Study TPP's impact on Bangladesh
Bangladesh should immediately analyse the potential consequences of the mega trade deal, Trans-Pacific Partnership, on its economy, a senior World Bank official said yesterday.
“Bangladesh needs to understand the TPP. It also should analyse the consequences and risks associated with the deal,” Cecile Fruman, director of trade and competitiveness of the World Bank Group, told The Daily Star in an interview.
In October last year, 12 Pacific Rim nations -- Canada, Chile, Japan, Mexico, the US, Australia, Vietnam, Malaysia, Brunei, Singapore, New Zealand and Peru -- reached an agreement on the TPP.
The trade agreement could reshape business practices across the world, potentially lowering tariffs for some goods and making foreign goods more readily available.
The TPP countries represent 40 percent of the global economy and a quarter of the trade. They are home to 800 million people, representing 12 percent of global population. The deal may present challenges for least-developed countries, she said.
For instance, Bangladesh's exports may be affected by Vietnam's improved market access to the US.
She urged Bangladesh to diversify its industries from garments to others that will link and upgrade the global value chain.
Fruman, who is in Dhaka now to attend the two-day Bangladesh Investment and Policy Summit, also talked about the challenges related to foreign direct investment and infrastructure.
Bangladesh needs to increase its investment to 33 percent of its gross domestic product from existing 27 percent, she said.
In so doing, the country will be able to register 7.5-8 percent growth.
The FDI inflow has to be around $5 billion a year from the present $1.6 billion to support higher economic growth.
Bangladesh has to simplify its regulations and laws to attract FDI, she said, while citing the example of India that has taken pro-active measures including regulatory framework and simplification of laws to attract investment from abroad.
In addition to this, poor institutional capacity coupled with infrastructure deficiencies and weak trade logistics remains major constraints to attracting FDI into Bangladesh.
Fruman hailed Bangladesh for its efforts to establish 100 special economic zones (SEZ).
“Setting up 100 special economic zones is very ambitious. Given the present conditions, it is a great solution to attracting FDI and diversifying industries.”
Though Bangladesh ranks 174th out of 189 countries in the WB's doing business report, the country has improved in some areas. Reforms have helped Bangladesh save $253 million over the last eight years, she added.
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