Bangladesh stands to gain more from Dhaka-Beijing FTA: Chinese expert

[Black_cats]

Bangladesh stands to gain more from Dhaka-Beijing FTA: Chinese expert

2019-09-09 01:42:50
Nurul Islam Hasib, bdnews24.com

https://www.google.com/amp/s/m.bdnews24.com/amp/en/detail/business/1662914

A Chinese expert has suggested that a free trade agreement (FTA) between Beijing and Dhaka will benefit Bangladesh more by cut the trade deficit that heavily favours the Asian economic giant.

“China-Bangladesh FTA agreement can bring more Bangladeshi products into the scope of tax exemption, effectively alleviate the bilateral trade deficit between Bangladesh and China,” Prof Cheng Min of the Institute for Bangladesh Studies of the Yunnan Academy of Social Science, Kunming, says.

“On the other hand, it also lays a good foundation for promoting the construction of "Bangladesh, China, India and Myanmar" economic corridor,” she said, speaking at an international conference on the belt and road initiative (BRI) in Dhaka on Sunday.

She tried to give an overview of the feasibility and countermeasure analysis of the signing of the China-Bangladesh FTA and allay possible concerns.

“At present, China's competitive advantages in steel, non-ferrous metals, building materials, railways, electricity, chemical industry, automobiles, communications, construction machinery, aerospace ships and marine engineering will hardly impact Bangladesh, because Bangladesh's industries are just starting.

“According to Liszt's theory of infant industry, a lot of imports and foreign investment are needed at this time. Due to the rising labour costs, it is also difficult for China's homogeneous ready-made clothing products to impact Bangladesh,” Prod Min said.

Bangladesh does not have free trade agreement with any country.

In October 2016, during Chinese President Xi Jinping visit to Bangladesh, the two sides agreed to launch a feasibility study on bilateral free trade area. Bangladesh also joined his flagship BRI during that visit.

Prof Min said Bangladesh is an “important partner” of China in South Asia, and the establishment of the FTA will not only benefit the two countries to carry out economic cooperation, but also will have a “positive impact” on the BRI construction.

The bilateral trade of $16.4 billion in 2017 grew with an average annual growth of 20 percent since 1975 when China established diplomatic ties with Bangladesh. It is heavily in favour of China. In 2018, China's direct investment in Bangladesh was $228 million.

“Since the establishment of diplomatic ties, bilateral trade investment between China and Bangladesh has been growing rapidly, but Bangladesh has been running a large deficit in goods trade with China.

“The Trade Integration Index between the two countries also shows that Bangladesh has a great dependence on Chinese goods and a huge export potential to China,” she said, adding that the trade expansion effect between China and Bangladesh is “obvious”.

“The BRI has provided good conditions for the establishment of the Sino Bangladesh free trade area. On this basis, China and Bangladesh still need to make continuous efforts to take positive measures.”

For that, she suggested establishing a list of early harvesting projects. The first is cooperation in the field of garment manufacturing.

“The two countries can sign the Framework Agreement on Cooperation in Textile and Garment Industry,” she said, as clothing sector is crucial for Bangladesh's economy.

“At present, it is facing problems such as industrial upgrading, heavy dependence on imports of raw materials and intermediate products.

“After many years of development, China's textile industry already has a complete industrial chain and a relatively high level of processing, but it also faces problems of rising labour costs and overcapacity.

“China's Ministry of Commerce encourages textile and garment enterprises to take the opportunity of the "one belt and one road" to carry out industrial transfer.

“If the specific rules of cooperation between China and Bangladesh on textile and apparel can be formulated as soon as possible, it will not only meet the practical needs of Bangladesh, but also provide a path for the development of China's textile and apparel industry in the context of supply-side reform,” she said.

The second, Prof Min said, is cooperation in steel, smelting, power, road infrastructure and communication networks.

“After the list of early harvested projects has been reached, detailed implementation rules should be promulgated, including simplifying the examination and approval procedures, clarifying the channels of appeal; establishing a cooperation fund for the list of projects to provide financing support for its smooth implementation; and the government should do a good job of service and publicise the cooperative projects.

“It will introduce the cooperation procedures, relevant laws and regulations, and other issues of concern to enterprises, so as to clear the barriers for enterprises to go out.”

She said China should give Bangladesh tax-free preferential policies for more products, including polymer products, gloves, silk, cleaning cloth, leathers, lead-acid batteries and synthetic fibres.

“The proportion of clothing with zero-tariff policy should increase from 90 percent to 100 percent in order to alleviate Bangladesh's expanding bilateral trade deficit with China.”

