Impact of International Trade in Bangladesh Economy

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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY

Chapter: 1 1.1 BACKGROUND OF THE STUDY

Trade is an integral part of the total developmental effort and national growth of all economies including Bangladesh. It particularly plays a central role in the development plan of Bangladesh where foreign exchange scarcity constitutes a critical bottleneck. Export trade can largely meet foreign exchange gap, and export growth would increase the import capacity of the country that, in turn, would increase industrialization, as well as overall economic activities. Bangladesh’s import needs are substantial; hence the need to rapidly increase exports is immediate. In order to finance the imports and also to reduce the country’s dependence on foreign aid, the Government of Bangladesh has been trying to enhance foreign exchange earnings through planned and increased exports. However, the global trade scenario has exposed structural limitations of the Bangladesh economy, posing a variety of challenges for the country that has under developed technology and a low capital base. In the process, we examine Bangladesh’s export and import performance compared to various countries, regions and the world over the years. We also discuss the sources of Bangladesh’s imports and directions of Bangladesh’s exports and the dynamic changes over the years, and highlight the trends of export and import shares to GDP and trade balance positions. 1.2 OBJECTIVES OF THE STUDY

This paper has been prepared from the corner of two objectives are as follows:

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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 1.2.1 Primary objective

 To give a concrete idea about the export and import activities of Bangladesh through presenting different products.  To know the overall performance of export and import and their balance as well as to find the positive or negative impact on our economy. 1.2.2 Secondary Objective

 To know the various terms of export and import.  To know the present, past and potential or future trading of Bangladesh.  To know the balance of trade of Bangladesh.  To know the challenges facing Bangladesh in exporting and importing products and services at present and recent. It is known to all that, importing more goods and services than exporting for an economy have continuous bad effect on its real growth. On the other hand, study of export and Import of international business provides a greater learning opportunity about varieties terms, policies, rules of export and import, products, opportunities as well as the paths for business expansion throughout the world for maximizing profit. We strongly hope that our paper will provide lot accurate and useful information that will help those who want to get an idea on export and import condition of Bangladesh. 1.3 SPECIFIC PURPOSE OF THE STUDY

In this Term Paper, we have discussed the composition, performance, growth, impact and trends of foreign


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trade of Bangladesh. This paper has been made to show the main purpose that is as follows:  To fulfill partial requirements of course completion of the International Business.  To obtain a strong knowledge that will help to work on business at international level in future. 1.4 RATIONALE & SIGNIFICANCE OF THE STUDY

There are many factors that discourage local companies from going international and taking their goods across the world. But the benefits of international trading far outweigh its disadvantages. The global village is growing even closer, and this has made exporting a big business that grows exponentially every year, and benefits from improved logistics and communication channels. Business can gain some long lasting benefits from international trade. Importing and exporting goods can help to broaden our horizons in the following ways: Trading our products internationally can give us an advantage over competition. If the domestic market is already flooded with similar products, then overseas markets may just be the answer to better profitability. This holds especially true for products that aren’t widely available overseas. As the international market for our good gets bigger, sales increase, giving us an advantage over others in our industry. Companies engaging in international trade experience improved efficiency brought on by the presence of economies of scale in production. This can bring about significant trade gains due to the reallocation of


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resources that can raise productive efficiency. Simply put, more output can be created at lower costs bringing about major savings. International trade can give us the opportunity to understand the varied market trends that can affect our business. It is common business saying that 95% of a company’s prospective market is situated out of the country. And it just won’t be wise to forego such a huge potential for business, leads, profits and thus business growth. So, the function of international trade is to capitalize on profitable opportunities for owners, which is the single most significant directive for corporations and many other businesses. For business concerns that offer season specific services or products, expanding operations to overseas is a perfectly viable way of staying busy and making money all year around. And staying in business all year round is a great way of outmaneuvering competitors. International trade can introduce a company to whole new foreign markets. Spreading risk in foreign markets and companies means that organization won’t only be subjected to the tribulations of the Bangladesh economy. This diversification can shield their businesses from the investment risk of putting all their eggs in one basket. Similarly, international traders are also ideally poised to take advantage of the higher than usual potential for growth of some foreign economies. It is important to do our research right to find the right emerging markets for our kind of businesses. Of course, it is also important to balance these advantages


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against the likelihood for high costs and abrupt changes that are the special risks of investing internationally. International trade holds many benefits for those who are willing to put in the extra effort. As websites such as Export promotion Bureau Bangladesh make it obvious, importing organizations are eager to make their infrastructures available to new trading partners on a global scale, which is a sure sign that the time is ripe to explore new opportunities. 1.5 FUTURE SCOPE OF THE STUDY

It is very known that, international Business is considered as a big path for bringing a revolutionary change in a countries economy as well as world. It may have some scope in variety of ways for various users, persons or groups. The study is specifically focused on the exporting and importing different products and its effect on the economy. o This report will render a close past theoretical look at the export and import that have been changed over time and may be used as historical data to decide for making future action. o The study will also help to know the reasons behind of growth of export in different sector and also together increasing import of Bangladesh. o The study will help to know the reasons of imbalance trading and its effect on economy at the time.


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o The study will help us to gather knowledge about the kinds of products & services are exported or imported from different countries. o It will assist to know the major products of exporting and importing are performed by bangladesh. 1.6 METHODOLOGY OF THE STUDY 1.6.1 Data Collection

This research is basically descriptive in nature and from the secondary sources. Keeping the background and the specific objectives in mind, related available information have been collected through mainly secondary sources during the process which is utilized for finding useful information on trading of Bangladesh. 1.6.2 Sources of primary data:

paper.

Not available in this term

1.6.3 Sources of Secondary Data

o Official websites of Central bank of Bangladesh. o Official websites of commerce ministry as well as concerned websites of government and its agencies. ( see references) o Financial Journals. o Bangladesh Business Portals. o Varieties Financial and Economic Magazines. o Others websites related with finance trading, economics and banking industry of international and domestic level. ( See references)


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 1.7 LIMITATIONS OF THE STUDY

The paper has focused mainly on limited items of exported and imported products of Bangladesh. Some limiting factors were faced while conducting process for preparing the report. These factors are as follows: o Particularly as we full time job holder so, time was really critical factor for us to accomplish this report. o We could not gather whole information of trading of given products equally standard from the prospect of export and import. o We have found it so critical to summarize information from different sources because of some lack of understanding to this process though tried best with our level. o We have found some data and information (year of 2011 as well as 2012) to the different websites dissimilar from commerce ministry of Bangladesh government which has led us to be confused on some particular term of trading of Bangladesh internationally. However, we have included data, information, table and all graphical presentation from the most reliable sources like websites of Bangladesh government, World Bank, WTO, IMF, DCCI, EPB and so on.


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Chapter >2: Literature Review 2.1 World Trade organization in International Trading

International trade has truly expanded to encompass most of the world over the past century. The countries of the world have seen that everyone can benefit from specializing in the production of a certain good or set of goods and by having skilled workers that provide services to others. This trade off in strengths and weaknesses help get some commodities to locations that would otherwise be unable to attain goods or services that they need. The world of trading between countries is ever changing with the advancement in technology that becomes available to countries. The importing and exporting of goods across the globe is regulated by the World Trade Organization (WTO). This, like many other organizations have multiple benefits and drawbacks for the parties involved beyond practical application of rules and policies. One major


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benefit of the WTO is that they allow for trading on neutral ground allowing neither of the parties involved to obtain an unfair advantage during the trade agreement process. Any disputes that arise between two or more trading parties are also handled by the WTO which is also a benefit of having the organization in place. The organization itself acts as a mediator or referee of sorts when it comes to the process of trade between nations across the globe. This type of organization also has drawbacks when it comes to certain real world application in certain aspect. Nothing is perfect but again some of its approaches to policy are only really beneficial in theory. It seems as if the WTO organizations method of operation is business focused with little care as to the effects its agreements have on the populous of the countries involved. Four key points defined in the international trade simulation are the    

Production possibility frontier. Opportunity cost. Absolute advantage. Comparative advantage.

The production possibilities frontier is a curve that measures the maximum combination of two products from a given number of available resources and current technology. If a company was in business producing laptop computers and HD television sets the resources are the workers, conveyer machinery, and other materials for production. The production possibilities frontier would depict a specified quantity produced if all resources were used to produce only laptop computers on one end of the frontier and the specified quantity produced if all resources were used to produce only HD

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television sets on the other side of the frontier. Associated points and quantities would be plotted accordingly as the total quantity of one product varies to produce the other. All combinations plotted on the frontier are attainable maximizing the resources available. As more of one product is manufactured less of the other product is produced. The opportunity cost of production is the highest valued alternative that must be forgone to engage in the production of another product. The opportunity cost of laptop computers to HD television sets would be the number of laptop computers that can be produced by not producing HD television sets. In some instances an individual, firm, or company can produce more of a good or service than their competitors using the same goods and services, which is known as absolute advantage. To maximize profits and production, countries should specialize in the production and export of commodities that it can produce at a lower opportunity cost than other countries, which is called comparative advantage. This includes importing commodities produced at a lower opportunity cost in other countries, which would increase overall GDP for all countries involved. In maximizing comparative advantage the opportunity cost concept can be an accurate approach because comparative advantage changes with the increase or decrease in technology or skill in labor because of this continual measure of the countries abilities should be maintained. Over time a nation’s workforce will change, and thus the goods and services that a nation produces and exports will change. Nations that train their workers for future roles can minimize the difficulty of making a transition to a new, dominant market.


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The simulation focused on trade policy and the terms of trade. The terms of trade can influence the ratio comparing export prices to import prices, the terms of trade as it is related to current accounts and the balance of payments. If a country's exports prices rise by a rate greater than that of its total imports, then the terms of trade have improved. Increasing the terms of trade begets an increased demand for a country's exports, thus, resulting in rising revenues from their total exports, which in turn increases demand for the country's currency, which increases is value via law of supply and demand. (Van Bergen). If the price of exports rises by rate smaller than that of its imports, the currency's value will decrease in relation to its trading partners. Throughout the simulation one had to negotiate the terms and evaluate the impact these terms were going to have the on the GDP, but it also would have affected the value of the currency. Terms of trade however depend on many factors during negotiation, primarily the stability of both the government and the economy. Political and economic stability also play important factors. Foreign investment seeks out countries with a strong economy and a stable government in which to invest their capital. It is making the safe bet to place their capital in a stable environment than an unstable one. If a country is perceived to become or be unstable, these investments are pulled out, thus reducing that economy’s access to capital, making funds scarce and devaluing their currency (Van Bergen). However if the investment is strong, then the currency becomes strong as more countries demand access to it via investment. One of the decision factors whether to open a Free Trade agreement was based on the factor of countries stability. With one country, maintaining a robust economy paired with a stable democratic government IBAIS University, Dhaka, Bangladesh Page 12

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and the other an unstable agrarian economy with a loosely organized and frequently shifting political environment. It was a safe decision on the behalf of Roadmap to select the stable country to open a free trade agreement as this would create a safer bet to withhold as much impact on both the home country and Roadmap currency. The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. The WTO has many trade topics, such as tariffs. Customs duties on merchandise imports are called tariffs. Tariffs give a price advantage to locally produced goods over similar goods, which are imported, and they raise revenues for governments. The WTO allows countries to negotiate trade on neutral ground; they help lower trade barriers and open markets for trade. Communication is difficult between countries; the WTO also solves this by interpreting contracts so both parties understand, and have a successful relationship. The WTO has helped increase trade and will continue to do so in the future. The simulation of the country of Roadmap tested the knowledge we have attained pertaining to international trade. This demonstrated how even one decision can change the face of trade between two countries and how each country can benefit from exchanging goods with one another to help fill in where one country may be weak. We learned how tariffs can affect imports, exports, and the balance of trade. This simulation shows the direct link between an international trade decisions by a country and how it will affect its outcome financially as well as any future interaction with that country. The result of this simulation is that there is always going to be change when dealing with trade


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issues with other countries. There will be up and down times that each country will face when attempting to trade a good or service with another country. The World Trade Organization has been implemented to help countries grow their economies by importing and exporting of goods. The bottom line in making any decision when deciding what to trade with another country is to compare how the items being traded are equaling out to one another. This is comparative advantage and must be monitored continuously over time due to changes in the availability of goods, commodities, and the workers a country may have available. 2.2 Definition of Export and Import

The idea of trade between nations has been around for centuries. It began with trade routes for silk, spices, and other commodities. It later began to include seafaring trading such as cocoa from Central and South America being sent to Europe. Today the world of trade includes anything that a person can conceive: grains, cotton, tobacco, spices, services, components for making a good, and the list go on. The individual countries must weigh every option and angle that is present when entering into a trade deal with other countries. Bangladesh economy has passed through a heightened pace of global integration in the 1990s. The degree of openness of the Bangladesh economy is now higher than many developing countries though international trade of Bangladesh is extremely small relative to the size of its population. "Foreign demands for goods are produced by home country". In national accounts "exports" consist of transactions in goods and services (sales, barter, gifts or grants) from residents to non-residents. A general IBAIS University, Dhaka, Bangladesh Page 14

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delimitation of exports in national accounts is given below: An export of a good occurs when there is a change of ownership from a resident to a non-resident; this does not necessarily imply that the good in question physically crosses the frontier. However, in specific cases national accounts impute changes of ownership even though in legal terms no change of ownership takes place. Export of services consists of all services rendered by residents to non-residents. In national accounts any direct purchases by non-residents in the economic territory of a country are recorded as exports of services; therefore all expenditure by foreign tourists in the economic territory of a country is considered as part of the exports of services of that country. Also international flows of illegal services must be included. National accountants often need to make adjustments to the basic trade data in order to comply with national accounts concepts; the concepts for basic trade statistics often differ in terms of definition and coverage from the requirements in the national accounts: Statistical recording of trade in services is based on declarations by banks to their central banks or by surveys of the main operators. In a globalized economy where services can be rendered via electronic means. Basic statistics on international trade normally do not record smuggled goods or international flows of illegal services. A small fraction of the smuggled goods and illegal services may nevertheless be included in official trade statistics through dummy shipments or dummy declarations that serve to conceal the illegal nature of the activities.


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"Imports" consist of transactions in goods and services (sales, barter, gifts or grants) from non-residents residents to residents. A general delimitation of imports in national accounts is given below: An import of a good occurs when there is a change of ownership from a non-resident to a resident; this does not necessarily imply that the good in question physically crosses the frontier. However, in specific cases national accounts impute changes of ownership even though in legal terms no change of ownership takes place. Imports of services consist of all services rendered by non-residents to residents. In national accounts any direct purchases by residents outside the economic territory of a country are recorded as imports of services; therefore all expenditure by tourists in the economic territory of another country are considered as part of the imports of services. Also international flows of illegal services must be included. Basic trade statistics often differ in terms of definition and coverage from the requirements in the national accounts: Statistical recording of trade in services is based on declarations by banks to their central banks or by surveys of the main operators. In a globalized economy where services can be rendered via electronic means. Basic statistics on international trade normally do not record smuggled goods or international flows of illegal services. A small fraction of the smuggled goods and illegal services may nevertheless be included in official trade statistics through dummy shipments or dummy declarations that serve to conceal the illegal nature of the activities. Like many other third-world countries, Bangladesh relies quite heavily on exports to provide for the needs of its densely populated nation. The same products sold locally will generally fetch a much lower price than they would on


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the international market. This means that it is far more profitable for the country to engage in exportation than it is to engage in local trade. While this may mean that a large percentage of the country’s GDP is sent off abroad as Bangladesh exports instead of being enjoyed by the country’s own people, it also allows for a steady influx of foreign currency. Currently Bangladesh’s main export items are garments, jute and jute-related goods, leather, frozen fish and seafood. Just three years ago the country made over $2,000 billion from export trade. The majority of the country’s trade is conducted with the USA but a small portion of exports also sees its way to Germany, the UK, France and Italy. However these figures should not mislead you into thinking that the country is well-off. As one of the poorest and most densely populated countries in the world, the majority of these profits will generally make their way into the pockets of a few wealthy while the rest will be thinly spread out amongst those involved in the production of these goods. To add to this, the country’s economy depends on an erratic monsoon cycle as well as drought and flooding which makes regular harvesting difficult. Besides these Bangladesh exports, the country is also engaged in the production of rice, tea, sugar wheat, ship scrap metal, textiles, fertilizer, pharmaceuticals, ceramic tableware and newsprint. Though yields can at times be quite high, the country still faces widespread poverty and it is struggling to free itself from this. Some progress has been made, but there are still many people living below the breadline in Bangladesh. 2.3 How to Measure the Effects of Export and Import on the Economy

According to the expenditures method of calculating gross domestic product, an economy’s annual GDP is IBAIS University, Dhaka, Bangladesh Page 17

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the sum total of C + I + G + (X – M), where C, I and G represent consumer spending, capital investment and government spending, respectively. While all those terms are important in the context of an economy, let’s look closer at the term (X – M), which represents exports minus imports, or net exports. If exports exceed imports, the net exports figure would be positive, indicating that the nation has a trade surplus. If exports are less than imports, the net exports figure would be negative, and the nation has a trade deficit. Positive net exports contribute to economic growth, something that is intuitively easy to understand. More exports mean more output from factories and industrial facilities, as well as a greater number of people employed to keep these factories running. The receipt of export proceeds also represents an inflow of funds into the country, which stimulates consumer spending and contributes to economic growth. Conversely, imports are considered to be a drag on the economy, as can be gauged from the GDP equation. Imports represent an outflow of funds from a country, since they are payments made by local companies (the importers) to overseas entities (the exporters).However, imports per se are not necessarily detrimental to economic performance, and in fact, are a vital component of the economy. A high level of imports indicates robust domestic demand and a growing economy. It’s even better if these imports are mainly of productive assets like machinery and equipment, since they will improve productivity over the long run. A healthy economy, then, is one where both exports and imports are growing, since this typically indicates economic strength and a sustainable trade surplus or deficit. If exports are growing nicely but imports have declined significantly, it may indicate that the rest of


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the world is in better shape than the domestic economy. Conversely, if exports fall sharply but imports surge, this may indicate that the domestic economy is faring better than overseas markets. The U.S. trade deficit, for instance, tends to worsen when the economy is growing strongly. The country’s chronic trade deficit has not impeded it from continuing to be one of the most productive nations in the world. But a rising level of imports and a growing trade deficit do have a negative effect on a key economic variable – the level of the domestic currency versus foreign currencies, or the exchange rate. 2.4 Effect of Exchange Rates

The inter-relationship between nation’s imports and exports, and its exchange rate, is a complicated one because of the feedback loop between them. The exchange rate has an effect on the trade surplus (or deficit), which in turn affects the exchange rate, and so on. In general, however, a weaker domestic currency stimulates exports and makes imports more expensive. Conversely, a strong domestic currency hampers exports and makes imports cheaper. Let’s use an example to illustrate this concept….

