Interactive Meeting With H E Air Vice Marshal (Retd) Altaf Hossian Choudhary, Hon'ble Commerce Minister of Bangladesh
November 17, 2004, New Delhi

Address by H E Air Vice Marshal (Retd) Altaf Hossian Choudhary, Hon'ble Commerce Minister of Bangladesh

H.E. Mr. Kamal Nath
Hon'ble Minister for Commerce & Industry
Government of India
Mr. Y.K. Modi
President, Federation of Indian Chambers of Commerce & Industry
Distinguished Participants
Ladies and Gentlemen

Assalamualikum and Good Afternoon,

It is indeed my great pleasure to be here today amongst the elites and key functionaries of Indian trade and industry. I am particularly happy and delighted at the presence of my esteemed counterpart H.E. Mr. Kamal Nath, who, I need not mention, is best known for his proactive thinking and who, in a brief span of less than a year, has earned the acclaim as a dynamic negotiator in the international arena. I sincerely express my thanks to you, Excellency for inviting me to New Delhi and for providing me with the opportunity to address this august forum.

Ladies and Gentlemen,

Bangladesh-India bilateral relation is set on a multidimensional range of activities, of which trade is a predominant parameter. I need not reiterate here that of all forms of human interactions, trade is potentially the most powerful instrument to generate people-to-people contact across national boundaries. And in an atmosphere of homogeneity and social and culture kinship, such contacts are destined to get mutually reinforced. Bangladesh and India, bound together by the heritage of a common culture, similar consumer tastes and a contiguous border of more than 4000 kilometers, do present prospects for highly encouraging linkages in the field of trade and commerce.

While I say this, I do not mean that trade linkages are not at work. Trade also has picked up, but the stimulus for a mutually reinforced trade relationship has not been in sight ever since the initiation of our bilateral trade. The point I intend to make here is that despite regular official level talks as well as interactions at the level of private sectors, very little has been achieved in concrete terms for the growth of a healthy and mutually beneficial trade relation. As a result, Bangladesh with its relatively narrow export range, has remained at the bottom edge of a chronic trade imbalance scenario.

The imbalance factor in Bangladesh-India trade is well known, I do not intend to go into the details, but what I consider important to mention is that while Bangladesh is India's largest export destination in South Asia with an annual average export turnover of more than US$ 1 billion, Bangladesh's export to India is as meagre as US$ 70-80 million. This indeed reflects a sorry state, and Bangladesh, in all fairness, can claim an increased share of the Indian market.

Friends,

The share of Bangladesh in our bilateral trade partnership has all along remained disproportionately low. There has not been any remarkable breakthrough by way of a boost in exports from Bangladesh since the last decade. Our bilateral trade, instead of being a two-way traffic, has perennially remained a one-sided affair. This is well reflected in the composition of Bangladesh's exports to India comprising only a few mentionable products such as, raw jute, chemical fertilizer, jute goods and frozen fish. Of these, raw jute and chemical fertilizer alone account for more than 60% of our total exports to India. This goes to demonstrate a serious stagnation and an apparent inaccessibility to penetrate the Indian market

The situation looks even gloomier if we examine the import and export ratio. Given the relatively low volume of Bangladesh's global exports, India contributes little over 1% to Bangladesh's total exports, while on the import front, India accounts for 14% of Bangladesh's total imports. This highly disproportionate picture is neither healthy for trade nor for mutually beneficial linkages among the closest neighbours. There is a general consensus among trade analysts and the business community in Bangladesh that inspite of the narrow product range, Bangladeshi products could have a better deal in the Indian market had there been enough facilitating measures to do away with the relatively regimented import regime in India.

It may not be out of place here to mention that over the years, the manufacturing base of Bangladesh has witnessed an appreciable expansion and diversity. While newer products have come up, existing products have undergone laudable improvement in quality, design and price competitiveness. A range of such products which have good market potential in India, include - ceramic and melamine tableware, toiletries, cosmetics, pharmaceuticals, jamdani saree, dry cell battery, cement, biscuits and wafers, woven and knit garments, automotive batteries, UPS, inverters, bicycles etc. Some of these products are currently being exported to India in small volumes, but a number of them have unfortunately been fraught with critical barriers resulting in a deadlock of exports. Hence, the success these products could have achieved, is not being materialized, despite considerable demand in the market

The reason I am making a reference to this is because of the wrong signal it causes to the business communities of both sides and works as a deterrent to lasting relationship. Over and above, since Bangladesh's export basket is far less extensive compared to that of India, it becomes extremely difficult for our exporters to conduct export operations when faced with any kind of barrier. Some of these barriers currently affecting the flow of our exports to India are: labelling requirement for export of jute bags, complex registration procedure for export of pharmaceuticals, chemical tests for leather and leather products, quarantine requirement for jute products, standard certification requirement for export of cement, sanitary and phyto-sanitary requirements in case of agro processed and food products.