 

[Black_cats]

Speakers emphasize negotiation for Bangladesh's BRI opportunities
UNB

• Published at 12:57 am September 9th, 2019

https://www.dhakatribune.com/busine...egotiation-for-bangladesh-s-bri-opportunities

Speakers at a conference on Sunday emphasized negotiation with China about opportunities of Belt and Road Initiative Mehedi Hasan


Addressing the conference as distinguished guest, Economist and Chairman of CPD Prof Rehman Sobhan said the concept of BRI has a much wider global significance

Speakers at a conference yesterday emphasized negotiation with China about opportunities of Belt and Road Initiative (BRI) since it is very important for economic ties.

The suggestion came at an international conference on BRI organized by CPD at a Dhaka hotel.

Addressing the conference as distinguished guest, Economist and Chairman of CPD Prof Rehman Sobhan said the concept of BRI has a much wider global significance.

"BRI is a global initiative to construct a new international order based on enhancing development and ending poverty across the South within the framework of a more equitable world order. The scope of BRI thus extends to agendas for comprehensive, deeper economic cooperation across the world."

He said Bangladesh should initiate a series of talks and negotiations with China to promote and preserve its interests in BRI.

Industries Minister Nurul Majid Humayun said there is a good relation between Bangladesh and China. Prime Minister Sheikh Hasina also visited the country.

"BRI is very important for south Asian countries," he said, adding that a developed economic tie will be established with China through BRI.

Foreign Ministry Senior Secretary Md Shahidul Haque said, “We are not going to confine ourselves within BRI. We should be party to all initiatives as long as it serves our national interest.”"We’re in key position of the belt. We’ve to negotiate about its opportunities," he said.

Former caretaker government advisor Syed Manzur Elahi presided over the function while Dr Fahmida Khatun, executive director of CPD, read out the keynote papers.

Elahi, also CPD’s trustee board member, suggested that government policymakers should discuss business interests with stakeholders while being part of any initiatives like BRI.

“BRI is an opportunity for us, but the reality is most economies associated with BRI are competitive. It has to be BRI plus Europe, because, at the end of the day, we need to export our products to developed countries,” he said.

In her keynote presentation, Executive Director of CPD, Dr Fahmida Khatun outlined the whole perspectives of BRI, its challenges and opportunities, and what it means to Bangladesh.

“There are mixed reactions over BRI because some countries have joined while some are still observing it,” she mentioned.

Professor Dr Sachin Chaturvedi, director general of Institute for Bangladesh System for developing Countries, New Delhi; Prof Cheng Min, Institute for Bangladesh Studies, Yunnan Academy of Social Sciences Kunming; and Mahbub Uz Zaman, Bangladesh Ambassador-designate to China also spoke at the first session.

'An instrument of cooperation'

CPD chairman Prof Rehman Sobhan said China's financial capacity to underwrite the BRI program is backed by the availability of sizeable surplus capacity in its capital goods, engineering and construction industries.

"Its global expansion has stimulated growth across the Asian region. As a result, today Asia is the fasted growing region in the global system. Over the next 25 years it will account for over 50% of global growth."

He also found allegations of China's "debt trap" to be overstated.

"China has little to gain from driving weaker partners into debt, thereby reducing their capacity to trade. China has indeed helped out many of its borrowers through debt relief extended to more than 80 projects around the world between 2000 and 2017. But the risks of over indebtedness remain inherent in the circumstances of some of the weaker economies which have been prone to overdependence on external loans well before the BRI entered the global discourse."

He remarked, "We must recognize that the BRI as it is conceived by President Xi Jinping in its totality is much more than just a program to use Chinese capital to construct infrastructure projects across the world. The BRI is, indeed, a global initiative to construct a new international order based on enhancing development and ending poverty across the South within the framework of a more equitable world order."

 

[Skull and Bones]

Congratulations, Bangladesh will be as prosperous as Pakistan in this sub continent.

 

[bluesky]

By its very definition, "A free trade agreement (FTA) is a treaty between two or more countries to facilitate trade and eliminate trade barriers. It aims at eliminating tariffs completely from day one or over a certain number of years".

Statistics:
Imports from China: Bangladesh imports almost a quarter of her total imports from China. In 2014 it imported 7,750 million USD from China, while her total import was 36.99 billion USD.

Export to China: Bangladeshi products export to China is approaching the 1 billion USD mark. It has already reached 746 million USD in FY 2014 from only 32.36 million USD in 2002.

The export and import data (old) show that BD imported 7,750 million dollar worth of goods from China and exported only a tiny 746 million dollar worth of goods. In a situation like this an FTA will only benefit Chinese exports to BD. China will export more and BD will get a lesser amount of tax money at the Customs. BD has no benefit with an FTA with China.