Consider an electronic component priced at $10 in the U.S. that will be exported to Bangladesh. Assume the exchange rate is 50 Taka to the U.S. dollar. Ignoring shipping and other transaction costs such as import duties for the moment, the $10 item would cost the Bangladeshi importer 500 Taka. Now, if the dollar strengthens against the Bangladeshi Taka to a level of 55, assuming that the U.S. exporter leaves the $10 price for the component unchanged, its price would


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increase to 550 Taka ($10 x 55) for the Bangladeshi importer. This may force the Bangladeshi importer to look for cheaper components from other locations. The 10% appreciation in the dollar versus the Taka has thus diminished the U.S. exporter’s competitiveness in the Bangladeshi market. At the same time, consider a garment exporter in Bangladesh whose primary market is the U.S. A shirt that the exporter sells for $10 in the U.S. market would fetch her 500 Taka when the export proceeds are received (again ignoring shipping and other costs), assuming an exchange rate of 50 Taka to the dollar. But if the Taka weakens to 55 versus the dollar, to receive the same amount of Taka (500), the exporter can now sell the shirt for $9.09. The 10% depreciation in the Taka versus the dollar has therefore improved the Bangladeshi exporter’s competitiveness in the U.S. market. To summarize, a 10% appreciation of the dollar versus the Taka has rendered U.S. exports of electronic components uncompetitive, but has made imported Bangladeshi shirts cheaper for U.S. consumers. The flip side of the coin is that a 10% depreciation of the Taka has improved the competitiveness of Bangladeshi garment exports, but has made imports of electronic components more expensive for Bangladeshi buyers. Multiply the above simplistic scenario by millions of transactions, and we may get an idea of the extent to which currency moves can affect imports and exports. Countries occasionally try to resolve their economic problems by resorting to methods that artificially depress their currencies in an effort to gain an advantage in international trade. One such technique is “competitive devaluation,” which refers to the strategic and large-scale depreciation of a domestic currency to boost export volumes. Another method is to suppress


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the domestic currency and keep it at an abnormally low level. This is the route preferred by China, which held its Yuan steady for a full decade from 1994 to 2004, and subsequently allowed it to appreciate only gradually against the U.S. dollar, despite having the world’s biggest trade surpluses and foreign exchange reserves for years. 2.5 Effect of Inflation and Interest Rates

Inflation and interest rates affect imports and exports primarily through their influence on the exchange rate. Higher inflation typically leads to higher interest rates, but does this lead to a stronger currency or a weaker currency? The evidence is somewhat mixed in this regard. Conventional currency theory holds that a currency with a higher inflation rate (and consequently a higher interest rate) will depreciate against a currency with lower inflation and a lower interest rate. According to the theory of uncovered interest rate parity, the difference in interest rates between two countries equals the expected change in their exchange rate. So if the interest rate differential between two nations is 2%, the currency of the higherinterest-rate nation would be expected to depreciate 2% against the currency of the lower-interest-rate nation. In reality, however, the low-interest-rate environment that has been the norm around most of the world since the 2008-09 global credit crisis has resulted in investors and speculators chasing the better yields offered by currencies with higher interest rates. This has had the effect of strengthening currencies that offer higher interest rates. Of course, since such “hot money” investors have to be confident that currency depreciation will not offset higher yields; this strategy is generally restricted to stable currencies of nations with


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strong economic fundamentals. As discussed earlier, a stronger domestic currency can have an adverse effect on exports and on the trade balance. Higher inflation can also affect exports by having a direct impact on input costs such as materials and labor. These higher costs can have a substantial impact on the competitiveness of exports in the international trade environment. 2.6 Economic Reports of Trade Balance

A nation’s merchandise trade balance report is the best source of information to track its imports and exports. This report is released monthly by most major nations. The U.S. and Canada trade balance reports are generally released within the first 10 days of the month, with a one-month lag, by the Commerce Department and Statistics Canada, respectively. These reports contain a wealth of information, including details on the biggest trading partners, the largest product categories for imports and exports, trends over time, etc. 2.7 Breaking down the Balance Of Trade

The balance of trade is the difference between a nation’s export and its imports. A crucial point to note is that both goods and services are counted for exports and imports, as a result of which a nation has a balance of trade for goods (also known as the “merchandise trade balance”) and a balance of trade for services. The net or overall figure forms the balance of trade or “trade balance,” a major contributor to a country's economic well-being. A nation has a trade surplus if its exports are greater than its imports; if imports are greater than exports, the nation has a trade deficit. 2.8 Trade Data – Census Basis and BOP Basis


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While data on a nation’s exports and imports of physical goods can be collated from customs documents such as export declarations and import manifests, this is not possible for trade in intangible services. The latter is therefore compiled based on the flow of funds, the foundation on which balance of payments (BOP) trade statistics are based. Therefore, data on merchandise trade is available based on both custom-based trade statistics and BOP, while data on services is only available on a BOP basis. For example, in the U.S., statistics on exports and imports are compiled by the Commerce Department’s Bureau of Economic Analysis (BEA) and released in a monthly report. The BEA collates information on exports from exporters electronic export information (EEI) that have been submitted to the U.S. Automated Export System (AES). Exporters submit this export information to the U.S. Census and also to U.S. Customs and Border Protection. Similarly, import data is compiled from documents collected by the U.S. Customs and Border Protection pertaining to goods that have arrived in the U.S. from foreign countries. The BEA adjusts the goods total on a census basis to bring the data in line with the concepts used to prepare national and international accounts. The BOP-basis data derived in this manner enables goods trade numbers to be summed with services trade figures to arrive at a more accurate picture of overall U.S. trade, goods and services. 2.9 Distinguishing Between a Service Export and Import

Statistics for trade in services are derived from the BEA’s estimates of service transactions between foreign countries and the U.S., based on periodic surveys and partial information from monthly reports. IBAIS University, Dhaka, Bangladesh Page 23

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The BEA provides export and import data on services in a number of categories travel, passenger fares, royalties and license fees, transfers under U.S. military sales contracts (only for exports), and direct defense expenditures (only for imports). While the distinction between an export and import of a physical good is readily apparent, it is not as clear for a service. Here, the flow of funds determines whether a service transaction qualifies as an export or an import, depending on whether it is a debit transaction that results in a payment or outflow of funds, or a credit transaction that results in a receipt or inflow of funds. So, for instance, fares received by U.S. carriers from foreign residents for travel between the U.S. and foreign countries, or between two points overseas, would show up on the export side of the trade balance for services. Likewise, fares paid by U.S. residents to foreign carriers would show up on the import side of the trade balance for services. 2.10 Factors That Affect Trade Balance

Numerous factors affect a country’s trade balance. These include: Trade policies: Nations that are insular and have restrictive trade policies such as high import tariffs and duties may have larger trade deficits than countries that have open trade policies, since they may be shut out of export markets because of these impediments to free trade. Exchange rates: A domestic currency that has appreciated significantly may pose a challenge to the cost-competitiveness of exporters, who may find themselves priced out of export markets. This may pressure a nation’s trade balance.


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Foreign currency reserves: To compete effectively in extremely competitive international markets, a nation has to have access to imported machinery that enhances productivity, which may be difficult if forex reserves are inadequate. Inflation: If inflation is running rampant in a country, the price to produce a unit of a product may be higher than the price in a lower-inflation country. This would affect exports, affecting the trade balance. 2.11 Use Trade Balance as an Economic Indicator

The utility of trade balance data as an economic indicator depends on the nation. The biggest impact is generally seen in nations with limited foreign exchange reserves, where the release of trade data can trigger large swings in their currencies. The trade data is usually the largest component of the current account, which is closely monitored by investors and market professionals for indications of the economy's health. The current account deficit as a percentage of GDP, in particular, is tracked for signs that the deficit is becoming unmanageable and could be a precursor to a devaluation of the currency. However, a temporary trade deficit may be viewed as a necessary evil, since it may suggest that the economy is growing strongly and needs imports to maintain the growth momentum. Trade data is also parsed to see which trading partners are contributing to the overall surplus or deficit. In June 2013, for example, the U.S. had a trade deficit of $26.6 billion with China, bringing its year-to-date deficit with the Asian giant to $147.7 billion. In contrast, the trade deficit with Canada – the biggest trade partner of the U.S., accounting for 16.8% of total trade in the first half of 2013 – was only $1.6 billion, for a YTD deficit of $15.5 billion. IBAIS University, Dhaka, Bangladesh Page 25

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China’s enormous trade surplus with the U.S. may lead to renewed calls for the nation to revalue its Yuan, which critics opine is being held artificially low to stimulate exports U.S. trade data occasionally affects the greenback, which in turn has an impact on commodity prices because of the negative correlation between the two (stronger dollar causes weaker commodity prices and vice versa). These moves often result in volatility in Canada’s TSX Composite index, which has a heavy weighting in commodities. In general, market watchers appear more concerned with trade deficits than trade surpluses. This may be because chronic deficits often trigger steep currency devaluation, leading to severe repercussions for the local economy as the higher interest rates that are used to prop up the currency take their toll. In summer of 2013, the currencies of India and Indonesia slumped 14% in just over two months as investors focused on nations with large trade and current account deficits. While India’s foreign currency reserves grew in leaps and bounds after the economic reforms of the 1990s, rising gold imports in 2013 led to widening trade deficits, causing the Indian government to take measures to restrict gold imports. 2.12 The Bottom Line

The balance of trade is a key indicator of a nation’s health. Trade balance data is available on a census / customs basis and BOP-basis for goods, and only on a BOP-basis for services. In general, investors and market professionals appear more concerned with trade deficits than trade surpluses, since chronic deficits may be a precursor to currency devaluation. 2.13 Conclusion


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Imports and exports exert a major influence on the consumer and the economy directly, as well as through their impact on the domestic currency level, which is one of the biggest determinants of a nation’s economic performance.

Chapter: 3: An Overview Of Bilateral Trade Among SARCC Nation’s

The trade is called the exchange of goods between two countries. Bilateral trade agreements give preference to certain countries in commercial relationships, facilitating trade and investment between the home country and the foreign country by reducing or eliminating tariffs, import quotas, export restraints and other trade barriers. Bilateral trade agreements can also help minimize trade deficits. 3.1 Bangladesh in Regional and Bilateral Trade

1.

Asia Pacific Trade Agreement (APTA)

2.

BIMSTEC meeting

3

SAARC Preferential Trading Arrangement (SAPTA)

4

AARC Preferential Trading Arrangement (SAPTA)

5

The Agreement on South Asian Free Trade Area (SAFTA)

6

SAARC Framework Agreement on Trade in Services

Trade

Negotiating


Committee

(TNC)

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(SAFAS) 7

Bilateral FTA with India, Pakistan and Sri Lanka

8

Standing Committee for Cooperation (COMCEC)

Economic

and

Trade

9

Standing Committee for Cooperation (COMCEC)

Economic

and

Trade

10 Trade Preferential System Among the OIC Members (TPS-OIC) 11 Preferential Trade Agreement (PTA) among D-8 Countries (D-8) 12 Bangladesh Foreign Trade Institute (BFTI) 13 International Trade Centre (ITC) 14 International Trade Centre (ITC) 15 United Nations Conference Development (UNCTAD)

on

Trade

and

16 United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) 17 Canadian International Development Agency (CIDA) 18 European Commission (EC) [The tables have been given below to show the position of Bangladesh in export and import among its partners from SAARC countries that include historical data from 1998 to 2011. (Not found data of 2012 and 2013)]


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3.2. Bangladesh-Bhutan Bilateral Trade


Value in Million Taka (Value in Million US $)

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INTERNATIONAL TRADE OF BANGLADESH & Trade IT’S IMPACT ON ECONOMY

Year

Export

Import

199900

40.50 (0.80) 220.60 (4.38) 1 : 5.47

200001

63.64 (1.18) 305.10 (5.65) 1: 4.79

Ratio

200191.37 (1.57) 225.00 (3.92) 1: 2.50 02 3.3 Bangladesh-India Trade 200203

91.17 (1.57) 18.90 (2.74)

200304

172.54 (2.93) 330.20 (3.35) 1: 1.14

200405

287.95 (4.65) 528.30 (8.60) 1:1.84

200506

101.74 (1.52) 784.00 (11.68)1: 7.68

200607

96.60 (1.40) 689.30 (9.98) 1: 7.39

200708

92.61 (1.35) 942.50 (13.73)1:10.18

200809

42.09 (0.61) 836.50 (12.12)1:19.87

200910

154.96 (2.24) 8289 (11.98)

201011

222.48 (3.12) 1325.5 (18.58)1: 5.95


1: 1.74

1: 5.35

Value in Million Taka (Value in Million US $) BBA


Year

Export

1998-99 2870.14(59.74) 1999-00 3264.11(64.88) 2000-01 3329.49(62.28) 2001-02 2865.96(50.28) 2002-03 4868.23(84.08) 2003-04 5261.57(89.27) 8869.13 (144.19) 16262.13(241.9 2005-06 6) 19969.98(289.4 2006-07 3) 24564.29(358.0 2007-08 8) 18391.95 2008-09 (274.26) 2009-10 21074 (304.62) 2010-11 36040 (512.51) 2004-05

3.4

Import

Trade Ratio

59350.90(1234.93 1: 13 ) 41889.00(832.62) 1: 19 63887.20(1183.39 1: 17 ) 58109.82(1019.47 1: 20 ) 78453.50(1352.64 1: 16 ) 94438.20(1602.27 1: 18 ) 124646.30 1: 14 (2042.06) 125330.00(1864.7 1: 8 4) 156636.00(2268.1 1: 8 1) 232138.60(3383.9 1:9 4) 186093.00 1:10 (2863.19) 159586 (3202.8) 1:10.5 320659 (4560) 1:8.9

Major Export Items in 2008-09 (In million US $):

Chemical fertilizer, Pharmaceutical products and other chemical products (72.89), Raw jute (29.36), Frozen Food (35.47), Agri-products (11.31), Jute goods (48.76), Woven garments and Knitwear (10.34) etc. 3.5

Major Import Items in 2007-08 (In million US $):

All types of cotton, cotton yarn/thread and cotton fabrics (611.08); Cereals (813.93); Mineral fuels, mineral oils and products of their distillation, bituminous substances and mineral waxes (164.30); Boilers, machinery and mechanical appliances, parts thereof (147.75); Vehicles other than railway or IBAIS University, Dhaka, Bangladesh Page 31 tramway-rolling stock and parts and accessories

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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 3.6 Bangladesh - Maldives Trade

Value in Million Taka Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Export 0.48 0.02 0.27 0.08 0.14 0.74 0.93

Import 0 0 0 0 0 0.86 1.44

Bangladesh - Nepal Trade


Trade Ratio

3.7

1:1.16 1:1.55

Value in Million Taka (Value in Million US $)

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INTERNATIONAL TRADE OF BANGLADESH & Value in Million Taka (Value in Million US $) IT’S IMPACT ON ECONOMY Year Export Import Year Export Import

