Dhaka Chamber of Commerce and Industry (DCCI), the largest and most active Chamber of the country, established in 1958, has been rendering very useful services for the continuous trade and industrial development of Bangladesh over the last 6 decades. Rizwan Rahman is the President of DCCI for the year 2021.
Rahman, in his wide-ranging business career, heads several segments of ETBL Holdings Ltd., a renowned local conglomerate, like financial services, dredging infrastructure, commodities trade, cold storage, furniture, print media, etc.
He is the Director of Eastland Insurance Company Ltd. and the Daily Financial Express. Upon completion of his higher education and return from the UK, he remained engaged with DCCI in different capacities since 2006 and contributed to the private sector development of Bangladesh. In his diverse career, he also served as the Director of Bangladesh Chamber of Industries (BCI), Bangladesh Philippines Chamber of Commerce and Industry (BPCCI) and Vice President of the Dutch-Bangla Chamber of Commerce and Industry (DBCCI) for the improvement of multilateral trade and investment regime.
In a recent conversation with Textile Today, Rizwan Rahman underlined his goal, the challenges of FTAs, export products’ diversification, the ways of improving the business environment and some other important issues.
Textile Today: As the President of the Dhaka Chamber of Commerce and Industry (DCCI) what is your goal? In what policies do you want to help the government which will be helpful for Bangladesh’s economy in the long run?
Rizwan Rahman: DCCI is the largest SME-led Chamber and is also the proactive voice of the business community of the country. Therefore, creating a sustainable and enabling business environment for the entire business community is my ultimate goal likewise other leaders of DCCI.
However, the road to recovery encompassing survival, revival and thriving strategy for large and MSME businesses in the private sector is our priority plan in the chamber in the new normal business context. I, however, would like to share my thought that ‘Bangladesh is not only building Bangladesh anymore, it rather contributes to the world economy’ and work for post-LDC graduation economic competitiveness by ensuring that the economic, trade and industrial issues later graduation are dealt with efficiently with the leverage of graduation for smooth transition and transformation of Bangladesh.
Textile Today: How do you evaluate the contribution of the textile and apparel industry to Bangladesh’s economy?
Rizwan Rahman: The textile and apparel industry of Bangladesh is doing good as far as export performance is concerned. It is the highest contributing sector to the export earnings of the country as well the largest manufacturing sector and employer.
However, this sector’s raw materials are primarily imported from abroad. Local sourcing of materials and establishing an effective and efficient backward linkage are, therefore, imperative. Moreover, this sector has not utilized most of the potentials of the domestic market yet. It is also essential that we create, nurture and promotes big apparel brands of the country on the world stage. We failed to ensure that it happens.
In the post-LDC graduation era, sustenance of these sectors will heavily depend on their ability to ensure vertical and horizontal product and market diversification. Therefore, despite being an established sector of the country, its promises may fade away, if the aforementioned issues could not be appropriately addressed.
This is the high time we must concentrate on diversified and high-value products for further growth of this sector. This industry has positioned and branded Bangladesh globally to a new height. The perceived quality of our textile and RMG products could not be established at par with their foreign peers.
This is another big concern for this industry. In the post-LDC graduation era, sustenance of these sectors will heavily depend on their ability to ensure vertical and horizontal product and market diversification. Therefore, despite being an established sector of the country, its promises may fade away, if the aforementioned issues could not be appropriately addressed.
Textile Today: To face post-LDC challenges Bangladesh government is emphasizing FTA with other countries. How many FTA have already been done? What are the challenges Bangladesh facing in signing FTAs with developed countries?
Rizwan Rahman: As ADB’s ARIC FTA database shows, Bangladesh is a party to 14 FTAs/PTAs/RTAs. However, only THREE are in effect like SFTA, APTA, D8 and 1 PTA are signed and the rest are either proposed or under consultation.
Signing FTA is a lengthy process. Many issues require detailed scrutiny before FTAs are signed. Agreement of both parties on the terms as well as the possibility that the preferences extended to one country may affect the others because they are party to other FTAs/PTAs/RTAs through the newly signed FTA which is also another concern for both parties of the agreement. Moreover, the economic benefits of entering into one FTA must be assessed.
Challenges of FTA:
- Tarde imbalance may increase if FTA is signed with countries Bangladesh has huge import dependence.
- Local industrial competitiveness is to be adequate.
