Chinese investments could pave the way for increased exports, ultimately benefiting Bangladesh’s economy.

The higher estimate of 6% for FY 2023 (ending on June 30, 2023) reflects strong net exports as imports fell more sharply than expected and export growth slowed less than expected, says the Asian Development Bank (ADB). On the supply side, manufacturing firms of all sizes leveraged supportive government policies to contribute to growth. Crop losses to floods, cyclones, and droughts were partly offset by subsidies, incentives, and other measures. The service sector was buoyed by higher warehouse and support activities and health and social services. Enhancing growth, promoting prosperity: BIMSTEC retreat held in Bangkok On the demand side, growth in public consumption outpaced expectations, as did public investment. The ADO April 2023 forecast for growth in FY 2024 is unchanged at 6.5%. The Asian Development Bank (ADB) is maintaining its growth outlook for developing economies in Asia and the Pacific at 4.8% this year, as robust domestic demand continues to support the region’s recovery. Inflation is expected to continue falling, approaching pre-pandemic levels as fuel and food prices decline, according to the Asian Development Outlook (ADO) July 2023, released on Wednesday (July 19, 2023). Bangladesh sets $72 billion export target with 11.52% growth for FY 2023-24 Inflation in developing Asia is forecasted at 3.6% this year, compared with an April forecast of 4.2%. The inflation outlook for 2024, meanwhile, is raised to 3.4% from an earlier estimate of 3.3%. The reopening of the People’s Republic of China (PRC) is bolstering the region’s growth. The PRC’s economy is projected to expand 5.0% this year, unchanged from the April forecast, amid strong domestic demand in the services sector. However, demand for developing Asia’s exports of electronics and other manufactured goods is slowing, as monetary tightening drags on economic activity in major advanced economies. The region’s growth forecast for next year is marginally revised down to 4.7% from a 4.8% estimate in April. Despite over 8% revenue collection growth, Tk 44000 crore shortfall in FY 2022-23 “Asia and the Pacific continues to recover from the pandemic at a steady pace,” said ADB Chief Economist Albert Park. “Domestic demand and services activity are driving growth, while many economies are also benefiting from a strong recovery in tourism. However, industrial activity and exports remain weak, and the outlook for global growth and demand next year has worsened.”

Economists are hopeful that Bangladesh’s economy will regain the growth momentum while reducing inflation and stabilising the exchange rate in the New Year. Despite higher inflation and fluctuating currency exchange rate, record defaulted loans, they are optimistic about the overall growth of the domestic economy, which is predicted by the IMF and World Bank to be over 6 percent still in FY23. Major challenges including capital flight ahead of the national election, persistent loan default culture, and lack of good governance in the banking sector will however remain. Also read: Bangladesh performing well in 3 major economic indicators, data shows Former adviser on finance and planning to a caretaker government Dr ABM Mirza Azizul Islam told UNB that Bangladesh’s economy remains in a good position compared to many other Asian countries - including Indonesia and Singapore. The trade deficit is widening due to the sharp rise in import demand, which should be tackled by discouraging unnecessary imports and increasing domestic agriculture production. Huge import payments have eaten away at the foreign exchange reserve, he said. Mirza Aziz said the pace of reducing the poverty rate (proportion of population under the poverty line) has slowed down. Inflation over 8 percent is pinching people’s pockets, as it creates an imbalance in the earnings and expenditure of marginal people. Read More: Keep wheels of economy running amid global crisis: PM urges industrialists He also suggested cutting additional facilities for loan defaulters as it is not good for the economy and the loan default culture could be reduced if the defaulters face legal action. Former governor of Bangladesh Bank Dr Atiur Rahman said the economy in the New Year will face both opportunities and challenges, depending mostly on developments in the global economy. “If the war in Ukraine comes to an end the global supply chains will improve and the shipping and fuel costs will come down. This will have some positive impact in terms of reducing the level of imported inflation with a huge impact on our overall inflation as well,” he said. Read More: Investment projection spelled out to counter hurdles for growth “However, we also need to do more on our domestic fronts to reduce this inflation,” Dr Atiur added. Inflation is certainly the biggest problem for middle and low-income people. On the other hand, if the Fed (US Federal Reserve, America’s central bank) stops tightening its monetary policy, it would have some positive impact on the Taka-Dollar exchange rate. On the whole, the geopolitical tensions will continue to determine the pace of Bangladesh’s economic growth and the level of inflation. “Yet, we must continue to support agriculture, remittances, and export sectors to contribute positively from within towards better gains of our economic growth. The monetary policy should continue to move towards market-determined conditions to help stabilise inflation from the demand side,” the former governor of Bangladesh Bank said. Read More: Green Economy in Bangladesh: Prospects and Challenges On the whole, the challenges will remain, but the economy of Bangladesh may stabilise with a robust foundation if the global situation turns favourable and austerity measures remain in place.

