Economists and experts said on Tuesday that modernizing the tariff structure was crucial for Bangladesh to support the country’s exit from the least developed countries and boost trade competitiveness.
They said Bangladesh enjoys low labor costs and tariff preferences, but the country will lose the benefits after it upgrades to developing country status in 2026.
Experts said that diversifying Bangladesh’s export basket is the immediate challenge and that it is imperative at the national level to launch the second phase of trade policy reforms as LDC graduation would take place in 2026.
In a webinar on “Improving Bangladesh’s Trade Competitiveness” co-hosted by the Bangladesh Policy Research Institute and the World Bank, economists also blamed the existing protective trade regime for the lack of diversification of exports, saying modernizing the tariff structure could increase trade. competitiveness.
Nora Dihel, senior economist at the World Bank, said average tariffs in Bangladesh were higher and exports were much lower than those of its competitors.
“Bangladesh’s lack of export diversification can be partly attributed to the protective trade regime,” she said.
Nora said modernizing the tariff regime could support Bangladesh’s export diversification and LDC graduation.
Due to high tariff protection, the prices of many consumer items are 2.5 times higher in the local market than in the export market, she said.
Nora said the existing tariff policy was responsible for anti-export biases.
She suggested that the tariff structure be compatible with middle-income country status by reducing reliance on tariff revenue.
She also suggested that Bangladesh could improve its revenue performance by broadening the tax base, reducing exemptions and collecting other forms of revenue through increased revenue.
Csilla Lakatos, another senior economist at the World Bank, said tariff and non-tariff issues are increasing the cost of doing business in Bangladesh.
She said high tariffs and the overall cost of trade were the main barriers to trade in Bangladesh.
Csilla also said that tariff rates in Bangladesh were higher than the South Asian average and that, at the same time, the country was lagging behind in implementing World Trade Organization trade facilitation agreements. .
She said regional integration could help Bangladesh accelerate market diversification and economic growth in the post-pandemic world.
Zaidi Sattar, president of the PRI, said the tariff protection structure was a significant obstacle to boosting exports and diversifying them.
“The modernization of the tariff structure was one of the many measures needed to diversify and strengthen our export competitiveness,” he said.
Zaidi Sattar said maintaining a flexible exchange rate regime would be a great support to export competitiveness.
He suggested signing FTAs, attracting export-seeking FDI and reducing trade costs by improving trade facilitation to address graduation challenges.
Commerce Minister Tipu Munshi said the government had formed a committee and seven sub-committees to assess possible graduation challenges.
“Our export products and markets are very limited. We need to develop our capacity and efficiency as we know Bangladesh’s tariff preferences will be eroded in the global market after the LDCs exit,” he said.
Hoon Sahib Soh, director of the World Bank’s macroeconomics, trade, investment and public sector practice, said Bangladesh needs a more efficient domestic tax system to boost export diversification.
He said high tariff protection erodes export competitiveness and domestic consumers pay more money for consumer products than the world average.
MP Yussuf Abdullah Harun, PRI Research Director Abdur Razzaque, DCCI President Rizwan Rahman and PRI Vice President Sadiq Ahmed, among others, spoke at the event.