Trade Trade Ratio Ratio 1996-97 1659.20(38.97 2872.40 (67.26) 1: 1: 3.24 1.72 2000-01 108.38(2.01) 352.20(6.53) ) 1997-98 2026.67(44.67 3638.34(80.03) 1: 1.79 2001Value in Million Taka (Value 191.80(3.34) in Million US $)1: 1.14 168.04(2.92) 2002 ) 1998-99 1829.47(38.13 3979.00(82.79) 1: 2.17 Year Export Import Trade Ratio ) 190.91(3.29) 320.90(5.54) 1: 1.68 2002-03 1999-00 238.76(4.77) 420.20(8.35) 1 : 1.75 1999-00 1597.34(31.75 4212.10 (83.72) 1 : 2.64 2000-01 141.37(2.62) 431.00(7.98) 1: 3.04 ) 150.36(2.55) 242.80(4.12) 1: 1.61 2003-04 2001-02 118.88 (2.07) 352.60(6.10) 1:2.94 2000-01 1715.00(32.08 5142.38(95.30) 1: 2.97 2002-03 217.49(3.76) 462.30(7.98) 1: 2.12 ) 290.81(4.74) 105.20(1.71) 1: 0.36 2004-05 2003-04 610.42(10.35) 578.87(9.82) 1: 0.94 2001-02 1642.50(28.60 3866.00(67.32) 1: 2.35 2004-05 683.11(11.11) 631.60(10.29) 1:0.93 ) 305.00(4.55) 180.60(2.69) 1: 0.59 2005-06 2005-06 888.81(13.25) 728.30(10.86) 1: 0.82 2002-03 1857.00(31.51 5331.70(92.08) 1: 2.92 2006-07 )1023.47(14.82 1131.10(16.37)1: 1.10 ) 58.592 2006-07 411.7 (5.96) 1:7.02 2003-04 2659.68(45.11 6637.80(112.62) 1: 2.49 (0.848) 2007-08 )1325.35(19.32 1047.20(15.26)1: 0.78 ) 2004-05 3942.35(64.09 8578.00(139.46) 1: 2.21 3632.8 2008-09 1283.56(18.67 1276.70(18.57)1: 0.99 2007-08 1:7.90 ) 460.16 (6.70) (52.95) ) 2005-06 2880.71(57.74 10072.90(149.87 1:2.60 2009-10 )1642.33(23.74)1574.8(22.76) 1: 0.95 ) 604.06 (8.78) 4728.5 2008-09 1:7.82 2006-07 4243.05(61.06 12983.80(188.00 1: 3.08 (68.73) 2009-10 )1642.33(23.74)1574.8(22.76) 1: 0.95 ) 2007-08 4871.27(71.01 16393.50(238.97 1: 3.36 2984.3 2010-11 2476.5 (34.73) 1966.4 (27.57) 1: 0.79 2009-10 556.8 (8.78) 1:4.91 ) ) (43.13) 2008-09 5243.25(76.21 19840.00(280.37 1: 3.67 3.12 Major export items in 2008-09 (value in million US$): ) ) 3455.8 2010-11 773 (10.84) 1: 4.47 2009-10 5373.14 22393.56 1:4.16 (48.46) Chemical products (7.63), Jute goods (1.12), Agri(77.67) (323.7) products (0.66), Knitwear (3.02), Woven garments 2010-11 (669.3) 1:7.71 Major export items from 4765.17 Bangladesh to Nepal in 2004(1.02) etc.6103.07 05 (Value (86.79) in million Tk) 3.13 Major import items in 2008-09 (value in million US$) : Pharmaceutical Products (0.23), Fertilizer (1.33), 3.9 Major export items (Value in million US$) (2008-09) Textile and Textile article (2.40), Electrical machinery Chemicals Products (5.09), Plastic and plastic and equipment (0.53) etc. products (0.53), Rubber and rubber products (0.59), Major import items into Bangladesh in 2004-05 (Value Raw jute (45.81); Tea (9.16); Chemical Products Cotton (2.83), Man-made filament (1.23), Transport in million Tk) (2.88); Agree-products Jute goods (3.18)etc. etc. equipment, electric and(3.16), machinery equipment Edible Vegetable and certain roots and tubers (0.92), Residues waste from food industries (0.21), Sources: Exportand Statistics, EPB &Bangladesh Bank, Import Statistics, Bangladesh Bank Cereals (0.32) etc. 3.10 University, Major import items (ValuePage in million US$) (2007-08) IBAIS Dhaka, Bangladesh 33 Information Source: EPB & Bangladesh Bank.

Cotton (129.73); Cereals (8.95); Sugar and sugar confectionery (31.89) Manmade filament (4.49), Manmade staple fibers (11.42) ,Special woven (5.35), BBA


3.14 Growth of Bilateral Trade

Bangladesh registered a ten percent rise in its exports to India, a latest report shows. Exports to the largest neighbor India were $302 million in 2009-10 when better trade ties were discussed at the level of the prime ministers in January. Exports to other neighbors barely account for 2.7 percent of the total, touching $431 million, New Age newspaper said quoting the government's Export Promotion Bureau's Evaluation Survey. Remaining almost static over the year, exports to Pakistan were worth $78 million. Exports to Nepal increased by 9 percent to $8.8 million, to Bhutan by 72 percent to $2.2 million, to Myanmar by 9 percent to $10 million and to Sri Lanka by 26 percent to $24 million. Exports to the Maldives increased almost five folds to $0.7 million but exports to Afghanistan declined by 37 percent to $3.7 million.


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Chapter 4: All about Exports

Exports measure the amount of goods or services that domestic producers provide to foreign consumers by. It is a good that is sent to another country for sale. In the past, export of commercial quantities of goods normally required involvement of the customs authorities in both the country of export and the country of import. More recently, with the advent of small trades over the internet such as through Amazon and e-Bay, exports have largely bypassed the involvement of Customs in many countries due to the low individual values of these trades. Nonetheless, these small exports are still subject to legal restrictions applied by the country of export. 4.1 Bangladesh Exports

Exports in Bangladesh increased to 2590.20 USD Million in September of 2013 from 2013.40 USD Million in


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August of 2013. Exports in Bangladesh are reported by the Bangladesh Bank. From 1995 until 2013, Bangladesh Exports averaged 3238.0 USD Million reaching an all time high of 15565.2 USD Million in June of 2009 and a record low of 1024.0 USD Million in October of 2009. Bangladesh exports mainly readymade garments including knit wear and hosiery (75% of exports revenue). Others include: Shrimps, jute goods (including Carpet), leather goods and tea. Bangladesh main exports partners are United States (23% of total), Germany, United Kingdom, France, Japan and India.

Figure: 1 4.2 Major Product - Wise Export of Bangladesh

Amounts in Million US$


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY Products

2009-10

2010-11 (July-April)

Raw Jute

196

357

Agri-Products

242

334

Frozen Foods

445

625

Leather

226

298

Jute Goods

592

758

Chemicals

103

105

Specialized Textiles

186

165

Home Textiles

402

789

Footwear

204

298

Knitwear

6483

9482

Woven Garments

6013

8432

Others

1113

1281

Total

16205 22924 Table No : 1

4.3 Exported Products by Category

Sl 1

Category Agar Products/Agar Wood


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Agricultural Equipments Animal Casing Agricultural Equipments-1 Aluminums Products Artificial Flowers Audio & Video (CD, VCD, DVD, VCR, Paper, Magazine) Automobile Products Ball Pen Bamboo Products Basket Ware Batik Items Battery (Auto) Battery Dry cells Beach Chair Bees Wax Betel Leaves & Nut Bi-Cycle Biscuits Blade Blazer And Coats Blouses, Ladies Shirts & Fashion Books & Periodicals Brass Products Bricks Broom Sticks Cables Candles Cane Products Canned Fruits Canned Fruits Canvas Shoes


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64

Carbon Rod Carpet Backing Cloth Carpet Carton Cement Exporters Cement Ceramic Products Chemical Products Computer Paper Condensed Milk Copper Wire Cotton Waste Cosmetics Cotton Bags Crabs Crushed Bone Cut Flower Data Entry Dehydrated Door Shutter Dry Fish Dry Foods Electrical Products Espadrilles Embroidery Fan Feathers Fertilizer Fish Maws Fish Meals Fishing Net Flush Door


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Food Products Footwear & Leather Goods Footwear Fresh Fish Fresh Fruits & Vegetables Fruit Juices Furniture G I Pipe Galantine Gift Items Glass Products Gloves Grey Fabrics Hand Bags Hand Made Paper Handicrafts Handloom Products Hanger Herbal Medicine Hessian Cloth Home Textiles-Specialized Textiles Exporter Honey Hooves Human Hair Jam & Jelly Jamdani Sharee Jewelers Jute Backing Cloth Jute Braid Jute Goods Jute Mat Jute Shoes


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Jute Yarn & Twine Jute Shopping Bag Kitchen Ware Knitwear Leather (Crust & Finished) Leather Garments Leather Products Light Engineering Products Home Textiles-Specialized Textiles Exporter List Of Firms Approved By EU List Of Knitwear Exporters List Of Oil Cake Manufacturers List Of Readymade Garments Exporters List Of Tea Exporters List Of The Members Firm Of Bffea_Usa Luggage, Toys & Fashion Products Marine Fish Matches Meat & Meat Products Medical Equipment Melamine Products Metal Products Molasses Mosquito Net Ms Pipe Mushrooms Muslin Nakshi Katha Naphtha Newspaper Newsprint Oil


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Orchid-Plants Paper Board Particle Board Pharmaceuticals Pink Pearl Plastic Products Plastic Sheets Plywood Poly Bags Potato Flakes Potato Pottery Poultry Feed Poultry Printing Materials Processed Fruits PVC Cables PVC Pipes-PVC Products Quilt Raw Cotton Raw Jute Readymade Garments-1 Readymade Garments-2 Readymade Garments-3 Readymade Garments-4 Refr Actory Bricks Refrigerator Rice Rubber Sanitary Ware Seed Sewing Thread


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Shark Fins Shark Meat Shell Products Shopping Bags Shrimps Silk Fabrics Silk Sharee Soap (Toilet) Socks, Vest, Rompers, Stuffed Toys, Quilts Soft Drinks Software & It Service Spices Sports Shoes Stationary Products Sugar Tapestry Tarpaulins Tea Telecommunication Television Tent Terry Towel Textile Fabrics Tiles Timber Tissue Paper Tobacco Tooth Brush Transformer Travel Bags Twill Tyre


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 193 194 195 196 197

Umbrella Ups Watch Wooden Products Yarn

4.4 Trend-in-Export-Trade and Product-Wise Structural Change over 4 Decades


Woven Garments 4.4.1 Export from Bangladesh 1972-73 to 2008-2009 38.25%

Trend-in-Export-Trade (In product & market) BBA

INTERNATIONAL TRADE OF BANGLADESH & 1972-73 Growth IT’S IMPACT ON ECONOMY 2008-2009

No. of25 Product No. of Market 68

173

592%

197

190%

Total Export 348

15565

4373%

Table : 2 4.4.2 Export by Major Products of the year 1992-93

4.4.3 Export by Major Products of the year 2002-03

4.4.4 Export By Major Products ( Upper one)


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 4.7: Year of 2009-10 01.

Woven Garments

37.11%

02.

Knitwear

40.01%

03.

Frozen Food

2.73%

04.

Jute Goods

4.86%

05.

Leather

1.40%

06.

Agri Products

1.50%

07.

Eng. Products

1.92%

08.

Footwear

1.26%

09.

Other

9.21%

Figure : 2 & 3 Below ( Next page)

01.

European Union (E-U)

52.3%

02.

American Region

33.3%

03.

Asian Region

8.8%

04.

Middle East Region

2.5%

05.

African Region

0.6%

06.

Oceania Region

0.3%

07.

East European Region

0.3%


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 08.

Other

Table : 3

4.8 Export Chart Data at a Glance


1.8%

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Chart: 1 4.9 Bangladesh exports to several countries of the world


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Name of the Countries Ecuador, France, Germany, Ghana, Hungary, India, Australia Afghanistan, Thailand, Syria, Singapore, Russia, Sudan, Togo, Taiwan, UAE. Nepal & Malaysia. Mexico, Indonesia, Japan, Jordan, Mozambique, Korea, Lebanon Brazil, Tanzania, South Africa, Spain, Sweden, Philippines, New Zealand, Cambodia, Kosovo, Bhutan, & UK. Myanmar, Canada, Colombia, Norway, Djibouti, Iran, Netherlands, USA, Venezuela, Zimbabwe, Ukraine, Georgia, Pakistan, Sri-Lanka, Vietnam, Kenya, Yemen & Hong Kong. 4. 10 : A brief overview of a Single Major Exported product-RMG

1950 was the beginning of R.M.G in the Western World. In order to control the level of imported RMG products from developing countries into developed countries, the Multi Fiber Agreement (MFA) was made in 1974. The MFA agreement imposed an export rate 6 percent increase every year from a developing country to a developed country. In the early 1980s Bangladesh started receiving investment in the RMG sector. Some Bangladeshis received free training from the Korean Company Daewoo. After these workers came back to Bangladesh, many of them broke ties with the factory they were working for and started their own factories. But most of the RMG entrepreneurs are the genuine patriot and started from grass root level who contributing in boosting of country economy.


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Although Bangladesh is not developed in industry, it has been enriched in Garment industries in the recent past years. In the field of Industrialization garment industry is a promising step. It has given the opportunity of employment to millions of unemployed, especially innumerable uneducated women of the country. It is making significant contribution in the field of our export income. History of our cloth Industry: Once the cloth of Bangladesh achieved worldwide fame. Muslim and Jamdani cloth or our country was used as the luxurious garments of the royal figures in Europe and other countries. The ready-made Garment (RMG) sector has started its journey in the late 1970s in Bangladesh. However, Bangladesh experienced a real momentum in RMG sector between the mid-1980s and mid-1990s (Robbani 2000). The first garment factory in Bangladesh (the then East Pakistan) was established in 1960 at Dhaka (Islam 1984). Bangladesh started exporting garments in 1976. The first joint venture garment factory in Bangladesh was Desh garment in association with Daewoo, a South Korean company (Rock, 2001). Bangladesh Garment Manufacturers and Exporters Association (BGMEA) were formed in 1982 to protect the interests of the manufacturers and the exporters of RMG sector. Imposing of “Quota” restrictions on Bangladeshi products by UK, France, Canada and USA in 1985 was a critical challenge towards the growth of this sector (Uddin, 2006). Following the General Agreement on Tariff and Trade (GATT) introduction of the Multi-fibre Arrangement (MFA) allowed the use of quota restriction (Siddiqi, 2005), which facilitated the growth and expansion of garment industry. Over the years, RMG sector has experienced a remarkable export growth.


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RMG share is the total export increased from 12.44 percent in 1984-1985 to 60.64 percent in 1992-1993 (Siddiqi 2005). At present, RMG sector is the single largest source of earning foreign exchange in Bangladesh. Table 1 shows the trends and exports of major export products of Bangladesh RMG sector has faced some challenges such as cleaning all internal inefficiencies, managing port effectively, building backward and forward linkages, diversifying product lines and searching for new markets due to the phasing out of MFA in 2005 (Robbani 2000). One of the weaknesses of the RMG sector in Bangladesh is its heavy dependence on imported raw materials due to inefficient backward linkage (Siddiqi 2005). The component of backward linkage includes weaving the fabric, spinning the yarn, and dyeing, printing and finishing operation (Siddiqi 2005). The development of backward linkage has been getting high priority in the post-MFA regime for achieving selfsufficiency in the area of input production for reducing cost and lead-time. Developing backward linkage refers the control over the supply of inputs of RMG industry like fabric, yarn and processing facilities (Siddiqi 2005). The ratio of gross export earnings from woven wear and knitwear has increased from 100:34 in FY1997 to 100:98 in FY2007, which ensures the structural change in export earnings (Rahman, Bhattacharya, and Moazzem 2008). Interestingly, the total export of RMG sector in Bangladesh has increased after the MFA phase out, as shown in Table 2. Bangladesh, despite being a least developed economy, has a proven record in export competitiveness. Here is a summary of the facts. From 2003 to 2007 Bangladesh achieved annual export value growth of 19.6%, a testimony to its export competitiveness. Whilst not wishing to be complacent,


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and being mindful of difficult global trade conditions in 2008-2010, these positive trade differentials are likely to be with Bangladesh well into the future. From spinning to weaving, from knitwear to leisurewear and high street fashions, the textiles and clothing industry is Bangladesh’s biggest export earner with value of over $ 16 billion of exports in 2009-10. Our factories design and produce for the world’s leading brands and retailers. This rapidly growing sector of the Bangladeshi economy offers a unique competitive edge that supports profitable expansion into new strategic markets. The ready-made garment (RMG) sector has experienced an exponential growth since the 1980s. The sector contributes significantly to the GDP. It also provides employment to around 4.2 million Bangladeshis, mainly women from low income families which affect their social status.  Manufacturing output has seen steady growth, recently in double figures. Bangladesh provides significant benefits to exporters.  Bangladesh offers a most liberal FDI regime in South Asia, with no prior approval requirements or limits on equity participation and repatriation of profits and income in most sectors.  Bangladesh enjoys tariff-free access to the EU, Canada, Australia and Japan. Bangladesh is the top manufactured products exporter to the least developed countries as well as to Europe, with more than 50% market share. 4.11 Key Statistics of RMG Products