Signing an FTA with China is tantamount to cutting one's legs intentionally. This will provide extra leverage to Chinese exporters at the expense of other exporting countries like India.

 

[Bilal9]

Who does China have an FTA with, in Asia or even the whole world?

 

[Nike]

China got FTA with all of ASEAN countries

 

[Black_cats]

China’s BRI 'debt trap' raises concerns among Bangladesh, India experts

2019-09-08 20:16:34
Senior Correspondent, bdnews24.com

https://www.google.com/amp/s/m.bdnews24.com/amp/en/detail/economy/1662793

Guests addressing the international conference on the Belt and Road Initiative organised by the Centre of Policy Dialogue at a hotel in Dhaka's Gulshan on Sunday. Photo: Asif Mahmud Ove
Experts at an international conference in Dhaka have spoken about their concerns over the “debt trap” of China’s flagship belt and road initiative (BRI) in which Bangladesh has joined.

Fahmida Khatun, executive director of the Center for Policy Dialogue (CPD) that organised the conference on Sunday, said “debt should be managed well and debt sustainability issue should be closely monitored in order to avoid any possible debt traps”.

Prof Sachin Chaturvedi, director general of India’s Research and Information System for Developing Countries (RIS), also shared the “inherent flaws of and concerns” about the BRI which he saw as an “alternative development cooperation” model.

But he said, in practice countries “often fail to negotiate a good contract that respects their own development priorities and get trapped in the undisclosed and opaque terms of engagement".

Chinese expert Prof Cheng Min of the Institute for Bangladesh Studies of the Yunnan Academy of Social Science, Kunming, however, said the BRI has provided “good conditions” for the establishment of the China-Bangladesh free trade area.

“On this basis, China and Bangladesh still need to make continuous efforts to take positive measures,” she said.

Bangladesh joined the BRI during Chinese President Xi Jinping’s visit to Dhaka in 2016. The initiative aims to rebuild the old Silk Road to connect China with Asia, Europe and beyond through massive infrastructural spending.

However, the initiative has been the subject of controversy in many western capitals, particularly Washington, which views it as merely a means to spread Chinese influence abroad and trap countries into debt through “nontransparent” projects.

India did not join the BRI, citing concerns over China’s projects with Pakistan. Some analysts say India is not comfortable with Bangladesh’s participation in the initiative.

Industries Minister Nurul Majid Mahmud Humayun said BRI is “significant” for Bangladesh which he said has “multidimensional economic ties with China”.

He termed it an “emerging opportunity” and said “lots of efficient activities” are needed to seize that opportunity.

“We have to ensure win-win cooperation with China and other countries,” he said.

NATIONAL INTEREST FIRST

The BRI promises to deliver physical and soft infrastructure to foster connectivity and economic development across its corridor.

The two-way trade between Bangladesh and China is $16.4 billion in 2017, with an average annual growth rate of about 20 percent since the establishment of diplomatic ties in 1975.

It is heavily in favour of China. China's direct investment in Bangladesh was $228 million in 2018.

Through the BRI, China intends to engage in the global economy mainly through investments in infrastructure.

A number of measures have been rolled out to materialise the ideas in Bangladesh. During his visit to Bangladesh, President Xi promised about $40 billion investment in Bangladesh - $24.45 in bilateral assistance for infrastructure projects and $13.6 billion in joint ventures.

In addition, $20 billion in loan arrangements was committed.

Foreign Secretary Md Shahidul Haque said Bangladesh has not confined itself to BRI only.

“We are looking beyond,” he said, referring to Bangladesh’s joining the Washington’s Indo-Pacific Strategy in this region.

He said Bangladesh will be joining to all initiatives “as long as it serves our interest”.

“We’ll try to avoid to joining to any military alliance,” he said, adding that “when we negotiate, we negotiate for the national interest. Nothing else, nothing else would determine our negotiation technique”.

INDIA’S CONCERNS

The Indian expert, Prof Chaturvedi, highlighted the flaws and concerns of the initiative.

“BRI is being viewed as a development initiative as participating countries are benefiting from investments by China in infrastructure projects,” he said.

But the “scepticism towards the projects, motivations and intents in the BRI countries’ continues,” he said.

“Partner countries often bring in issues like transparency in BRI projects; projects do not factor environmental aspects; local labour is not employed in project construction, operations and other work; etc.

“Further, lack of local participation, lack of inclusivity, lack of economic and project viability and increased risk of debt hangovers are manifestations of the inherent gaps in BRI.

“Local resistance to BRI projects in partner countries in worrisome. For instance, Myanmar is willing to scale down the Kyaukpyu Port over concerns over mounting debt.