State minister for planning  Shamsul Alam on Sunday said Bangladesh’s economy has discomfort, but there is no crisis yet. Denying a section of economists' assumptions, he said the economy is on the right track; growth, production, and supply lines are working positively, while the government is trying to ease inflation by policy measures.  Alam said this  at a discussion meeting on ‘New challenges in the economy of Bangladesh’ organized by the Economic Reporters’ Forum (ERF) at its auditorium in the capital on Sunday. Chief Economist, Bangladesh Bank Md Habibur Rahman, Ahsan H. Mansur, Executive Director, Policy Research Institute (PRI), Mohammad Hatem, Executive President of BKMEA, Barrister Nihad Kabir, , Chairperson, Business Initiative Leading Development (BUILD), Abul Kashem Khan, director FBCCI, among other spoke at the event. Also read: No reason to worry; Bangladesh's economy on right track: Shamsul Alam ERF president Sharmeen Rinvy presided the discussion meeting while its secretary general, SM Rashidul Islam, moderated the program. The state minister also said some Bangladeshi economists were wrong in predicting that over 5 lakh people may die from Covid-19 pandemic unless a full lockdown was  imposed across the country. Despite this warning, the prime minister decided to keep open the factories, resulting in Bangladesh standing in the1st position in South Asia and 15th in the world in economic growth. If the government implemented a full lockdown in the factories, the economy of the country would have been in trouble, he said. Import is declining, remittance, export and industrial growth are expanding in the country, defying the warning of a disaster of these sectors by the domestic economists, Dr Alam said. The state minister said around 10 lakh workers went to different countries till June 2022. Ane despite huge imports, forex reserves still remained over USD $ 41 billion, so there is nothing to be worried about the economy. BB chief economist Habibur said Bangladesh macroeconomics situation is under a little stress due to external effects, which are becoming stable by policy measures of the central bank. The central bank will not increase the interest rate rather policy rate increases to make money management smooth, he said. Also read: Economy needs transitional policy to overcome the crisis: Debapriya Meanwhile, the BB announced around Tk 1.0 lakh crore special loan packages for CMSMEs, SMEs, Agriculture and other specialized sectors to increase money flow in the market, said Dr Habibur. He also assumed that exchange rate will back in stable position and then inflation rate will also become tolerable as it created for external effect, he said.  Ahsan Mansur said that another blow from the global recession will  hit the domestic economy besides Russia-Ukraine war. He suggested massive reform of the tax system including tax policies and strengthen domestic gas-coal extraction to make vibrant the domestic economy from the external effect. Mohammad Hatem said huge tax burden is a barrier to growing business here it is not cooperative al all for Bangladesh entrepreneurs to compete with the global market.   If business grows, the revenue generation would grow, so government policy should aim to help business grow more.  0therwise pushing higher tax will hurt business, he pointed out. He emphasized on uninterrupted energy supply in the knitwear sector for smooth production of export goods.  If it does not happen, the fabrics import demand will increase which is not good for the economy. Nihad Kabir said the government should act as facilitator, not regulator everywhere. In case of raw materials for the pharmaceutical sector, an importer has to collect around 73 types of documents from Union Parishad to relevant ministries which are waste of time, she said. For lack of automation a business requires around 35 types of documents to start and that is not business friendly at all. To create entrepreneurs, the government should reform policy, withdraw trade license requirements, make the easy business process to create young entrepreneurs, Nihad suggested.