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY RMG EXPORTS AND IT'S SHARE IN TOTAL EXPORT OF BANGLADESH Export Of RMG (In Million Us$)

Year

Total Export Of Bangladesh (In Million Us$)

% Of RMG's To Total Export

1983-84 31.57 811.00 1984-85 116.2 934.43 1985-86 131.48 819.21 1986-87 298.67 1076.61 1987-88 433.92 1231.2 1988-89 471.09 1291.56 1989-90 624.16 1923.70 1990-91 866.82 1717.55 1991-92 1182.57 1993.90 1992-93 1445.02 2382.89 1993-94 1555.79 2533.90 1994-95 2228.35 3472.56 1995-96 2547.13 3882.42 1996-97 3001.25 4418.28 1997-98 3781.94 5161.20 1998-99 4019.98 5312.86 1999-00 4349.41 5752.20 2000-01 4859.83 6467.30 2001-02 4583.75 5986.09 2002-03 4912.09 6548.44 2003-04 5686.09 7602.99 2004-05 6417.67 8654.52 2005-06 7900.80 10526.16 2006-07 9211.23 12177.86 2007-08 10699.80 14110.80 2008-09 12347.77 15565.19 2009-10 12496.72 16204.65 2010-11 (July3971.52 5029.05 Sep) Data Source Export Promotion Bureau Compiled by BGMEA

3.89 12.44 16.05 27.74 35.24 36.47 32.45 50.47 59.31 60.64 61.40 64.17 65.61 67.93 73.28 75.67 75.61 75.14 76.57 75.01 74.79 74.15 75.06 75.64 75.83 79.33 77.12 78.97

Table: 4 4.12 Main Apparel Items Exported From Bangladesh (m US$) Year

Shirt

Trouser

Jacket

T-shirt

Sweater

2005-06

1,056.69

2,165.25

389.52

1,781.51

1,044.01

2006-07

943.44

2,201.32

1,005.06

2,208.90

1,248.09

2007-08

915.6

2,512.74

1,181.52

2,765.56

1,474.09


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 2008-09

1000.16

3,007.29

1,299.74

3,065.86

1,858.62

2009-10

993.41

3035.35

1350.43

3145.52

1795.39

Table: 5

Source: Bangladesh Garment Manufacturers and Exporters Association (BGMEA)

4.13 Sector Highlights

 Cost and quality of products that are produced on time, reliably and very competitively with a highly skilled labor force.  A unique regional location for expansion into key Eastern and other markets.  Favored trading status with the EU and the USA.  Clusters of companies providing a local supplier base with real depth in skilled labor, training and technical development facilities. The growing demands for yarn in the local market, comparatively low cost of doing business, lucrative incentive packages and a favorable investment policy regime are important reasons for investment in this sustainable sector. 4.14 RMG and Backward Linkages

The phenomenal growth in the readymade garment (RMG) sector in the last decade created many new factories and employment opportunities. Having enjoyed more than 70% of total investments in the manufacturing sector during the first half of the 1990s, RMG and knitwear now account for about 4,825 factories and a workforce of 3.1 m -80% of which are women. This sector now employs over 50% of the


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industrial workforce and accounts for 79% of the total export earnings of the country. The growing trend in the textile and the garments sector means that Bangladesh is perfectly positioned to appeal to foreign investors. 4.15 Size of Bangladesh Textile Industry Sub-sector

No. unites

Textile spinning

341

Textile weaving

400

Installed machine capacity

Production capacity (m)

Manpower

1,600 kg

400,000

25,000 SL/SLL

1,600 mtr

80,000

Specialized textile and 1,065 power loom

23,000 SL/SLL

400 mtr

43,000

Handloom (GF/F)

498,000 handloom 837 mtr

1,020,000

148,342

of

7.20 ml. spld 0.18 ml. rotor

Knitting, knit dyeing (GF): (a) Export-oriented

800

12,000 knit/Dy/M

3,600 mtr

300,000

(b) Local market

2,000

5,000 knit/M

500 mtr

24,000

Dyeing and finishing (FF): (a) Semi-mechanized

180

-

120 mtr

10,000

(b) Mechanized

130

-

1,600 mtr

23,000

Export oriented RMG

4,500

-

475 doz

2,000,000

Source: Director's Report 2009, Bangladesh Textile Mills Association 4.16 Favored Trading Status

Bilateral agreements with 28 countries and Generalized System of Preferences (GSP) of the EU are key reasons for Bangladesh RMG products having access to global markets. The current cycle of GSP applied from 1 January 2009 to 31 December 2011. Bangladesh is now a significant RMG supplier to North America and


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Europe. Bangladesh has also taken a better position in the USA market through competition. Bangladesh is expected to maintain its tariff-free access to EU under the European GSP, since the GSP is not covered by the Uruguay Round Agreement. Recently Canada has also provided tariff-free access for all the items from Bangladesh. Meantime, the Bangladesh RMG industry has become very competitive as a global standard RMG source. Marketing investments have been made in trading partner economies; end users can often differentiate products with confidence. Historically the Bangladesh RMG industry has depended largely on imported yarns and fabrics and produced only 10% of the export-quality cloth used by the garments industry. The need for establishment of backward-linkage industry has become an immediate concern to the government and the exporters and there are enormous opportunities to set up a composite textiles industry combining textile, yarn and garments.

4.17 Export earning hits record $3b in July


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The country’s single month export earnings hit a record $3 billion in July, the first month of the financial year 2013-14, riding on the performance of readymade garment sector that defied factory disasters, Export Promotion Bureau officials said. Provisional data from the EPB, which was sent to the commerce ministry for approval on Sunday, showed that the export earnings totaled $3,024.29 million in July, growing by an impressive 24 per cent compared with the same period last fiscal year. The export earnings figure of July in financial year 2012-13 was $2.4 billion with 4.26 per cent growth. The EPB vice-chairman Shuvashish Bose told New Age on Tuesday that export crossed $3 billion because of impressive performance by the readymade garment sector. Even after the tragic incidents at Tazreen Fashions and Rana Plaza, the export earnings of July proved that Bangladesh has not lost its competitiveness in the RMG sector,” he said. Export earnings growth has been on an upward trend in the last three months with the earning standing at $2.53


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billion in May and 2.69 in June, the two months of the previous FY 2012-13.EPB officials could not immediately give the data on RMG export earnings but said that the export growth of the sector was double digit and higher than that of the earnings of June of FY 2012-13. The total export earnings from RMG sector in June was over $2.1 billion. The country’s export in the just concluded FY 2012-2013 was $27.01 billion, growing by 11.18 per cent from the previous FY, whereas the government set the export earnings target for the current FY 2013-14 at $30.50 billion with a growth of 12.84 per cent. The total RMG export in FY 2012-13 grew by 2.73 per cent to $21.51 billion in the FY 13 from $19.08 billion in the FY 12. Garment industry people and many of the experts, however, were shaky about achieving the target for FY 2013-14 against the backdrop of Rana Plaza collapse that killed more than 1,100 garment workers in April. The Rana Plaza incident and the Tzaneen Fashions fire that killed 113 workers in November, 2012 created an international outcry over the factory safety standard in the country. Bangladesh Garment Manufacturers and Exporters Association leaders earlier said that the international buyers were putting less order in Bangladesh following the Rana Plaza incident while the impact of the building collapse would be seen in the export figure in SeptemberOctober. [Note: we could not find the data of the month of September-October in the website of EPB.]

4.18 Present Challenges in RMG Sector


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Garment industry in Bangladesh is facing multidimensional problems such as acute power crisis followed by non tariff restriction, chronic labor unrest, lack of infrastructural facilities, inadequate supply of material and accessories, inability or lack of efforts to diversify the products and markets, irregularities relating to customs, bond, and shipping (Uddin and Jahed 2007). These major problems disrupt the production and increase the cost of production significantly. Weak and inadequate infrastructures such as poor energy supply, poor port facilities are the common challenges facing by the RMG sector in Bangladesh (Rahman and Anwar 2007). Another problem is port congestion. RMG sector often faces huge losses due to the inefficiency of Bangladesh port. To remain competitive in the world market one of the important strategies is product and market diversification (Rahman and Anwar 2007). Moreover, natural calamity often affected garment industry. For instance, due to the flood in 1998, garment order of Tk 1,000 (US$ 15,000 million) crore could not be exported on time. More than 3 lakh workers were victim of the flood (Quddus and Rashid 1999). There are some other disadvantages that affect the competitiveness of RMG sector. Hartals (Strike due to political reason) and inadequacy of infrastructural facilities undermine Bangladesh’s position in the international market (Abdullah 2005a). Furthermore, the productivity of Bangladeshi workers is one-fourth of that of Chinese. The main reason is low literacy rate. Only 25 unions are active among 200 unions registered in the garment sector. Local experts report that only 20 percent of workers receive the minimum legal wage for all hours including overtime (Clark and Kanter 2010/2011). Empirical studies have proved that any expenses for improving working condition are offset by the IBAIS University, Dhaka, Bangladesh Page 59

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productivity gains in the case of RMG sector (Berik and Rodgers 2008). RMG exports are also influenced by external factors. For instance, after the terrorist attract on September 11, 2001, export to the United states declined by 2.34 percent in 2003 and 13.04 percent in the middle of 2004 (Abdin 2008). The post-MFA trade environment has created a dual challenge to Bangladesh: firstly, Bangladesh has needed to access raw materials at a competitive price and also RMG sector is now competing with hitherto restricted countries in a quota-free environment (Bhattacharya and Rahman 2001). Handling charge for a 20-feet container in Chittagong port was $640 compared with $220 in Colombo and $360 in Bangkok (World Bank 1999). Inefficiencies of Chittagong port are costing the economy as much as $600 million annually (World Bank 1999). From opening of letters of credit to the clearance of goods from customs involves several complicated and time-consuming steps (World Bank 1999). The hidden costs (bribe) paid by importers per delivery ranged from Tk.4700 to Tk.36800 (about US$100 to $735) (CPD Survey 1997). These inefficiencies and corruption adversely affect competitiveness of Bangladeshi garment in the world market (Robbani 2000). Bangladesh must address a number of challenges if it is to continue current strong development in garment exports, according to a new report from The World Bank. Shortcoming in trade logistics, skill shortage and the requirement to fulfill with government labor standards could all hamper future development in garment exports from the Asian country, says the report, 'Consolidating and Accelerating Exports in


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Bangladesh.’ It suggests that better export diversification beyond clothing is needed – garments account for more than 75% of Bangladesh’s exports – but adds that, still in the garment industry, export increase is not to be taken from established. Bangladesh is deeply dependent on exports make driving in the manufacturing division, to afford high efficiency and high-income jobs – all envisioned in the country’s Sixth Five-Year preparation. Lead country economist at The World Bank, Sanjay Kathuria said: “While China’s wage growth presents main opportunities for countries with less costly labor, Bangladesh will need to beat significant bottlenecks to make sure that its exports keep on to grow at the pace seen over FY05-10, when dollar exports almost doubled,” The World Bank said the sooner export increase would be “critical” to Bangladesh achieving the rank of growth required to reach its ambitious goal of appropriate a middle-income country by 2021. “The garments sector of Bangladesh has grown-up remarkably and captured a rising share of the world market”. The World Bank said. “But development in exports cannot be taken for granted. Second only to China, Bangladesh’s garment exporting sector will need to participate with the impact of an already huge base and major market share in key markets.” Exports can grow quickly, the report suggests, but only if “critical bottlenecks” are addressed – the first of which is the provision of successful trade logistics. Improvements in this region would give the country a “competitive frame”, ensuring that exports and imported input goods are shipped on time, economically and reliably. Better connections, enhanced customs dealings, better air shipment ability and better rail services could reduce lead times to complete an order by up to 21 days, the IBAIS University, Dhaka, Bangladesh Page 61

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report estimates, still if raw materials are sourced from out of the country. In the meantime, it warns that Bangladesh’s skills gap is “increasingly visible in all manufacturing sectors, and maybe more so in the garment sector”, where it reports a high refusal rate for final goods. Finally, the details highlight the importance of industry complying with the Bangladeshi government’s labor and building standard – an ever further main issue as the country attempts to move into higher-value garment exports. Investigate the need for the government to work closely & directly with industry to make sure standards are correctly implemented, The World Bank said firms might also require support to rearrange factories out of residential areas and into purpose-built facilities with safer working environment. The RMG sector has economic contribution as well as social contribution in Bangladesh. It has created employment opportunities for about five million people including young, poor and illiterate women. However, recently the RMG sector is going through severe disturbances. The clashes between garment workers and law enforcers create serious crisis in this industry (Islam and Ahmad 2010). In January 11, 2010, the garment workers created violence for getting the facilities such as lunch bills and encashment of casual leaves. Forty workers were injured, production of 30 garment factories were halted. The garment workers had created another aggression on April 28, 2010 for increasing their monthly wage rate from US$ 25 to US$ 70. During that incidence, more than 22 RMG factories were affected and 30 peoples were injured (Islam and Ahmad 2010). The wage rate (0.25 US$ hour) is the lowest in Bangladesh compare with other countries like China (0.35), Vietnam (0.40), Pakistan (0.40) and India IBAIS University, Dhaka, Bangladesh Page 62

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(0.60). Overtime allowance is also inadequate in the garment sector in Bangladesh. Another major worker disputes had taken place on May 25, 2010 for low house rent allowance. Thirty peoples were wounded, a police station was burned down and many roads were blocked for several hours. Worker unrest took place on June 21, 2010 for implementing minimum wages of US$ 70 a month. In that clash, two hundred peoples were injured and thirty factories were ransacked (Islam and Ahmad 2010). The garment workers had violated at Dhaka on June 30, 2010 for protecting the closure of factories, and more than 40 people were injured. The workers have been engaged in street protest, picketing, or blocked of a manager's office or a factory for expressing their dissatisfaction about their wages and other job related issues. One of the reasons for this unrest in the garment industry is legal and institutional failures to ensure labor rights (Islam and Ahmed 2010). Most of the garment factories in Bangladesh do not follow the labor law and ILO conventions (Islam and Ahmed 2010). The Labor Act 2006 (called Labor code) clearly mentions that the wage of a worker must be paid within seven workings days [Section 123 (1)]. Majority factories do not provide appointment letters/contract letters, identity cards and employee handbooks. Health safety and security condition in this sector are also insufficient. The workers do not have a clear idea about their rights and labor laws (Islam and Ahmed 2010).There are some important causes that reduce productivity in the garment sector. Issues like unresolved labor conflict and poor teamwork result in firm’s ineffectiveness, low motivation, boredom for specialized work, rapid technological change and high


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cost that reduced innovation (Abdullah 2005b). The most common reasons of labor unrest in the garment sector are wage rate and unpaid wage. Some garment owners do not pay salaries and overtime allowance to the workers on time. However, owner’s claim that more than 90 percent factories pay workers wages within 1st and 2nd week of the month (Rahman, Bhattacharya 2008). Political unrest at the national level often influences violence at the RMG sector. Sometimes women workers work until 3 o’clock in the morning for meeting their shipment deadlines (Jamaly and Wickramnanyam 1996). In most of the factories in the RMG sector, daily working hour is 8.28 hours (excluding overtime working hours) (Bhattacharya 2008). Women generally choose to work in the RMG sector due to their poor economic condition with little or no control over their income. In fact, women face discriminations at work in terms of wage differentials and gender differences. They are working in poor condition and feel insecurity. The women workers are living under the poverty line because of their low wage. They cannot maintain their basic cost of living so that they try to increase their income by working overtime. Until 2010, the minimum wage of US$ 43 per month has not yet implemented. Still they are living below poverty line (Clark and Kanter 2010/2011). Participants were asked to share their opinions about the causes of recent unrest in the garment sector. Most of the participants believe that influence of external factors is the major reason for current unrest in the garment sector (F1:1; F1: 3; F1:6; F3:1; F2:4). For example, some garments where payment are quite high also experience labor unrest (F1:1; F1: 3; & F1:6). Participants reported that there are some external groups always try to create rumor about unfair


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management practices so that workers become restless and create dispute against the garment management. Dispute in a garment factory also have influence on the workers of another garment factory to create further disputes (F3:1 & F1:1). Apart from the external influences, there are antitrust relationships exists between workers and management. The workers believe that they are always exploited by the Management. Labor unions are promoting these views (F2:4). Poor relationship among workers and the front line managers (FLMs)/supervisors are reasons of labor unrest in garment industry (F2:3). FLMs or the supervisor’s poor behavior makes the workers stubborn and reluctant to work, and it often creates disputes among the workers in garment factory (F1:1&2). Moreover, if management does not solve worker’s problem quickly, it also creates disputes (F3:7). A participant reported that strict supervisors sometimes get support from top management due to their high achievement (F2:7). Prompt and participative management approaches to complain are effective remedy to resolve worker’s disputes.

