Bangladesh’s government can improve its trade environment by joining the Association of Southeast Asian Nations (ASEAN) as this single market will become the world’s fourth-largest economy by 2030 following the US, China and EU.
Rubana Huq, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) highlighted it while speaking at a recent virtual discussion.
ASEAN’s number of member nations have turned into good destinations for raw materials sent to and from the country which can also be beneficial for Bangladesh.
Petrapole, the Indian side of the Petrapole-Benapole land port and Bangladesh’s largest and most active border crossing, is a very important aspect of the country’s trade where shipment delays caused the products to deteriorate in quality over time. Measures should be taken to improve overall port performance. Therefore, strong inter-ministerial coordination among the finance, commerce, National Board of Revenue (NBR), port authorities and other related ministries is crucial to improve logistics services, Huq added.
In terms of the poor state of logistic support for trade growth, port charge for a single consignment in Bangladesh is $408 while the rate in Vietnam is $290 and $211 in Indonesia and those rates are declining in both countries.
Port clearance for a consignment in Bangladesh secure168 hours but in Vietnam, it takes just 55 hours.
The combined storage space of all warehouses across Bangladesh is currently about 4.2 million square feet, by 2022 it will increase around 6.7 million square feet. Due to a lack of formal warehousing facilities, most importers and exporters store their products usually inside their factories or other private property but other countries have third-party warehousing facilities, a secured environment and several other services for ensuring product quality.
Bangladesh needs to expedite the development of logistics services. Modernizing port customs services will facilitate trade growth due to Bangladesh ships 1,400 various goods abroad each year while 100 new products are added to the export list annually. 290 different products have a yearly export value of the above business and other goods are still very valuable for the economy and so, the government should facilitate their growth and incentivize the exporters.
Nearly 10,000 goods laden trucks from Dhaka enter Chattogram each day to offload export-oriented products.
However, lack of a truck terminal in the port city, mile-long tailbacks on the roads and highways hamper the trade.
Therefore, the government should build a large truck terminal, construct a bay terminal at Chattogram Port, Improve port handling facilities and upgrade the Dhaka-Chattogram highway to eight lanes should be completed.
Tariff and para-tariff in trade, border issues, and non-automation and customs issues are mainly responsible for Bangladesh’s lowest ranking in the South Asian Network on Economic Model (SANEM) index.
Goods shipments are 35 to 50% slower than what they could be due to slow, expensive inland transportation, cumbersome customs and border management processes, inadequate consolidation of terminals, inland clearance depots, trade corridors and a lack of coordination among trade-related agencies along the border.
Many investment proposals are lagging behind the lead time factor because of the poor logistics services available.
For ASEAN, Bangladesh’s growing economy and geographical location make it a natural candidate for membership.
Bangladesh knows the value of the Look East policy and joining this important trade block would further grow trade relationships with a wider range of countries.
So ASEAN offers Bangladesh many opportunities for building co-operation and sharing expertise with sophisticated economies as an investment destination.