“Likewise, there were protests over local employment in Thailand and Lao PDR in the high speed rail project.

“Sri Lanka’s disappointment with Hambantota Port is widespread now. This has perhaps the reason that led Sri Lanka to invite India and Japan for joint development of Colombo Port,” he said.

“ASEAN as a whole has not yet developed a common understanding about the significance, progress and challenges associated with BRI and Chinese influence in ASEAN.

“Malaysia postponing certain BRI projects in 2018 and later negotiating with China signify the problem of unilateral conceptualization of development projects.”

WAY FORWARD FOR BANGLADESH

Fahmida of CPD said for Bangladesh, BRI provides opportunity to seize benefits, particularly in the areas of trade, investment, connectivity, education and tourism, through strong ties with countries particularly in the Southern Asian region, more specifically, with China and India.

“Realisation of the BRI objectives will also help Bangladesh in achieving the SDGs,” she said.

But for implementation of BRI projects, she said, Bangladesh will require trade facilitation reforms. Bangladesh has to mobilise domestic resources through tax reform and public-private partnership.

“Selection and planning of BRI projects should be sound with a full understanding of the economic and social benefits that will be created though such projects,” she said.

“For timely completion of projects and minimise cost overrun, public disclosure of BRI projects, terms and conditions of project finance, and monitoring, reporting and anti-corruption measures should be in-built in the project implementation mechanism”.

 

[Bengal71]

By its very definition, "A free trade agreement (FTA) is a treaty between two or more countries to facilitate trade and eliminate trade barriers. It aims at eliminating tariffs completely from day one or over a certain number of years".

Statistics:
Imports from China: Bangladesh imports almost a quarter of her total imports from China. In 2014 it imported 7,750 million USD from China, while her total import was 36.99 billion USD.

Export to China: Bangladeshi products export to China is approaching the 1 billion USD mark. It has already reached 746 million USD in FY 2014 from only 32.36 million USD in 2002.

The export and import data (old) show that BD imported 7,750 million dollar worth of goods from China and exported only a tiny 746 million dollar worth of goods. In a situation like this an FTA will only benefit Chinese exports to BD. China will export more and BD will get a lesser amount of tax money at the Customs. BD has no benefit with an FTA with China.

Signing an FTA with China is tantamount to cutting one's legs intentionally. This will provide extra leverage to Chinese exporters at the expense of other exporting countries like India.

Who does China have an FTA with, in Asia or even the whole world?

In my thinking whatever BD imports from China will continue to import whether there is a FTA or not. I don't think signing FTA with China will increase Chinese imports into BD. However a FTA will remove all barriers from BD exports into China. With Chinese labor cost increasing, we can definitely export garments to China at a cheaper cost.

 

[bluesky]

In my thinking whatever BD imports from China will continue to import whether there is a FTA or not. I don't think signing FTA with China will increase Chinese imports into BD.

Not the govt of BD but the private companies import goods. They will increase imports once the market for Chinese goods enlarges because of cheaper price due to the non-imposition of a tariff. Both the importers and the consumers will get benefitted but the GoB will lose its tax.

In order to meet the BD revenue shortfall China may come out with its very special method, that is, to extend loan after loan. It is not that bad except that the GoB will keep on borrowing to pay back the arrears.

However a FTA will remove all barriers from BD exports into China.

In the case of China, it has not imposed any artificial barrier that India did. Our goods are even now barrier-free. I do not think a non-barrier will automatically increase our exports.

With Chinese labor cost increasing, we can definitely export garments to China at a cheaper cost.

No one bets on selling coal to New Castle. Should we bet on our textiles export to China and free their goods in BD without a tariff in exchange? It is too early to do that successfully. Let the average Chinese income goes up to half that of Japan. That will make its goods costlier. But, the time is not ripe.

 

[Bengal71]

Not the govt of BD but the private companies import goods. They will increase imports once the market for Chinese goods enlarges because of cheaper price due to the non-imposition of a tariff. Both the importers and the consumers will get benefitted but the GoB will lose its tax.

In order to meet the BD revenue shortfall China may come out with its very special method, that is, to extend loan after loan. It is not that bad except that the GoB will keep on borrowing to pay back the arrears.


In the case of China, it has not imposed any artificial barrier that India did. Our goods are even now barrier-free. I do not think a non-barrier will automatically increase our exports.


No one bets on selling coal to New Castle. Should we bet on our textiles export to China and free their goods in BD without a tariff in exchange? It is too early to do that successfully. Let the average Chinese income goes up to half that of Japan. That will make its goods costlier. But, the time is not ripe.

That's an alternative perspective and has merit. I think you are right.