4.19 New Challenges

Five deadly incidents from November 2012 through May 2013 brought worker safety and labor violations in Bangladesh to world attention putting pressure on big global clothing brands such as Primark, Loblaw, Joe Fresh, Gap, Wal-Mart, Nike, Tchibo, Calvin Klein and Tommy Hilfiger, and retailers to respond by using their economic weight to enact change No factory owner has ever been prosecuted over the deaths of workers. Other


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major fires 1990 and 2012, resulting in hundreds of accidental deaths, include those at that's It Sportswear Limited and the fire at Tazreen Fashions Ltd. Spectrum Sweater Industries, Phoenix Garments, Smart Export Garments, Garib and Garib, Matrix Sweater, KTS Composite Textile Mills and Sun Knitting. major foreign buyers looking for outsourcing demand compliancerelated norms and standards regarding a safe and healthy work environment which includes fire-fighting equipment, evacuation protocols and mechanisms and appropriate installation of machines in the whole supply-chain. RMG insiders in Bangladesh complain about the pressure to comply and argue that RMG factory owners are hampered by a shortage of space in their rental units. Scott Nova of the Worker Rights Consortium, a rights advocacy group, claimed that auditors, some of whom were paid by the factories they inspect, sometimes investigated workers right issues such as hours or child labor but did not properly inspect factories structural soundness or fire safety violations. Nova argued that the cost of compliance to safety standards in all 5,000 clothing factories in Bangladesh is about $3 billion (2013). In 2000 garment entrepreneurs had a reputation for shirking custom duties, evading corporate taxes, remaining absent in capital markets, avoiding social projects such as education, healthcare, and disaster relief but, argued authors Quddus and Salim, these entrepreneurs took the risks needed to build the


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industry. Bangladesh successfully competes in the manufacturing industry by maintaining "lowest labor costs in the world." Garment workers' minimum wage was set at roughly $37 a month in 2012 but since 2010 Bangladesh's double-digit inflation with no corresponding rise in minimum wage and labor rights, has led to protests. A fire broke out on 24 November 2012, in the Tazreen Fashion factory in Dhaka killing 117 people and injuring 200. According to the New York Times, Wal-Mart played a significant role in blocking reforms to have retailers pay more for apparel in order to help Bangladesh factories improve safety standards. Wal-Mart director of ethical sourcing, Sridevi Kalavakolanu, asserted that the company would not agree to pay the higher cost, as such improvements in electrical and fire safety in the 4,500 factories would be a "very extensive and costly modification" and that "it is not financially feasible for the brands to make such investments." On April 24 1137 textile workers factories making clothes for Western brands, were killed when a garment factory collapsed. The Savar building collapse was in the Rana Plaza complex, in Savar, an industrial corner 20 miles northwest of Dhaka, the capital of Bangladesh. It was the "world's deadliest industrial accident since the Bhopal disaster in India in 1984. While some 2,500 were rescued from the rubble including many who were injured, the total number of those missing remained unknown weeks later. Bangladesh's Commerce Ministry, fearing the loss of contracts that represent 60 per cent of textile industry exports On May 9, 2013 eight people were killed when


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a fire broke out at a textile factory in an eleven-story building in the Mirpur industrial district owned by Tung Hai Group, a large garment exporter. 4.20 Effects of RMG exported Products on Bangladesh’s Economy

Garment sector is the largest employer of women in Bangladesh. The garment sector has provided employment opportunities to women from the rural areas that previously did not have any opportunity to be part of the formal workforce. This has given women the chance to be financially independent and have a voice in the family because now they contribute financially. However, the women workers are facing many problems. Most women come from low income families. Low wage of women workers and their compliance have enabled the industry to compete with the world market. Women are paid far less than men mainly due to their lack education. Women are reluctant to unionize because factory owners threaten to fire them. Even though trade unionization is banned inside the Export processing Zones (EPZ), the working environment is better than that of the majority of garment factories that operate outside the EPZs. But, pressure from buyers to abide by labor codes has enabled factories to maintain satisfactory working conditions. In recent times, garment workers have protested against their low wages. The first’s protests broke out in 2006, and since then, there have been periodic protests by the workers. This has forced the government to increase minimum wages of worker. Bangladesh textile sector actually grew tremendously


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after 2004 and reached an export turnover of US$10.7 billion in FY 2007. Bangladesh's export trade is dominated by the RMG industry. The sector currently employs 2.5 million people about 40% of total manufacturing (85% of these employees are women) and accounts for 76% of the country's export earnings and 10% of its GDP. Bangladesh was the sixth largest exporter of apparel in the world after china, the EU, Hong Kong, Turkey and India in 2006. In 2006 Bangladesh's share in the world apparel exports was 2.8%. The US was the largest single market with US$3.23 billion in exports, a 30% share in 2007. Today, the US remains the largest market for Bangladesh's woven garments taking US$2.42 billion, a 47% share of Bangladesh's total woven exports. The European Union remains the largest regional destination - Bangladesh exported US$5.36 billion in apparel; 50% of their total apparel exports. The EU took a 61% share of Bangladeshi knitwear with US$3.36 billion exports. The RMG sector is expected to grow despite the global financial crisis of 2009. As China is finding it challenging to make textile and foot wear items at cheap price, due to rising labor costs, many foreign investors, are coming to Bangladesh to take advantage of the low labor cost. Even now for the readymade garments most of the manufacture need to bring all the accessories from abroad, which is very costly. Now they are start using locally accessories minting the required quality. Zippers, buttons, labels, hooks, hangers, elastic bands, thread, backboards, butterfly pins, clips, collar stays, collarbones and cartons are the major garment


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accessories produced in Bangladesh. Many small and medium accessory industries have grown here over the years, particularly to meet high demand from low-end garment makers The accessory market is dominated by multinational companies operating in Bangladesh, because in majority cases, garment buyers prefer accessories from them over the locally available items, Now it is time for the Bangladeshi Merchandiser to introduce more local trims and trims manufacturer to buyer to show their expertise. The sector rapidly attained high importance in terms of employment, foreign exchange earnings and its contribution to-GDP’s 175.67%. Currently Bangladesh is now second largest readymade garments manufacturer after China, by the next five years Bangladesh will become largest readymade garments manufacturer hopefully if it can face the challenges from different serious issues has been discussed above. Export Promotion Bureau statistics showed RMG export posted over 24% growth to $6.2bn in the first quarter of the current fiscal year, compared to $5bn from the same period of last year. In the last fiscal year, the RMG sector earned US$21.51bn, which was 12.7% higher compared to the earnings of 2011-12 fiscal year.

Chapter: 5: All about Import An import is any good or service brought into one country from another country in a legitimate fashion, typically for use in trade. Import goods or services are


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provided to domestic consumers by foreign producers. An import in the receiving country is an export to the sending country. Import of goods normally requires involvement of the Customs authorities in both the country of import and the country of export and is often subject to import quotas, tariffs and trade agreements. 5.1 General import regulations and requirements

Most goods imported into Bangladesh, regardless of entered value, are required to submit to a Pre-Shipment Inspection. For further details see field for "PreShipment Inspection/Other Pre-Shipment Requirements”. Bangladesh observes a boycott of Israel. Imports may not ship on Israeli flag vessels. No vessel or aircraft used for shipments to Bangladesh may call on any port in Israel. 5.2 Import customs tariff

Bangladesh uses the Harmonized Tariff System for tariff classification. Tariff rates are set at 10, 15, 20, and 25 %. Certain products are exempt from duties. Additional taxes/charges which may apply:  15 % value-added tax  Supplemental tax on certain goods  Landing fee  Insurance charge 5.3 Customs valuation basis


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Specific duty rates is based on net weight. Ad valorem duties are based on value assessed as follows: CFR value, plus insurance fee (1%) and landing charge (1%). Bangladesh also applies the WTO Customs Valuation agreement. According to this agreement, there are six acceptable methods of determining customs value. Typically the first method is used (unless the buyer and seller are related parties). When the value cannot be obtained this way, or is rejected by customs, one of the other methods is to be used, in descending order: o Transaction value (the price actually paid or payable by the importer, plus certain costs and expenses) o Transaction value of identical goods o Transaction value of similar goods o Deductive value (the sale or resale value, reduced by certain costs such as customs duties, taxes, and commissions) o Computed value (calculated by adding together certain costs/values for production, materials, profit and other expenses) o Fall-back method 5.4 General import license/permit requirements

Most goods do not require an import license. The Ministry of Commerce requires registration of each importer. Prior approval is required to import goods on the restricted list. Certain restricted goods may be imported only by authorized users. There are no tariff quotas on imports.


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 5.5 Prohibited or highly restricted imports

All goods from Israel, Serbia and/or Montenegro are prohibited. Prohibited articles may include the following: artificial mustard oil, eggs (except hatching eggs), fishing nets (gillnets), grass, horror comics, lard and tallow oil, lard, live pigs, motorbikes more than three years old, nylon and polyethylene ropes, obscene and subversive literature or similar types of materials; opium, pig and poultry fat, pig hair, poppy seeds and dried posto dana, raw sugar, selected insecticides, selected petroleum products, single phase electricity meters solid or semisolid palm oil, some kinds of cloth, tendu leaves, undenatured ethyl alcohol (80% or higher) and other denatured spirits of any strength, used or new rags, vessels more than 15 years old, wine, woven fabrics of silk or silk waste. Restricted articles may include the following, in alphabetical order: goods bearing pictures or writing which is obscene or of a religious connotation which may injure the religious feelings of any class of Bangladeshi citizens; printed material, posters, video tapes, etc. containing matters likely to outrage the religious feelings and beliefs of any class of Bangladeshi citizens; unless otherwise specified, old, second-hand and reconditioned goods; unless otherwise specified, all kinds of waste; reconditioned office equipment (i.e., photocopier, typewriter, telex, computer, phone, fax machine). 5.6 Foreign exchange controls and letters of credit


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Foreign exchange is controlled by the government through the central bank, the Bangladesh Bank. It administers foreign exchange control through authorized commercial banks and financial institutions. Unless otherwise specified, all imports must be made by opening an Irrevocable Letter of Credit. Importers are required to have Letter of Credit Authorization (LCA) forms. The unit of currency is the BDT = Bangladeshi Taka (subdivided into 100 Poisha). 5.7 Pre-shipment requirements

A Pre-Shipment Inspection (PSI) is required. Such an inspection involves a physical inspection of the goods and in addition a price comparison of the merchandise in order to:  Ensure that prices charged by exporters reflect the true value of the shipped goods.  Prevent substandard goods Bangladesh's commerce.

from

entering

 Mitigate attempts by importers to avoid payment of customs duties. 5.8 Commercial invoice

A commercial invoice is required for every commercial shipment and should conform to the information requirements described in our definition. At least three (3) original, signed copies should be sent to the consignee or the agent thereof with the other shipping documents. The shipper should confirm the exact number of copies required with the consignee. Country


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of origin information should be included, unless a separate certificate of origin is requested. A pro-forma invoice is needed in advance for the required letter of credit (L/C). Each non-commercial shipment will also require a pro-forma invoice. For airfreight shipments, in most cases, the shipping documents should accompany the cargo and/or the air way bill (AWB). 5.9 Packing list

A packing list is recommended to facilitate customs clearance. In general, even when it is not required regulation, it is recommended that a packing list be used with all shipments containing more than one shipping unit of packaged cargo. Most countries require a packing list be provided together with the commercial invoice. The required information must be consistent with all information shown on the commercial invoice. At least three (3) copies of the packing list should be included as part of the shipping documents sent to the consignee or the agent thereof. The exact contents of each package should be clearly identified. This should include each item's gross weight and net weight and each package's marks and numbers. 5.10 Transport document

A properly prepared transport document is required for transportation purposes and as a source document for customs clearance purposes at the port of entry. For ocean cargo, three (3) copies of an ocean bill of lading are required. "To order" B/Ls is acceptable. For airfreight, an air waybill (AWB) is required.


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 5.11 Certificate of Origin (general)

When required by the buyer/consignee or the terms of a letter of credit (L/C); a shipper should consult with the customer in Bangladesh to determine the exact number of C/O copies needed. At the very least, three (3) copies should be prepared, using the general certificate of origin (CO, C/O) form that is available from a commercial printer. Once completed, each C/O must be signed and each signature must be notarized. Following notarization, each C/O must be certified by a recognized Chamber of Commerce. 5.12 Official cargo insurance requirements

Every import shipment to Bangladesh is required to be covered by shipping insurance underwritten by the Sadaran Bima Corporation or any other Bangladeshi insurance company. A copy of the insurance certificate or the insurance policy is required to be included among the shipping documents. 5.13 Product packaging/labeling requirements

Generally, labeling must show country of origin and complete manufacturer's name and address. Specific packaging and labeling requirements apply to food, agricultural and chemical products and to other products and commodities. Obscene words or transcriptions are not permitted. Additional product packaging and/or labeling requirements may apply to particular types of products. Refer to the product-based information herein for the product you are considering to import or export. An exporter should also verify with


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its prospective importer in the destination country as to requirements for a specific product to be shipped. 5.14 Standards

Product standards are regulated by the Bangladesh Standards and Testing Institution. (BSTI). Certain products are subject to standards requirements. 5.16 ATA carnets

The ATA Carnet currently is not accepted in this country. An ATA Carnet is obtained in the country from which the goods are to be first exported (see list of participating countries). Initiating and governing authority for ATA Carnets is the International Chamber of Commerce (ICC). An ATA Carnet is typically accepted for Commercial Samples, Exhibitions and Fairs, and/or Professional Equipment. An ATA Carnet does not cover perishable or consumable items, or goods for processing or repair. Some countries are more restrictive in the scope of allowances for temporary imports covered by ATA Carnet. It is recommended that prior verification be made with the issuing agency.] [Note:

5.17 Bangladesh Imports

Imports in Bangladesh decreased to 2656.90 USD Million in August of 2013 from 3056.60 USD Million in July of 2013. Imports in Bangladesh are reported by the Bangladesh Bank. From 1995 until 2013, Bangladesh Imports averaged 4363.0 USD Million reaching an all time high of 20291.4 USD Million in June of 2009 and a record low of 1424.2 USD Million in August of 2009. Bangladesh imports mostly petroleum product and oil, machinery and parts, soybean and palm oil, raw cotton, iron and steel and wheat. Bangladesh main imports


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partners are China (17% of total), India, Indonesia, Singapore and Japan.

Figure : 1 Imports: $32.61 billion (2011 est.) & $34.56 billion (2012 est.) Source: CIA World Fact book - Unless otherwise noted, information in this page is accurate as of December 6, 2013.

5.17.2 Import of Bangladesh, 1970-2012


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Figure: 2 5.17.3 Import per capita in Bangladesh, dollars, 1970-2012


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 5.17.4 Import share in GDP in Bangladesh, %, 1970-2012

5.17.5 Import growth dynamics of Bangladesh, %, 1971-2012


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5.18 Comparison Table of Import of Bangladesh and its Neighbors

5.18.1 Import of Bangladesh and its neighbors, billions dollars, 19702012

Bangl adesh

Year

197 0 197 1 197 2 197 3 197

Myan mar

India

0.55

0.34

2.4

3.29

0.42

0.35

2.7

3.47

0.6

0.28

2.7

3.58

0.56

0.24

4.1

4.9

0.61

0.21

5.9

6.72


Total

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4 197 5 197 6 197 7 197 8 197 9 198 0 198 1 198 2 198 3 198 4 198 5 198 6 198 7 198 8 198 9 199 0

0.53

0.23

6.8

7.56

1.3

0.24

6.3

7.84

0.88

0.3

7.5

8.68

1.5

0.47

9.1

11.07

1.8

0.65

12

14.45

2.6

0.71

17

20.31

2.6

0.78

17

20.38

2.6

0.82

17

20.42

2.5

0.65

18

21.15

2.6

0.61

17

20.21

2.7

0.57

18

21.27

2.5

0.33

18

20.83

2.8

0.29

20

23.09

3.2

0.2

23

26.4

3.7

0.13

25

28.83

3.9

0.19

28

32.09


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199 1 199 2 199 3 199 4 199 5 199 6 199 7 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200

3.7

0.15

25

28.85

3.8

0.13

28

31.93

4.5

0.14

28

32.64

4.7

0.13

33

37.83

6.6

0.13

45

51.73

7.4

0.13

45

52.53

7.4

0.12

51

58.52

7.8

0.062

54

61.862

8.4

0.049

62

70.449

8.7

0.043

66

74.743

9.8

0.04

66

75.84

9

0.027

78

87.027

10

0.017

94

104.017

12

0.013

138

150.013

13

0.011

184

197.011

15

0.014

230

245.014

18

0.014

295

313.014


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7 200 8 200 9 201 0 201 1 201 2