- TBTs and SPS are major technical hindrances that require specific attention.
- FTA discussion, negotiation and implementation must be time-bound.
- It is important to weigh the cost and benefits of each clause in detail. Signing FTAs with the developed countries may also create increased competition due to reciprocity. This also has to be taken into account.
- As FTA was not signed previously by Bangladesh, we have a lack of human resources to negotiate for FTA signing.
- Trade diversion may cause by doing FTA, and, in this regard needs to be more careful.
Textile Today: Diversification of export products is a prerequisite of engaging FTAs with any country, how Bangladesh can work for export products’ diversification?
Rizwan Rahman: There are many steps that both the private and the public sectors may take to ensure export diversification. They are:
- Diversifying into high value-added products
- Searching for newer markets in the Asian Region based on demands
- Increased efforts for Country Branding
- Arranging trade shows, summits, B2B sessions in association with multilateral and bilateral chambers and ministries of different countries
- Encouraging promising sectors through policy and non-policy support measures
- Skill development of the employees and workers
- Ensuring better costs effectiveness by redesigning manufacturing processes as and where applicable (For example, moving towards a semi-automated manufacturing process from a completely manual manufacturing process will restructure costs and offer greater leverage to businesses. However, the risk must also be taken into account and balanced )
- Creating an atmosphere where technology transfer becomes easier. It also helps the industry to come up with innovative products and processes
- Higher investment in R&D
- Ensuring quality and compliance for improved product standards and country
Textile Today: Average customs duty in Bangladesh is highest among developing countries. To make the FTA fruitful how customs policy can be reformed?
Rizwan Rahman: Actually, the main reason for doing FTA is to reduce the Tariff burden and increase trade between the countries. The FTAs will automatically guide the policymakers about necessary adjustments of the ad valorem tariff rates. We must bear in mind that tariffs generate around 20% of our overall revenues in Bangladesh. Thus, in doing FTA, for greater trade flow, the sensitive list must be minimal, with minimal operations and processes. On the other hand, the rules of origin need to be set at a minimum rate for easing trade growth.
Textile Today: Recently the Embassy of Vietnam in Bangladesh and the Dhaka Chamber of Commerce and Industry (DCCI) have signed a memorandum of cooperation to ease trade and investment between Vietnam and Bangladesh. How can this MoC aid Bangladesh’s textile and apparel sector?
Rizwan Rahman: The MoC between DCCI and Vietnam can help the textile and apparel sectors by offering business matching of the two countries through B2B or other alternative measures to cooperate in production and investments of businesses from both countries. This MoC can also help the aforementioned sectors by introducing and promoting goods and services to other markets and consumers, following the requirements and capabilities of each party.
Moreover, the MoC under the G2G cooperation also helps us with the opportunity to arrange events for orienting market, regulations and potentials of industry, meetings for business matching, exhibitions like Dubai fair, Destination market-wise fairs, Sourcing summit for promoting our textile products for extended reach out. As well, MoC extends support through EPB for the textile sector through different state negotiations in international forums to protect this industry in tariff, Rules of Origin and market creation.
Textile Today: Bangladesh still lags in the Ease of Doing Business Index. According to industry people, entrepreneurs face various difficulties and harassment operating their business. How can Bangladesh improve its business environment to attract more investment?
Rizwan Rahman: There are many practical challenges with the application of the policies that are taken to improve our score at the ease of doing business index. Bureaucratic complexities, lack of coordination among agencies, lack of appropriate technological infrastructure (such as blockchain technology) and some processing delay. Following measures can improve the business environment:
- Predictable and easy tax system and lower corporate tax, tax
- Easy cross-border trade process through customs
- Meaningful OSS
- Infrastructural development for reduced lead time and higher
- Revision of Companies act, insolvency and bankruptcy act and other relevant acts.
- Paperless trade and easing cross-border trading system.
- Establish a monitoring system to ensure strict adherence to the timeframe and complete the entire process including enforcement of Commercial disputes within a stipulated time
- All policy reforms must be business-centric, realistic and pro-business.
- Reforms in existing regulation must be communicated to the private sector for their experience in the business.
- Time-bound and collective agendas backed by private and public sector efforts are essential to improve our doing business state and
- Experience and learning of better-ranked LDCs in Asia and Africa must be replicated in
- Strict IPR policy implementation.
- As digital Bangladesh, we need to initiate a data security act to attract FDI in the IT sector.