The government has taken structural transformation of the economy as a priority agenda for the coming days to maintain its position among the developing countries and become a higher middle-income country by 2031 defying all the hurdles of the post-LDC era. "We, therefore, need to accelerate this structural transformation of the economy," the government said in an official budget document. To this end, the government will provide necessary financial assistance for the implementation of some activities. Read Next 2 weeks crucial to ensure TRIPS waiver for pharma beyond LDC graduation These are-- mechanisation of agriculture, development of the agro- processing sector, skill development and productivity enhancement, and expansion of training and education related to 4th Industrial Revolution. The government will also provide necessary financial assistance for encouragement of online based outsourcing work, self- employment/creation of new entrepreneurs, and encouragement of basic and practical research at the university level. It said that the country has been gradually moving from an agro-based economy to a manufacturing-based economy following the pursuit of effective government policies and strategies during the last 12 years. Also read: World Bank prediction on Bangladesh economy inconsistent: Finance Minister Therefore, the document said, the contribution of agriculture to the GDP has been gradually declining and the desired structural transformation is taking place in the economy. It mentioned that Bangladesh has already qualified for graduation from a least developed country to a developing country. "To maintain its position among the developing countries and become a higher middle income country by 2031, we need a strong industrial and manufacturing sector, which will help sustain high economic growth." Also read: WB projects 1.6 pc GDP growth for Bangladesh in 2020-21 According to the United Nations Committee for Development Policy (UNCDP) recommendation, Bangladesh's transition will be effective in 2026. It means until 2026, Bangladesh will be able to enjoy all the benefits applicable to LDCs.

Dr David Brewster, a senior research fellow at the National Security College in Australia, has depicted Bangladesh’s economic growth and described how the country is becoming an increasingly influential regional state. He mentioned that Dhaka is increasingly confident in an emerging role and the rest of the world would benefit from paying close attention. In his recent article titled “A rising Bangladesh starts to exert its regional power” Brewster said the recent announcement that Bangladesh would provide US$200 million in aid to Sri Lanka is an important turning point as that country moves from being an impoverished supplicant towards an increasingly influential regional state. He thinks it is an outcome of years of high economic growth and points to Dhaka’s potential to become an important Indo-Pacific middle player. When it gained independence from Pakistan in 1971, Brewster said, Bangladesh was one of the poorest countries in the world with few apparent prospects – former US Secretary of State Henry Kissinger apocryphally called it a “basket case”.  Also read: Bangladesh 3rd most peaceful country in South Asia, ahead of India, Pakistan Today, he said, it is a confident country of 160 million people with a booming, export-oriented economy, which has grown at an annual average of about 6% for two decades. The economic growth slowed to 5.2% in 2020 due to Covid, and is forecast by the ADB to bounce back to 6.8% in 2021 and 7.2% in 2022. GDP per capita now stands at $2,227, higher than India’s ($1,947) and much higher than its former masters, Pakistan ($1,543). Dhaka’s recent aid to neighbouring Sri Lanka was a first in Bangladesh extending financial assistance to any other country. “Just as importantly, Bangladesh scores well against India and other South Asian countries in many social indicators, including health, life expectancy, birth rates and employment of women,” Brewster wrote in his article that appeared on The Interpreter that features daily commentary and analysis on international issues. He said the sustainability of Bangladesh’s growth story is not without its sceptics who question official growth figures or point to its heavy reliance on garment exports, which could make it financially vulnerable. Also read: 'Bangabandhu one of the most influential leaders' Since 2008, Prime Minister Sheikh Hasina has presided over a relatively stable civilian administration, Brewster wrote, mentioning that she is publicly popular. He said Australian Foreign Minister Marise Payne is now known to be keen on building ties, and there are signs that the two sides want to move the relationship beyond aid. An agreement to facilitate trade and investment has been finalised and is close to signing, which could help open opportunities for Australian agriculture, resource and energy exports to a booming Bangladesh, the article reads. “Australia could do well in moving beyond traditional regional partners. Greater focus needs to be given to building ties with emerging middle powers such as Bangladesh to complement relationships with the big powers,” Brewster wrote. The article is part of a two-year project being undertaken by the ANU National Security College on the Indian Ocean, with the support of the Australian Department of Defence.

Speakers at a JICA seminar opined that the Japanese model of development might be the best pathway for Bangladesh in achieving economic goals and turning itself into a developed country. 

Prime Minister Sheikh Hasina on Thursday urged researchers to conduct studies to diversify Bangladesh’s export products alongside modernising and mechanising the agriculture sector.

Finance Minister AHM Mustafa Kamal has said that the World Bank is not consistent in its prediction about the economy of Bangladesh.

Prime Minister Sheikh Hasina on Monday asked Bangladesh Chhatra League (BCL) leaders and activists to build themselves up putting ideology of Bangabandhu in their heart, imbued with patriotism and keeping their organisation's tradition in mind to lead the country in the coming days.