23

0.022

371

394.022

24

0.022

340

364.022

25

0.037

448

473.037

34

9.1

583

626.1

36

10

591

637

5.18.2 Import of Bangladesh and its neighbors, % 1970-2012 Year

Bangladesh

Myanmar

India

Total

1970

16.72

10.33

72.95

100.0

1971

12.1

10.09

77.81

100.0

1972

16.76

7.82

75.42

100.0

1973

11.43

4.9

83.67

100.0

1974

9.08

3.13

87.8

100.0

1975

7.01

3.04

89.95

100.0

1976

16.58

3.06

80.36

100.0

1977

10.14

3.46

86.41

100.0

1978

13.55

4.25

82.2

100.0

1979

12.46

4.5

83.04

100.0

1980

12.8

3.5

83.7

100.0

1981

12.76

3.83

83.42

100.0


BBA


1982

12.73

4.02

83.25

100.0

1983

11.82

3.07

85.11

100.0

1984

12.86

3.02

84.12

100.0

1985

12.69

2.68

84.63

100.0

1986

12

1.58

86.41

100.0

1987

12.13

1.26

86.62

100.0

1988

12.12

0.76

87.12

100.0

1989

12.83

0.45

86.72

100.0

1990

12.15

0.59

87.25

100.0

1991

12.82

0.52

86.66

100.0

1992

11.9

0.41

87.69

100.0

1993

13.79

0.43

85.78

100.0

1994

12.42

0.34

87.23

100.0

1995

12.76

0.25

86.99

100.0

1996

14.09

0.25

85.67

100.0

1997

12.65

0.21

87.15

100.0

1998

12.61

0.1

87.29

100.0

1999

11.92

0.07

88.01

100.0

2000

11.64

0.06

88.3

100.0


BBA


2001

12.92

0.05

87.03

100.0

2002

10.34

0.03

89.63

100.0

2003

9.61

0.02

90.37

100.0

2004

8

0.01

91.99

100.0

2005

6.6

0.01

93.4

100.0

2006

6.12

0.01

93.87

100.0

2007

5.75

94.24

100.0

2008

5.84

0.01

94.16

100.0

2009

6.59

0.01

93.4

100.0

2010

5.28

0.01

94.71

100.0

2011

5.43

1.45

93.12

100.0

2012

5.65

1.57

92.78

100.0

5.18.3 Import per capita in Bangladesh and its neighbors, dollars, 1970-2012 Year

Bangladesh

Myanmar

India

1970

8

13

4

1971

6

13

5

1972

9

10

5

1973

8

8

7

1974

9

7

10

1975

7

8

11

1976

18

8

10

1977

12

9

12


BBA

INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 1978

19

14

14

1979

22

19

18

1980

32

21

24

1981

31

22

24

1982

30

23

23

1983

28

18

24

1984

28

16

22

1985

29

15

23

1986

26

8

23

1987

28

7

24

1988

31

5

28

1989

35

3

29

1990

36

5

32

1991

34

4

28

1992

34

3

31

1993

39

3

30

1994

40

3

35

1995

55

3

47

1996

60

3

46

1997

59

3

51

1998

61

1

54

1999

65

1

60

2000

66

1

63

2001

73

1

62

2002

66

1

72


BBA


72

0

86

2004

85

0

124

2005

91

0

163

2006

104

0

201

2007

123

0

255

2008

155

0

316

2009

161

0

286

2010

165

1

372

2011

222

174

477

2012

233

189

478

5.18.4 Import share in GDP in Bangladesh and its neighbors, %, 19702012 Year

Bangladesh

Myanmar

India

1970

7.9

12.6

3.9

1971

6.7

12.5

4.1

1972

8.6

10.8

3.8

1973

7.4

7.3

4.8

1974

6.7

5.3

6.1

1975

5.6

6.2

6.8

1976

11.8

5.9

6.2

1977

8

7.1

6.4

1978

10.7

10

6.7

1979

10.6

12

8

1980

13.7

12

9.2

1981

13.7

13.2

8.6


BBA


15.3

13.4

8.5

1983

13.9

10.3

8.2

1984

12.4

9.4

7.8

1985

12.3

8.6

8

1986

10.9

6.6

7.3

1987

10.8

5.9

7.3

1988

11.4

4.4

7.6

1989

12.3

2.7

8.3

1990

12.2

3.7

8.6

1991

10.9

2.8

8.6

1992

10.9

2.2

9.6

1993

12.5

2.2

9.9

1994

12.4

1.8

10.2

1995

15.3

1.7

12.2

1996

16.4

1.5

11.6

1997

16.1

1.3

12.1

1998

16.3

1.1

12.7

1999

16.8

0.7

13.7

2000

17.1

0.6

14.1

2001

19.2

0.5

13.7

2002

17

0.3

15.4

2003

17.2

0.2

15.9

2004

19

0.1

19.3

2005

20

0.1

22


BBA


22.1

0.1

24.3

2007

23.4

0.1

24.5

2008

25.6

0.1

28.7

2009

24

0.1

25.4

2010

22.3

0.1

26.3

2011

28.1

16.5

30.3

2012

28.3

16.9

31.5

5.18.5 Import growth dynamics of Bangladesh and its neighbors, % 1971-2012 Year

Bangladesh

Myanmar

India

1971

76.4

102.9

112.5

1972

142.9

80

100

1973

93.3

85.7

151.9

1974

108.9

87.5

143.9

1975

86.9

109.5

115.3

1976

245.3

104.3

92.6

1977

67.7

125

119

1978

170.5

156.7

121.3

1979

120

138.3

131.9

1980

144.4

109.2

141.7

1981

100

109.9

100

1982

100

105.1

100

1983

96.2

79.3

105.9

1984

104

93.8

94.4

1985

103.8

93.4

105.9


BBA


92.6

57.9

100

1987

112

87.9

111.1

1988

114.3

69

115

1989

115.6

65

108.7

1990

105.4

146.2

112

1991

94.9

78.9

89.3

1992

102.7

86.7

112

1993

118.4

107.7

100

1994

104.4

92.9

117.9

1995

140.4

100

136.4

1996

112.1

100

100

1997

100

92.3

113.3

1998

105.4

51.7

105.9

1999

107.7

79

114.8

2000

103.6

87.8

106.5

2001

112.6

93

100

2002

91.8

67.5

118.2

2003

111.1

63

120.5

2004

120

76.5

146.8

2005

108.3

84.6

133.3

2006

115.4

127.3

125

2007

120

100

128.3

2008

127.8

157.1

125.8

2009

104.3

100

91.6


BBA


104.2

168.2

131.8

2011

136

24594.6

130.1

2012

105.9

109.9

101.4

5.19 Import of Bangladesh and its neighbors, %, 2012

5.20 Comparison of import of Bangladesh and leaders 5.20.1 Import of Bangladesh and leaders, billions dollars, 1970-2012

Year

Banglad United esh States

Chin Germa Japa Great a ny n Britain

1970 0.55

56

2.5

37

20

27

1971 0.42

62

3

43

21

29

1972 0.6

74

3.8

51

25

34

1973 0.56

91

5.2

68

42

46


BBA


1974 0.61

128

7.5

87

67

63

1975 0.53

123

7.4

96

64

63

1976 1.3

151

6.8

110

72

66

1977 0.88

182

7.4

126

80

74

1978 1.5

212

15

151

92

87

1979 1.8

253

24

197

127 115

1980 2.6

294

33

231

156 134

1981 2.6

318

35

201

165 121

1982 2.6

303

28

191

152 118

1983 2.5

329

28

188

146 118

1984 2.6

405

32

186

157 123

1985 2.7

417

41

191

149 127

1986 2.5

453

37

237

149 148

1987 2.8

509

47

285

179 183

1988 3.2

554

64

314

230 222

1989 3.7

591

68

335

264 234

1990 3.9

630

52

426

291 264

1991 3.7

624

59

473

294 252

1992 3.8

668

70

504

294 268

1993 4.5

720

94

438

303 257


BBA


1994 4.7

813

106 483

340 286

1995 6.6

903

129 584

411 329

1996 7.4

964

147 581

435 357

1997 7.4

1056

164 563

418 383

1998 7.8

1116

164 593

349 397

1999 8.4

1251

190 608

380 414

2000 8.7

1474

251 624

446 435

2001 9.8

1398

271 617

408 433

2002 9

1430

328 626

395 464

2003 10

1544

449 771

440 521

2004 12

1798

607 913

524 620

2005 13

2026

712 999

590 683

2006 15

2241

853 1158

650 778

2007 18

2376

103 1335 4

699 835

2008 23

2556

123 1517 2

849 850

2009 24

1976

111 1238 3

621 663

2010 25

2362

152 1389 0

768 742

2011 34

2670

189 1648

947 827


BBA


8 2012 36

2743

207 1572 0

992 835

5.20.2 Import per capita in Bangladesh and leaders, dollars, 1970-2012

Year



1970 8

267

3

467

193 485

1971 6

293

4

541

200 520

1972 9

346

4

640

234 608

1973 8

422

6

853

389 820

1974 9

589

8

1091

612 1122

1975 7

561

8

1204

578 1120

1976 18

682

7

1381

643 1173

1977 12

814

8

1584

708 1315

1978 19

939

16

1901

807 1545

1979 22

1110

25

2484

110 2043 4

1980 32

1277

34

2918

134 2380 6

1981 31

1368

35

2543

141 2149 2

1982 30

1291

28

2420

129 2094


BBA


1 1983 28

1388

27

2385

123 2093 2

1984 28

1691

31

2360

131 2179 6

1985 29

1724

39

2421

124 2247 2

1986 26

1854

34

2998

123 2614 6

1987 28

2062

43

3594

147 3224 9

1988 31

2222

57

3944

189 3901 4

1989 35

2346

59

4186

216 4101 7

1990 36

2475

45

5293

238 4614 0

1991 34

2427

50

5838

239 4393 6

1992 34

2573

58

6175

238 4659 7

1993 39

2745

77

5327

245 4456 0

1994 40

3067

86

5837

274 4945 0


BBA


1995 55

3369

104 7024

330 5673 2

1996 60

3554

118 6967

348 6137 6

1997 59

3846

130 6743

334 6564 3

1998 61

4014

130 7102

278 6782 6

1999 65

4445

149 7282

302 7049 8

2000 66

5179

196 7472

354 7379 8

2001 73

4862

210 7382

323 7316 9

2002 66

4926

253 7480

312 7807 9

2003 72

5272

345 9202

347 8727 8

2004 85

6085

463 10889

413 10336 3

2005 91

6795

540 11916

464 11328 6

2006 104

7447

643 13829

511 12834 3

2007 123

7821

775 15973 549 13695


BBA


3 2008 155

8335

918 18194

666 13859 8

2009 161

6385

824 14883

487 10745 6

2010 165

7565

111 603 16732 11955 8 0

2011 222

8479

138 743 19881 13247 7 8

2012 233

8639

150 779 18986 13300 3 6

5.20.3 Import share in GDP in Bangladesh and leaders, %, 19702012

Year

Banglade United sh States


1970 7.9

5.2

2.7

17.7

9.6

21.6

1971 6.7

5.3

3.1

17.8

8.9

20.6

1972 8.6

5.8

3.4

17.6

8

21

1973 7.4

6.4

3.8

17.6

9.9

25.1

1974 6.7

8.3

5.3

20.2

14.2 31.8

1975 5.6

7.3

4.6

20.2

12.5 26.7

1976 11.8

8

4.5

21.9

12.5 29.1

1977 8

8.7

4.3

21.7

11.3 28.8


BBA


1978 10.7

9

7

21.1

9.2

1979 10.6

9.6

9.1

23.1

12.2 27.3

1980 13.7

10.3

10.7 25.1

14.4 24.7

1981 13.7

9.9

11.9 25.9

13.7 23.5

1982 15.3

9.1

9.5

25.4

13.6 24

1983 13.9

9

8.9

25.2

12

1984 12.4

10

10.1 26.5

12.1 28

1985 12.3

9.6

13.3 26.9

10.8 27.4

1986 10.9

9.9

12.2 23.4

7.3

26

1987 10.8

10.5

14.2 22.7

7.2

26.1

1988 11.4

10.5

15.5 23.2

7.6

26.1

1989 12.3

10.4

14.8 24.7

8.8

27.2

1990 12.2

10.5

12.9 24.9

9.4

25.9

1991 10.9

10.1

13.9 26.1

8.3

23.6

1992 10.9

10.2

14

24.4

7.6

24.2

1993 12.5

10.5

14.7 21.8

6.9

25.8

1994 12.4

11.1

18.2 22.5

7

26.5

1995 15.3

11.8

17

23.1

7.7

27.9

1996 16.4

11.9

16.5 23.8

9.2

28.7

1997 16.1

12.3

16.6 26.1

9.7

27.7


26.8

25.3

BBA


1998 16.3

12.3

15.7 27.2

8.9

26.9

1999 16.8

12.9

17.3 28.5

8.6

27.3

2000 17.1

14.3

21

33.1

9.4

29.1

2001 19.2

13.2

20.6 32.8

9.8

29.2

2002 17

13

22.5 31.2

9.9

28.6

2003 17.2

13.4

27.2 31.8

10.2 27.8

2004 19

14.6

31.2 33.5

11.3 27.9

2005 20

15.5

31.1 36.1

12.9 29.4

2006 22.1

16.2

30.5 39.9

14.9 31.3

2007 23.4

16.4

29.5 40.2

16

2008 25.6

17.4

27.1 41.9

17.5 31.6

2009 24

13.7

21.8 37.5

12.3 30

2010 22.3

15.8

25.5 42

14

2011 28.1

17.2

26

45.4

16.1 33.6

2012 28.3

16.9

24.8 45.9

16.6 33.8

29.2

32.3

5.20.4 Import growth dynamics of Bangladesh and leaders, %, 1971-2012

Year



197 76.4 1

110.7

120

116.2 105

107.4

197 142.9

119.4

126. 118.6 119

117.2


BBA


2

7

197 93.3 3

123

136. 133.3 168 8

197 108.9 4

140.7

144. 159. 127.9 137 2 5

197 86.9 5

96.1

98.7 110.3 95.5 100

197 245.3 6

122.8

91.9 114.6

197 67.7 7

120.5

108. 111. 114.5 112.1 8 1

197 170.5 8

116.5

202. 119.8 115 7

117.6

197 120 9

119.3

160

132.2

198 144.4 0

116.2

137. 122. 117.3 116.5 5 8

198 100 1

108.2

106. 87 1

105. 90.3 8

198 100 2

95.3

80

95

92.1 97.5

198 96.2 3

108.6

100

98.4

96.1 100

198 104 4

123.1

114. 98.9 3


135.3

112. 104.8 5

130.5 138

107. 104.2 5

BBA


198 103.8 5

103

128. 102.7 94.9 103.3 1

198 92.6 6

108.6

90.2 124.1 100

198 112 7

112.4

127

198 114.3 8

108.8

136. 128. 110.2 121.3 2 5

198 115.6 9

106.7

106. 114. 106.7 105.4 3 8

199 105.4 0

106.6

76.5 127.2

110. 112.8 2

199 94.9 1

99

113. 111 5

101

199 102.7 2

107.1

118. 106.6 100 6

199 118.4 3

107.8

134. 86.9 3

199 104.4 4

112.9

112. 112. 110.3 111.3 8 2

199 140.4 5

111.1

121. 120. 120.9 115 7 9

199 112.1 6

106.8

114


120.3

99.5

116.5

120. 123.6 1

95.5 106.3

103. 95.9 1

105. 108.5 8

BBA


199 100 7

109.5

111. 96.9 6

199 105.4 8

105.7

100

199 107.7 9

112.1

115. 108. 102.5 104.3 9 9

200 103.6 0

117.8

132. 117. 102.6 105.1 1 4

200 112.6 1

94.8

108

98.9

200 91.8 2

102.3

121

101.5 96.8 107.2

200 111.1 3

108

136. 111. 123.2 112.3 9 4

200 120 4

116.5

135. 119. 118.4 119 2 1

200 108.3 5

112.7

117. 112. 109.4 110.2 3 6

200 115.4 6

110.6

119. 110. 115.9 113.9 8 2

200 120 7

106

121. 107. 115.3 107.3 2 5

200 127.8 8

107.6

119. 121. 113.6 101.8 1 5


96.1 107.3

105.3 83.5 103.7

91.5 99.5

BBA


200 104.3 9

77.3

90.3 81.6

201 104.2 0

119.5

136. 123. 112.2 111.9 6 7

201 136 1

113

124. 123. 118.6 111.5 9 3

201 105.9 2

102.7

109. 95.4 1

5.21 Composition Bangladesh:

and

Performance

73.1 78

104. 101 8 of

Imports

of

5.21.1 Import Composition and Growth:

To analyze the import composition of Bangladesh it is observed that the import share of principal primary commodities (in total imports) showed a declining trend in recent years. On the other hand, the shares of principal industrial goods and capital goods reported a slight increase. The import payments for principal primary commodities, in FY 1998-99, were US$ 1,448 million representing 18.06% of total import payments. These figures decreased to US$ 980 million and $ 1,098 million (11.66% and 11.73% of total import payments) in FY 1999-2000 and 2000-01 respectively. The import shares of principal industrial goods increased to 14.58% and 15.34% in FY 1999-2000 and FY 2000-01 from 13.77% in FY 1998-99. The share of import payments for capital goods in total imports increased to 25.63% in FY 2000-01 from 24.56% in FY 1998-99. Import payments for rice and wheat significantly decreased in FY 1999-2000 and FY 2000-01 compared to FY 1998-99, which implies that the country is making progress in food production. The share of import payments for IBAIS University, Dhaka, Bangladesh Page 104

BBA


petroleum products increased significantly in FY 200001 compared to FY 1998-99. Total import payments stepped up to US$ 9363 million in FY 2000-01 from US$ 8403 million in FY 1999-2000 recording an increase by 11.42% (GOB 2002; Bangladesh Bank 2002-03). 13.21% increased by the FY 2012-2013. 5.21.2 Import Shares of Consumer and Capital Goods:

The variations in the share of consumer and capital goods are not notable for the period 1995/96-1998/99 except for consumer goods in FY 1996-97, when the share dropped to 28% from 39% in FY 1995-96. The shares of consumer goods dominate throughout the period recording 38% to 39% of total import payments. Capital goods, on the other hand, registered 13% to 16% of total import payments during this time. The share for combination of consumer goods and materials represented 63% to 68% of total import payments, whereas the same for capital goods and materials together was 32% to 37% during the stated period (BBS 2000: 251). 5.22 Major Product - Wise Import of Bangladesh

Amounts in Million US$ 01.Petroleum Products

20092010-11 10 2021 3280

02.Chemicals

972

1271

966

1319

04.Cotton

1440

2718

05.Yarn

719

1412

Sl. Product

03.