Ladies and Gentlemen,

Trade and commerce today are free from the regulatory clutches of earlier days, much to the relief of the business community as well as the consumers. But barriers do prevail in most countries, either as state-pursued protectionist policies or as remnants of the regulated regimes pursued earlier. In either case, they manifest themselves in the form of non tariff barriers cutting across trade regimes in a vastly varying manner causing undesirable roadblocks.

It is in this context heartening to note that both Bangladesh and India have recognized the crucial need to identify the NTBs and phase them out. This definitely is a proactive initiative on the part of the Commerce Ministries of our two governments. A Joint Working Group comprising officials of both countries has been formed and three meetings have in the meantime taken place. I have come to learn that to complement government level initiatives, private sector level meetings through apex chambers of both countries are also being arranged towards removal of the NTBs. However, as things stand now, the series of meetings do not appear to have progressed much in eliminating the NTBs. May I in this regard draw the personal attention of His Excellency the Commerce Minister and request Your Excellency to kindly look into the matter so that NTBs do not continue to be roadblocks to our bilateral trade. I would particularly request Your Excellency, to kindly look into a few specific issues relating to the registration of Bangladeshi cement manufacturers with the Bureau of Indian Standards, signing of MOU between the Bureau of Indian Standards and Bangladesh Standard Testing Institute for mutual recognition of each other's standards, recognition of Bangladeshi testing laboratories for issuance of preshipment inspection certificates for various exportables from Bangladesh and early settlement of the Review case of automotive batteries at the Anti-dumping directorate in India.

Besides, I would also like to have your personal attention on the improvement of the infrastructure at Benapole-Petrapole and Banglabandha-Fulbari land custom stations. All these issues have been flagged at the Joint Working Group meetings. Your personal attention, Excellency, I am sure, will help resolve the problems once for all.

Dear Friends,

I have so long pondered on certain aspects of our trade relations which can be resolved conclusively with a spirit of understanding and commitment. Let me now tell you briefly about the investment climate in Bangladesh, which some of you may be aware, is quickly emerging as favourite choice for foreign direct investment as well as joint ventures. The lucrative incentive package, simplified procedures, highly liberalized fiscal policies and infrastructure facilities have made Bangladesh one of the best investment destinations in Asia.

Some key features which have rendered foreign investment so lucrative in Bangladesh, are: 100% foreign equity, unrestricted exit policy, full repatriation of dividend and capital at the event of exit, tax holiday for 10 years in case of units under the Export Processing Zones (EPZs) and 5-7 years for units outside the Export Processing Zones depending on their location. Besides these, which are more or less general in nature, there are sector-specific incentives both for units located within and outside the EPZs.

The government in order to cater to the requirements of foreign and joint venture investment, has expanded the scope and support services of the Export Processing Zones in the country. Currently, there are 6 Export Processing Zones in operation and 2 more are coming up shortly.

Besides, one EPZ is solely owned and operated by a renowned foreign firm. More than 200 overseas companies from 21 countries have installed their manufacturing units in these EPZs. The main sectors of FDI and joint venture investment include - readymade garments, textiles, services, garments accessories, footwear and leather, electrical and electronics, plastic, paper products, agro processed products, software etc. The government has identified some Thrust Sectors with additional facilities for investment, which are: agro processing, artificial flower, IT, electronics, frozen food, jute goods, jewellery, diamond cutting and polishing.

Besides the Export Processing Zones, a sizeable number of FDI and joint venture units are in operation in strategic locations all over the country. Fiscal and other incentives are equally applicable to these units. Sectoral distribution of FDI suggests that services sector is ahead of the others with a contribution of around 69% to total foreign investment, followed by agro processing (12%), chemicals (7.12%) and textiles (5.74%). It may be pertinent to mention that major sectors where Indian investment has taken place are - pharmaceuticals, animal and poultry feed, textiles, readymade garments, food industry, healthcare, chemicals and agro processing. Furthermore, a large-scale investment plan by a renowned Indian Corporate in the fields of fertilizer, power generation and steel is being looked into. These indeed demonstrate the strengths and finer aspects of investment scenario prevailing in Bangladesh.

Distinguished participants,

The challenges of globalization are at our doors. Unless we succeed in strengthening the foundation of our regional and bilateral trade and investment, we will run the risk of being swayed by floodgates of competition from all over. It is true that the export-import directions of our two countries have not emerged out of our mutual requirements. But with the passage of time, there is now an increasing need for mutuality. The need for us is genuine and the hour propitious to set a harmonious and binding tie for our business communities. The market driven economy will take its own course, but let not the governmental hands be redundant. Because it is the government which is the foremost facilitator. So let us facilitate. Let this venue be a starting point for facilitation and elimination of trade-impeding practices.

I conclude here with sincere thanks for your patience, ladies and gentlemen, to listen to me. I once again express my heartiest thanks and gratitude to you, Excellency for being with me here. Finally, my thanks are due for the Federation of Indian Chambers of Commerce and Industry for organizing this event.

Thank you.