Exporters pin big hopes on Bhutan

15 Sep 2020 10:31 AM
Image collected
Bangladesh's exports to Bhutan would get a huge boost after the two sides sign the proposed preferential trade agreement, said exporters and authorities yesterday.

They say the move would create new trading opportunities between your two countries. The PTA will ensure duty-free usage of major trading components of both countries.

For instance, Bangladesh will love duty benefits on the shipment of garments and clothing accessories, jackets and blazers, plywood, particle boards, mineral and carbonated water, green tea extract, orange juice, pineapple juice and guava juice.

The Bhutanese goods that will be eligible for the preferential treatment include milk, natural honey, wheat, jams, fruit jellies, marmalades, food preparations of soybeans, mineral water and carbonated water, wheat bran, quartzite, cement clinkers, portland cement, soap, wooden particle boards, ferrosilicon, iron bars and rods or non-alloy steel and wooden furniture.

"We have started a fresh journey by approving the PTA with Bhutan," said Commerce Minister Tipu Munshi by phone after the cabinet approved the agreement.

Once signed, this might be Bangladesh's first bilateral trade agreement with any country.

A lot more than 100 Bangladeshi-origin goods will come beneath the PTA to be signed within the next month. Bangladesh allows duty-free import of 34 Bhutanese goods, he said.

Business leaders and exporters were equally elated.

Ahsan Khan Chowdhury, chairman and CEO of Pran-RFL Group, said his company has been performing strongly in Bhutanese markets for a long time because of the popular of goods the neighborhood conglomerate produces. The business mainly exports plastic goods for household purposes, noodles, confectionery items, juices, beverages, biscuits and energy beverages to Bhutan.

"If my company enjoys duty-free benefits on the exports, the shipments will grow," Khan told The Daily Star.

Pran-RFL Group ships $2.5 lakh worth of products to Bhutan every month. "I hope my business will grow faster to Bhutan because of this PTA," he said.

Bhutan can also be a good source for processed fruit juice. The Himalayan nation produces a whole lot of orange and kinnow. Bangladesh can import a whole lot of citric fruits to process and re-export as juice abroad or sell in the domestic markets, he said.

"I welcome the move," Khan said.

The two-way trade between Bangladesh and Bhutan was $57.9 million in fiscal 2018-19.

Bangladesh exported a lot more than $300,000 worth of garment what to Bhutan at 30 % duty, Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association.

"We see opportunities everywhere, in particular when it's in your South Asian region."

Shams Mahmud, president of the Dhaka Chamber of Commerce and Industry, said the Bhutanese market could possibly be smaller in comparison to its South Asian peers, but it still is an essential market for exports and imports.

He said Bangladesh is heavily reliant on garment items, so the planned agreement can create opportunities for both countries to trade agricultural products.

Some selected sectors like plastic goods, light engineering and electronic goods will immensely benefit from the PTA, he said.

MA Razzaque, research director at the Policy Research Institute of Bangladesh, said Bhutan is important both as a trading partner and as a strategic partner. Mahmud suggested the government strike deals with countries in Africa and Latin America in order that local manufacturers usually do not face any lean period in exports.

In Bangladesh, the garment sector, the primary forex earner, faces a lean season in June, July and August due to too little work orders from UNITED STATES and European retailers and brands.

"If Bangladesh can sign handles African and Latin American countries, local manufacturers should be able to keep their factories up and running over summer and winter," he said.

Razzaque said Bangladesh must ink trading handles important partners just like the European Union, the united kingdom, the members of the Association of South-East Asian Nations and China for the continuation of zero-duty benefits even following the graduation from the band of the least-developed country (LDC) to a developing country by 2024.

He said Bangladesh should demand duty-free benefits on exports to India beneath the South Asian Free Trade Area (SAFTA)'s Article 12 as New Delhi has extended such preferential treatment to all goods from the Maldives beneath the clause although the Island nation became a developing country in 2011.

The clause mainly guarantees zero-duty usage of Indian markets even following the graduation.

India has already proposed to sign a Comprehensive Economic Partnership Agreement (CEPA) with Bangladesh.

However, the PRI research director prefers SAFTA's Article 12 to the CEPA as you will find a precedent in the Maldives.

India is an extremely important and a large source for industrial recycleables and other basic commodities for Bangladesh.

The signing of the PTA with Bhutan will inspire Bangladesh to sign big handles major trading partners in future, Razzaque said.

"I am hopeful of signing more free trade agreements and PTAs with various other potential trading partner countries next couple of years," said Tipu Munshi. 

Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue, said once Bangladesh moves from the LDC, the country's market usage of many countries would come to an end.

"So, we must sign bilateral FTAs and CEPAs to deepen economic ties and secure preferential market access."

The trade economist said Bangladesh would steadily have to move from PTAs to more comprehensive FTAs and CEPAs.

"Bilateral relationship is not only about trade in goods. There must be CEPAs, which would include investment, logistics and trade in services aside from trade in goods."

Economic agreements being signed nowadays all over the world are mostly CEPAs, Rahman said. 

"Bangladesh's negotiating capacity has to be improved because deals would have to be signed with larger countries in the coming years."