Plastics Articles

&

Rubber


BBA


06.Textiles and Articles

1986

2716

07.Iron & Steel

1453

2032

08.Capital Machineries

1594

2359

09.Food Grains

837

1932

10.Edible Oil

1050

1080

5.23 List of Imported Products brought certification before Customs clearance

under

mandatory

A. Food Products (18 Items):

Sl. No Name of the products 1 Milk Powder and Cream Powder 2 Fruit Cordial 3 Biscuit 4 Sauce (Fruit & Vegetable) 5 Lozenges 6 Tomato Ketchup 7 Jams (Fruits Preserves) & Jelly 8 Marmalade 9 Infant Formula 10 Soybeans Oil 11 Soft Drink Powder 12 Sugar 13 Instant Noodles 14 Fruit or vegetable Juice 15 Edible Sun Flower Oil 16 Chips/Crackers 17 18 19

Standards NO. BDS/CAC 207:08 BDS 508:2006 BDS 383:2001 BDS 512:2007 BDS 490:2007 BDS/CAC 530:2002 BDS/CAC 79:2008 BDS/CAC 80:2008 BDS CAC 72:2003 BDS 909: 2000 BDS 1586:2007 BDS/CAC212:2006 BDS 1552:2007 BDS 513:2002 BDS CAC 23: 2002 BDS 1556:1997;Amend1:2 004 Taffies BDS 1000:2001 Honey BDS /CAC 12:2007 Processed Cereal based Foods for Infants and youngBDS 074: 2007 children’s

B. Chemical Products (08 items): Sl. No 1

Name of the products

Standards NO.

Coconut Oil

BDS 99:2007


BBA


Skin Cream

BDS 1382:2006

3

Tooth Paste

BDS 1216:2006

4

Skin Powder

BDS 1337:2006

5

Shampoo, Synthetic Deter-gent based

BDS 1269:2002

6

Lipstick

BDS 1424:2006

7

Toilet Soap

BDS 13:1994

8

After Shave Lotion

BDS 1524:2006

C. Textile Product (2) Items Sl. No 1


Standards NO.

Polyester blend Suiting

BDS 1175:2001

2

Polyester blend Shirting (Market Varieties)

BDS 1148:2003

D. Electrical & Electronic Products (07) Items Sl. No 1

Name of the products Primary Batteries: a) Part-1 General

Standards NO.

BDS IEC 1):2005 b) Part-2 Physical and Electrical Specification BDS IEC 2):2005 c) Part-3 Watch Battery BDS IEC 3):2005 d) Part -4 Safety of Lithium batteries BDS IEC 4):2005 e) Part-5 Safety of Batteries with Aqueous BDS IEC Electrolyte 5):2005 2

3 4 5 6 7

60086

(Part-

60086

(Part-

60086

(Part-

60086

(Part-

60086

(Part-

Performance & Construction of Electric circulating BDS 818:1998 (BDS 181: Fans & '98, Amend 1: 06) Regulators (Ceiling & dec head fans, pedestal fans & table/cabin fans with in-built regulators) Tubular & other switches for domestic & similar BDS 117:2005 purposes (Push button, Piano etc.) Tubular Fluorescent Lamps BDS 292:2001 Ballast for Fluorescent Lamps PerformanceBDS /IEC 60921:05 Requirements Two-Pin Plugs & Socket-Outlets Reversible type for BDS 102:2005 domestic use Three-Pin Plugs & Socket-Outlets BDS 115:2005


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY E. Engineering Products (04) Items Sl. No 1


Standards NO.

Cement

BDS EN 197-1:2003

2

Ceramic Table wares

BDS 485:2006

3

G P Sheet (Including Corrugated Sheet)

BDS 1122: 2007

4

Ceramic Tiles- definitions, Classifications characteristics &BDS/ISO marking 2006

13006:

5.24 Bangladesh Imports by Product Section in US Dollars - Yearly


Section

2010

2011

Live Animals; Animal $105,764,259 $109,429,766& INTERNATIONAL TRADE OF BANGLADESH Products BBA IT’S IMPACT ON ECONOMY

2012 $171,618,433

Vegetable Products

$665,219,787

$1,034,222,203

$1,607,928,144

Animal or Vegetable Fats and Oils and Their Cleavage Products; Prepared Edible Fats; Animal or Vegetable Waxes

$646,889,973

$956,357,797

$1,553,757,562

Prepared Foodstuffs; Beverages, Spirits and Vinegar; Tobacco and Manufactured Tobacco Substitutes

$324,402,630

$485,547,480

$534,364,521

Mineral Products

$525,706,783

$631,299,180

$693,220,761

Products of the Chemical or Allied Industries

$1,071,632,413

$1,118,803,531

$1,395,561,553

Plastics and Articles Thereof; Rubber and Articles Thereof

$457,161,087

$601,180,557

$759,422,931

Raw Hides and Skins, Leather, Fur skins and Articles Thereof; Saddlery and Harness; Travel Goods, Handbags and $5,877,490 Similar Containers; Articles of Animal Gut (Other Than Silk-Worm Gut)

$6,572,673

$7,846,798

Wood and Articles of Wood; Wood Charcoal; Cork and Articles of Cork; Manufactures of Straw, of $23,518,960 Esparto or of Other Plaiting Materials; Basket ware and Wickerwork

$10,633,640

$9,886,546

Pulp of Wood or of Other Fibrous Cellulosic Material; Recovered (Waste and Scrap) Paper $173,024,827 or Paperboard; Paper and Paperboard and Articles Thereof

$219,490,186

$230,763,881

Textiles and Textile Articles

$2,619,577,970

$2,550,583,616

$2,424,690,835

Footwear, Headgear, Umbrellas, Sun IBAIS University, Dhaka, Bangladesh Page 109 Umbrellas, WalkingSticks, Seat-Sticks,

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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY Source: United Nations Commodity Trade Statistics Database.

5.25 A Major Products

Imported

Product

by

Bangladesh-Petroleum

Bangladesh is not a petroleum producing country though it has a refinery plant ERL, where imported crude oils from Saudi Arabia and Abu Dhabi are processed with a small quantity of oil from Haripur Gas Field and the products are marketed by several marketing companies. Hence, Bangladesh has to depend on imported oil. The present annual demand of petroleum products in the country is 3,300,000 tons. Total storage capacity of petroleum products in the country is 687,500 tons, of which the storage capacity at Eastern Refinery Limited is 365,000 tons. In the main installations of three oil-marketing companies of ERL in Chittagong (Padma Oil Company Ltd, Jamuna Oil Company Ltd, Meghna Petroleum Ltd), the total storage capacity is 205,600 tons. Other than Chittagong, oil companies have 19 (nineteen) oil depots in different parts of the country, located at Godenail, Fatullah, Daulatpur, Bhairab, Chandpur, Baghabari, Balashi, Chilmari, Ashuganj, Rangpur, Dhaka, Barisal, Jhalokati, Sreemangal, Sylhet, Parbatipur, Rajshahi, Natore and Harian (Rajshahi).


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From Chittagong, 82% of petroleum products are transported by river (coastal tanker), 6% by Railway (Tank wagon or Box wagon), 10% by road (Tank) and 2% by other local means (boat, push cart or van etc). There are 72 coastal tankers (850-1200 tons capacity each) for transportation of petroleum products from Chittagong to Godenail, Fatullah, Daulatpur, Barisal, Jhalokati, Chandpur, Ashuganj and Bhairab depots. There are 33 shallow Draft Tankers (400-450 tons capacity each) for transportation of products from Godenail or Fatullah to Baghabari, Chilmari, Balashi and Chandpur depots. There are about 1,000 railway tank wagons (meter gauge and broad gauge). From Chittagong, products are dispatched to Sylhet, Sreemangal, Rangpur and Dhaka oil depots by rail through meter gauge railway. From Daulatpur products are dispatched to Natore, Parbatipur, and Harian and Rajshahi depots by rail through broad gauge railway. There are 759 filling stations, 37 consumer pumps, 1,480 agents/distributors, 1273 LPG dealers and 305 Packed Point Dealers appointed by three oil-marketing companies in the country for retail trading. There are more than 6,000 tank Lorries owned by dealers/distributors for transportation of petroleum products from oil company depots to their selling points. During 1997-1998 the Corporation imported 5,13,000 tons crude oil from Abu Dhabi and 6,31,000 tons crude oil from Saudi Arabia thus totaling 11,44,000 tons under state to state annual contract basis. The C&F cost of this imported crude oil was US$ 151.56


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million equivalent to Tk 7,141.51 million. The average C&F import cost was US$ 132.48 per tons. Similarly in 1997-1998 the Corporation imported about 17,23,000 tons of various grades of Refined Petroleum Products from KPC, SHELL and ESSO and also procured about 12,000 tons bitumen from Iran under international tender. The C&F cost for the above import amounted to US$ 268.06 million equivalent to Tk 12,630.99 million. The imported refined products included 100 thousand tons petrol, 272 thousand tons SKO, 126 thousand tons jet petrol and 1,225 thousand tons HSD. The average C&F cost for this was US$ 154.36 per tons while the average C&F import cost of bitumen was nearly US$ 173.64 per tons. During the mentioned period Bangladesh Petroleum Corporation (BPC) also imported about 39,742 tons different grades of Lube base oil at a C&F cost of US$ 11.78 million equivalent to Tk 555.07 million and the average import cost was US$ 296.41 per tons. So during 1997-98, BPC imported 29, 19,000 tons of crude and refined products and the total import cost amounted to US$ 431.40 million equivalent to Tk 20327.57 million. During the same period the Corporation exported 1,10,968 tons surplus petroleum products like 10,459 tons naphtha and 1,00,509 tons furnace oil from the refinery and earned US$ 10.11 million equivalent to Tk 476.38 million. In that year the country's only refinery produced 11,560,00 tons various finished petroleum products by refining imported crude oils including 38 thousand tons condensate received from the gas fields.


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At the same time the sole Bitumen plant of the country 'Asphaltic Bitumen Plant' produced 57,462 tons of bitumen and LPG bottling plant 'LP Gas Limited' bottled a total 10,61,000 cylinders (each cylinder containing 12.5 Kg LPG) which were delivered to the three oil marketing companies for marketing purpose. Two lube blending plants of BPC, namely Standard Asiatic Oil Company Ltd and Eastern Lubricants Blenders Ltd, blended different grades of 39,042 tons lubricating oil and supplied to three oil marketing companies. Last year BPC took several initiatives for activating the country wide marketing and distribution of various petroleum products by giving greater importance to the oil demand of the Northern regions. The government raised the price of 0.25% sulfur gasoil, superior kerosene, 95 RON and 92 RON gasoline by Taka 5 (6.75 cents)/liter and the price of 180 CST high sulfur fuel oil by Taka 8/liter. Officials said the government had decided to hike the prices four months after the previous hike on May 6, 2011 as multilateral donor agencies including the International Monetary Fund had suggested adjusting the prices of petroleum products in line with the prices in the international market. In May, the government had raised all petroleum product prices by Taka 2/liter. BPC had earlier projected that it would require around Taka 460 billion in the current fiscal year 2011-12 (July-June), up 53% from the previous fiscal year's Taka 300 billion to import an increased quantity of fuel to feed domestic demand. And it said that the government subsidy to BPC might have to increase more than three times to Taka 260 billion in the current


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fiscal year, from the previous year's Taka 80 billion, if the domestic oil prices were not increased.BPC will require to import around 6.50 million mt of petroleum products in fiscal year 2012-13, up 27.45% from previous fiscal year's 5.10 million mt. The demand might soar to around 7 million mt for 2012-13 depending on fuel requirements of the new gasoil and HSFO-fired power plants. BPC has planned to import around 4.0 million mt of gasoil and 1.5 million mt of HSFO to meet the mounting oil demands in 2011-12 fiscal years. The remaining 1 million mt of petroleum products include kerosene, A-1 jet fuel, gasoline and other fuels. The country's petroleum demand is rising fast as the government has moved to widen its range of energy sources by installing dozens of high-cost diesel and furnace oil power plants in both the private and public sectors, the sources added. Twenty seven diesel and furnace oil-fired rental and quick rental power plants are now operational across the country and a dozen more are expected to come online soon.BPC is struggling to make payments for petroleum imports; and suppliers especially the Malaysian Petro, the trading arm of state-owned PETRONAS, and the Philippines National Oil Company recently offered BPC a deferred payment mechanism to pay for import bills within six months with interest to ensure payments. In the past 10 years of operations, BPC has made profit only in fiscal 2008-2009 of Taka 3.22 billion when oil prices in the international market went down following the global economic meltdown. BPC incurred losses of around Taka 72.08 billion for fiscal 2010-2011. In fiscal 2009-2010, the losses were


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at Taka 20.49 billion. Bangladesh's petroleum import bill surged about 41 percent year on year to nearly 5 billion U.S. dollars in the last 2011-12 fiscal that ended in June, said a central bank official Monday. This is compared to 3.18 billion dollars the South Asian nation of 152.52 million people spent in the previous 2010-11 fiscal year (July 2010-June 2011). The settlement of letters of credit (LCs), generally known as actual imports, for petroleum products stood at 4,479.21 million dollars in the 2011-12 fiscal year (July 2011-June 2012). In the last fiscal, he said the country's overall fuel import orders also increased by 51.40 percent year on year. The overall import orders, officially known as fresh opening of import letters of credit, increased to 4.671 billion dollars in 2011-12 against 3.085 billion dollars in the previous fiscal year, said the official quoting the Bangladesh Bank (BB) data. State-run Bangladesh Petroleum Corporation (BPC), the country's sole importer of petroleum product, said it raised import of fuel to cope with greater demand in the power and transport sectors and farm irrigation.17 percent of the fuel oil imported in the last fiscal was spent on power generation. Communications and irrigation also had 35 percent and 42 percent shares of total import respectively in the last fiscal year. In the current fiscal year’s estimated import target at about 5.8 million tones of petroleum products to meet the growing demand from various sectors. 5.26 Petroleum’s Impact on Economy

Bangladesh's overall electricity generation is now reportedly hovering at about 5,600 megawatts (mw) per day against a demand of around 7,000 mw. The import of fuel oil has increased mainly to run the rental and quick rental power plants. Bangladesh economic


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analysts have long been saying that the country's macro-economy is under severe strain due to the huge import liability of fuel oils for the quick rental power plants. Bangladesh's annual demand of fuel oil, which had been hovering around 3 million tons a year until it jumped to 4.48 million tons in the last fiscal year, marking a sharp rise due mainly to installation of many rental and quick oil-fired power plants in recent years and growing dependency of farm machinery on diesel generators for energy because of insufficient and unreliable electricity supply. Bangladesh's two development partners -- Asian Development Bank (ADB) and International Monetary Fund (IMF) -- few months ago said one of the major reasons for macroeconomic pressures in the country is rising oil import. Although the government in the last fiscal year hiked fuel oils more than thrice, BPC, which sells fuel oil to the local market at much lower rates than import prices, reportedly lost around 100 billion taka in the last fiscal year. According to BPC, Bangladesh imports crude oil from Kingdom of Saudi Arabia and Abu Dhabi. There are some important economic indicators with a bit discussion on historical base data are given below that will help us to find out the performance of export and import and its real impact on our economy. The economy of Bangladesh is a rapidly developing market-based economy. Its per capita income in 2012 was estimated to be US$2,100 (adjusted by purchasing


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power parity). According to the International Monetary Fund, Bangladesh ranked as the 44th largest economy in the world in 2012 in PPP terms and 57th largest in nominal terms, among the Next Eleven (N-11) of Goldman Sachs and D-8 economies, with a gross domestic product of US$306 billion in PPP terms and US$153.6 billion in nominal terms. The economy has grown at the rate of 6-7% per annum over the past few years. More than half of the GDP is generated by the service sector; while nearly half of Bangladeshis are employed in the agriculture sector. Other goods produced are textiles, jute, fish, vegetables, fruit, leather and leather goods, ceramics, ready-made goods. Exports of textiles and garments are the largest source of foreign exchange earnings. Shipbuilding, pharmaceuticals and consumer goods manufacturing are important emerging industries, while the jute sector is re-emerging with increasing global demand for green fibers. Remittances from Bangladeshis working overseas, mainly in the Middle East, are another major source of foreign exchange earnings. Other important export sectors include fish and seafood, ceramics, cement, fertilizer, leather and leather goods, food products, software and IT services. Bangladesh has also made major strides in its human development index. The land is devoted mainly to rice and jute cultivation as well as fruits and other produce, although wheat production has increased in recent years; the country is largely self-sufficient in rice production. Bangladesh's


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growth of its agricultural industries is due to their fertile deltaic lands that depend on its six seasons and multiple harvests. Transportation, communication, water distribution, and energy infrastructure are rapidly developing. Bangladesh is limited in its reserves of oil, but recently there has been huge development in gas and coal mining. The service sector has expanded rapidly during last two decades and the country's industrial base remains very positive. The country's main endowments include its vast human resource base, rich agricultural land, relatively abundant water, substantial reserves of natural gas and coal, major seaports at Chittagong and Mongla, and its central strategic location at the crossroads of the two large burgeoning economic hub groups of SAARC and ASEAN. Chapter VI: Chapter 6: Overall Impact of Export &Import on Economy of Bangladesh According to a 2012 projection by HSBC, Bangladesh will be the world's 31st largest economy in 2050 when ranked by total gross domestic product (GDP) and 89th when ranked by GDP per capita. The global economy is familiar with specific terms defining the economic powers that influence trade and industry beyond their borders. The Asian Tigers, for example, are the four highly-developed countries (Hong Kong, Singapore, South Korea, and Taiwan) that account for a good percentage of market exports around the planet. Whether these nations will remain on top is up for


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debate, but as implied by Goldman Sachs those included in the Next Eleven group may prove competitive in the future. One such country is Bangladesh. [Note: See the table shows the contribution of export on our economy: ] Table: Major Products Export From Bangladesh And Contribution. to GDP - 2013 ( Financial Express) RMG Frozen Food Jute Goods Leather Chemical Products Raw Jute Agri Products Tea Others

|75.65% |4.22% |2.60% |2.19% |1.77% |1.21% |0.72% |0.06% 11.56%

6.1 Bangladesh GDP-2013

The Gross Domestic Product (GDP) in Bangladesh was worth 115.61 billion US dollars in 2012. The GDP value of Bangladesh represents 0.19 percent of the world economy. GDP in Bangladesh is reported by the World Bank. From 1960 until 2012, Bangladesh GDP averaged 31.9 USD Billion reaching an all time high of 115.6 USD Billion in December of 2012 and a record low of 4.3 USD Billion in December of 1960. The gross domestic product (GDP) measures of national income and output for a given country's economy. The gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time.


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Source: World Bank

Figure: 1

6.2 Bangladesh GDP Growth Rate

The Gross Domestic Product (GDP) in Bangladesh expanded 6.01 percent in the fiscal year 2012/2013 from the previous year. GDP Growth Rate in Bangladesh is reported by the Bangladesh Bank. From 1994 until 2013, Bangladesh GDP Growth Rate averaged 5.6 Percent reaching an all time high of 6.7 Percent in June of 2011 and a record low of 4.1 Percent in June of 1994. Bangladesh is considered as a developing economy. Yet, almost one-third of Bangladesh’s 150m people live in extreme poverty. In the last decade, the country has recorded GDP growth rates above 5 percent due to development of microcredit and garment industry. Although three fifths of Bangladeshis are employed in the agriculture sector, three quarters of exports revenues come from producing ready-made garments.


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Source: Bangladesh Bank

Figure: 2

6.3 Bangladesh GDP Annual Growth Rate

The Gross Domestic Product (GDP) in Bangladesh expanded 6.01 percent in the fiscal year 2012/2013 from the previous year. GDP Annual Growth Rate in Bangladesh is reported by the Bangladesh Bank. From 1994 until 2013, Bangladesh GDP Annual Growth Rate averaged 5.6 Percent reaching an all time high of 6.7 Percent in June of 2011 and a record low of 4.1 Percent in June of 1994. In Bangladesh, services are the biggest sector of the economy and account for 50 percent of total GDP. Within services the most important segments are: wholesale retail and trade (14 percent of total GDP); transport, storage and communication (11 percent) and real estate, renting and business activities (7 percent). Industry accounts for 30 percent of GDP. Within industry, the manufacturing segment represents 18 percent of GDP while construction accounts for 9 percent. The remaining 20 percent is contributed by agriculture and forestry (16 percent), and fishing (4 percent).


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Figure: 3

Figure: 4 6.4 Bangladesh Gross National Product

Gross National Product in Bangladesh increased to 4773.82 BDT Billion in 2013 from 4488.39 BDT Billion in 2012. Gross National Product in Bangladesh is reported by the Bangladesh Bureau of Statistics. Gross National Product in Bangladesh averaged 3606.21 BDT Billion IBAIS University, Dhaka, Bangladesh Page 122

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from 2003 until 2013, reaching an all time high of 4773.82 BDT Billion in 2013 and a record low of 2483.46 BDT Billion in 2003.

Figure: 5

6.5 Bangladesh GDP per capita

The Gross Domestic Product per capita in Bangladesh was last recorded at 597.49 US dollars in 2012. The GDP per Capita in Bangladesh is equivalent to 5 percent of the world's average. GDP per capita in Bangladesh is reported by the World Bank. From 1960 until 2012, Bangladesh GDP per capita averaged 311.6 USD reaching an all time high of 597.5 USD in December of 2012 and a record low of 219.3 USD in December of 1972. The GDP per capita is obtained by dividing the country’s gross domestic product, adjusted by inflation, by the total population.


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Figure: 6 6.6 Bangladesh Current Account to GDP

Bangladesh recorded a Current Account surplus of 1.40 percent of the country's Gross Domestic Product in 2012. Current Account to GDP in Bangladesh is reported by the Bangladesh Bank. From 1980 until 2012, Bangladesh Current Account to GDP averaged -1.1 Percent reaching an all time high of 3.7 Percent in December of 2010 and a record low of -4.4 Percent in December of 1988. The Current account balance as a percent of GDP provides an indication on the level of international competitiveness of a country. Usually, countries recording a strong current account surplus have an economy heavily dependent on exports revenues, with high savings ratings but weak domestic demand. On the other hand, countries recording a current account deficit have strong imports, a low saving rates and high personal consumption rates as a percentage of disposable incomes.


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Figure: 7 6.7 Bangladesh Terms of Trade

Terms of Trade in Bangladesh decreased to 70.10 Index Points in the fiscal year 2011/2012 from 70.80 Index Points in the fiscal year 2010/2011. Terms of Trade in Bangladesh is reported by the Ministry of Finance, Bangladesh. From 1986 until 2012, Bangladesh Terms of Trade averaged 87.7 Index Points reaching an all time high of 104.7 Index Points in June of 1988 and a record low of 70.1 Index Points in June of 2012. In Bangladesh, Terms of Trade (TOT) correspond to the ratio of Price of exportable goods to the Price of importable goods.


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Figure: 8 6.8 Bangladesh Current Account

Bangladesh recorded a Current Account deficit of 97 USD Million in the second quarter of 2013. Current Account in Bangladesh is reported by the Bangladesh Bank. From 2005 until 2013, Bangladesh Current Account averaged 470.4 USD Million reaching an all time high of 1975.0 USD Million in March of 2013 and a record low of -1638.0 USD Million in December of 2011. Current Account is the sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid).


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Figure: 9 6.9 Bangladesh Balance of Trade

Bangladesh recorded a trade deficit of 643.50 USD Million in August of 2013. Balance of Trade in Bangladesh is reported by the Bangladesh Bank. From 1995 until 2013, Bangladesh Balance of Trade averaged -1105.0 USD Million reaching an all time high of -32.3 USD Million in July of 2013 and a record low of -5370.6 USD Million in June of 2008. Bangladesh exports mainly readymade garments including knit wear and hosiery (75% of exports revenue). Others include: Shrimps, jute goods (including Carpet), leather goods and tea. Bangladesh main exports partners are United States (23% of total), Germany, United Kingdom, France, Japan and India. Bangladesh imports mostly petroleum product and oil, machinery and parts, soya bean and palm oil, raw cotton, iron and steel and wheat. Bangladesh main imports partners are China (17% of total), India, Indonesia, Singapore and Japan.


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Figure: 10

Chapter 7: Findings and Conclusion 7.1 Findings


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Even though Bangladesh is a member of the Third World but today, Bangladesh maintains its rank among nations with high potential developing an economy that has shown impressive growth over the years. One might think, given the assumed paucity of natural resources and industry in the country that Bangladesh doesn't offer much in the way of goods to export. Quite the contrary, though our neighbor to India doesn't enjoy the same GNP level of the United States or nearby Asian nations. Bangladesh's two development partners are respectively Asian Development Bank (ADB) and International Monetary Fund (IMF) few months ago said one of the major reasons for macroeconomic pressures in the country is raising oil import. Bangladesh exported in 2009 more than $18 billion worth of supplies annually, a significant growth from $5 billion seven years prior. Although import in 2013 has been decreased by around $3000 million by the time mid august but still economy is depended on import. There are around 650 million USD trade deficits in Bangladesh for 2013. Economist says the government needs to look for alternative means to ease pressure on economy caused by growing import of petroleum products and also the cause of deficits for importing heavy machineries and parts, iron and steel and again petroleum products. The country buys refined fuel oil from varieties companies from different countries. 7.2 Conclusion


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Economist specialist says that the outcome of 20122013 may not continue in near future because international pressure is increasing day by day on RMG particular issues. So it is very important task of government to resolve the all problems of garments workers like maintaining workplace safety and international standard hour working and standard figure of salary, bonus as well as overtime payment. One of the ways to empower workers may be by following Toyota Production System in manufacturing. Role of Trade Union and Labor Rights Conflicting Relationship with First Line Supervisors Demand for Work-life Balance Need for Self-respect and Participation Job Turnover and Absenteeism Efficiency and Productivity of Workers Motivational Issues should be reviewed sincerely. However, all negative things, we strongly believe Bangladesh can be a country to watch in the next decade for development faster than others third world if the government take step to reduce import of those products are expensive that make deficits of trade every year and make our economy slower. Bangladesh can reduce some items of imported products as agriculture based economy by producing those like soya bean and palm oil, raw cotton and so on. We have found also the biggest obstacles to sustainable development in Bangladesh are also overpopulation, poor infrastructure, corruption, political instability and a slow implementation of economic


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reforms. So the government of Bangladesh should be active to solve those all problems to increase GDP by giving favorable environment to establish new industry will reduce imported products that will carry exponential growth continually and impact on our economy as well as to neighboring nations.

Chapter 8: Bibliography 1. 2. 3. 4. 5.

www.ilo.org/wcmsp5/groups/public/---.../wcms_204089.pdf bea-bd.org/site/images/pdf/33.pdf www.bdresearch.org/.../index.php www.slideshare.net/.../political-economy-of-trade-liberalisation-in-bangl globaledge.msu.edu › Global Insights › By Country › Bangladesh


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 6. garments-bangladesh.blogspot.com/.../impact-of-rmg-sector- in-banglade 7. www.ycsg.yale.edu/activities/files/Wahid.doc 8. www.assignmentpoint.com › Business › Economics 9. www.bdresearchpublications.com/admin/journal/upload/.../09176.pdf 10. www.ocoglobal.com/ 11. www.webcrawler.com/ 12. www.importexportplatform.com/ 13. CIA World Factbook (March 2012) U.S. Dept. of State Country Background Notes ( March 2012) 14. www.mopa.gov.bd 15. www.nbr-bd.org 16. www.boi.gov.bd 17. www.bangladesh-bank.org 18. www.tcb.gov.bd 19. www.roc.gov.bd 20. www.teaboard.gov.bd 21. www.bdtariffcom.org 22. www.epb.gov.bd 23. www.mincom.gov.bd 24. Bakht, Z. (2001): “Trade Liberalization, Exports and Growth of Manufacturing Industries in Bangladesh” in M. M. Huq and Love (eds.) 25. Strategies for Industrializations: The Case of Bangladesh, University Press Ltd., Dhaka. 26. Rab, A. (1997): “Export Trends and Policies in Bangladesh: Some Lessons of Past Performance for Future Policies”, paper presented to a Workshop organized by the Institutional Support to the Ministry of Finance Project (ISMOF) supported by the Asian Development Bank, March, Dhaka. 27. Rahman, S. H. (1979): “The Determinants of Change in Trade Balance: Some Estimates for Bangladesh, 1959/60 – 1974/75”, 28. Bangladesh Development Studies, vol. 7, pp. 71 – 84. 29. Ahmed, S. and Sattar, Z. (2004). “Trade Liberalization, Growth and Poverty Reduction:The Case of Bangladesh 30. ,” Working Paper , World Bank, South Asian Region. May 01, 2004. The paper was also presented in the ABCDE Bangalore Conference in May, 2003. 31. Bangladesh Bank. (2002-2003). 32. Annual Report 2002-2003, Dhaka, Bangladesh. Report 33. Bangladesh Bank. (2007). Quoted in w w w. b a n g l a e m b a s s y. c o m . b h / F D I % 2 0 i n %20Ban-gladesh.htm. Downloaded on 31 October 2007. 34. BBS. (200 0). 35. Statistical Pocketbook of Bangladesh 36. , Bangladesh Bureau of Statistics, Dhaka, Bangladesh. 37. CPD. (1997). 38. Growth or Stagnation? A Review of Bangladesh’s Development 1996, 39. Centre for Policy Dialogue/University Press Limited, Dhaka. 40. CSB. (2003).Country Study of Bangladesh,


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 41. A Paper Presented at the Country Studies Wor kshop on ‘Trade Cooper ati on an d Eco nom ic Pol icy Refo rm in Sou th Asia’, Bangladesh Institute of Development Studies, Dhaka, Bangladesh, March 30. 42. EPB (Expo rt Promo tion Bureau). (2004-2012-13). 43. Bang lades h Expor t Stat istics 2002-2003 - Export Promotion Bureau, Dhaka, Bangladesh. www.epbbd.com/ExportStat.html 44. GO B. (20 02). ‘Forei gn Tra de, Exchan ge Rate Man age men t and Ex ternal Sec tor ’, 45. Bangladesh Economic Review 46. , Finance Division, Ministry of Finance, the Government of Bangladesh, Dhaka. 47. GOB. (2003 ). 48. Expo rt Poli cy 2003 -2006,2012-2013 49. Min istry of Commer ce, Government of Bangladesh, December, 2003. 50. GOB. (2006). 51. Trade Policy Review by Bangladesh, 52. World Trade Organization, Report No. 06-3754. downloaded on 10/9/12. 53. World Bank. (1999-2013). 54. World Development Indicators 55. Database, World Bank, Washington,D. C.2012LPdf World Bank. (2000). 56. World Development Indicators-2012 57. Database, World Bank, Washington,D. C. 58. B a n g l a d e s h I n t e r n a t i o n a l t r a d e , I n f o r m a t i o n a b o u t I n t e r n a t i o n a l t r a d e i n Bangladesh http://www.nationsencyclopedia.com/economies/Asia-and-thePacific/Bangladesh-INTERNATIONAL-TRADE.html#ixzz1GOf4e1tc 59. Bangladesh Export Promotion Bureau 60. Truell, A. D. & Milbier, M. (2006). International Trade. In B. S. Kaliski (Ed.) Encyclopedia of Business and Finance, (Vol. 1). (2nd ed., pp. 422-426) Detroit: Macmillan Reference USA Retrieved May 5, 2011, from Gale Virtual Reference Library via Gale: http://go.galegroup.com/ps/start.do? p=GVRL&u=apollo 61. University of Phoenix. (2011). Week five simulations: Applying international trade concepts. Retrieved from University of Phoenix, ECO/212-Principles of Economics course website 62. Van Bergen, J.6 Factors That Influence Exchange Rates. In Investopedia Retrieved May 5, 2011, from http://www.investopedia.com/articles/basics/04/050704.asp 63. World Trade Organization. (2011). WTO. Retrieved on April 27, 2011 from, www.WTO.org 64. www.financialexpress.com 65. www.businesfinance.com 66. www.investopedia.com 67. www.academiaedu.com 68. www.termpaperwarehouse.com 69. http://ezinearticles.com/?Bangladesh,-an-Emerging-Economy-in-Exportand-Import&id=5070551


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INTERNATIONAL TRADE OF BANGLADESH & IT’S IMPACT ON ECONOMY 70. http://www.tradingeconomics.com/bangladesh/imports 71. http://www.epb.gov.bd/images/exportdata/Details%20Export%20for %20the%20month%20of%20July-August%202013-2014.xls 72. http://en.wikipedia.org/wiki/International_trade 73. http://www.chinadaily.com.cn/xinhua/2012-08-13/content_6712123.html 74. http://www.indexmundi.com/trade/imports/?country=bd 75. http://www.gistnet.com/cidb-sample/bd.import.html


Impact of International Trade in Bangladesh Economy

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