Despite its commendable average export growth of about 15 per cent per year, Bangladesh exports have a narrow base and remain focused on ready-made garments and a few other items. Furthermore 90 per cent of ready-made garments and knitwear go to Europe and the US. Clearly more needs to be done to expand and diversify the export base. And here comes the competitiveness of products.

Since 1991, Bangladesh has been opening its economy under pressure of economic globalization. This implies that Bangladesh is gradually integrating with the world economy. The challenge Bangladesh faces is how to boost competitiveness for its export of goods overseas in comparison with goods of other countries.

There are many factors which determine competitiveness of Bangladeshi products and some of them deserve mention:

First, competitiveness is linked with productivity of labour. If productivity is low, it will not be able to attain competitiveness. For example, if in Bangladesh only three shirts are made per hour in a garment factory, how can it compete with seven shirts made per hour in China? Low production means absence of skilled labour. Unless Bangladesh has a higher yield for the products, it will not be able to compete in the overseas market. This necessitates that Bangladesh has to concentrate on a number of items of their comparative advantage.

Second, wage given to the labour is to be taken into account. If the labour gets high wages compared to that of another country, the price will be high for goods and will thus lose competitiveness.

Third, the quality and design of goods is another element that has to be taken care of as ill-designed and low quality products have poor market overseas. Domestic taxes and subsidies in Bangladesh also determine the competitiveness of goods.

Fourth, there exists a bureaucratic process through which export of goods is sent overseas. Often there needs to be clearances from many government agencies in the country. It is said that at least 20 signatures are required in Bangladesh to export goods, while in Singapore only 2 are necessary. Furthermore, corruption almost at every level in bureaucracy gives rise to price of a product. It is learnt that almost one US dollar is spent for export of each shirt/garment abroad.

Finally, energy and adequate port facilities are to be available to private sector so that industry does not get bogged down with "load-shedding" and port bottlenecks do not arise for export of goods. The turn over of ships in ports is significant to keep the time schedule for delivery of products. Once the delivery schedule is not kept, one would be reluctant to import Bangladeshi goods.

Left to market forces, Bangladesh needs to initiate a process of structural diversification in the production as well as export structures in order to improve its competitiveness in order to make inroads into overseas market.

The role of Bangladesh missions abroad is crucial in advancing competitiveness of products in the following manner:

(a) Collecting information about the trade barriers and productivity differences, domestic taxes and subsidies, relative wage and profit margin of products of other countries.

(b) Pursuit of robust economic diplomacy.

With regard to (a), interaction between private sector and missions overseas is imperative. At present such cooperation is almost nil. Bureaucratic reforms are necessary so that missions abroad may interact with private sector. It is the private sector which needs detailed information of the regime under which products are manufactured in other countries.

With regard to (b), economic globalization has increasingly made economic diplomacy a significant factor in advancing countries' interests and it is difficult to draw a clear cut distinction between what is domestic and what is global.

Economic diplomacy may operate on three levels -- bilateral, regional and global. Bilateral diplomacy takes place between two countries, for example, during the recent visit of Bangladesh Prime Minister to Pakistan, Bangladesh has agreed to conclude a Free Trade Agreement (FTA) with Pakistan.

The negotiations with Pakistan for such an agreement are complicate matters because the essence of the FTA is how many items are included in the negative list, which will be excluded from tariff concessions and secondly whether tariff and non-tariff barriers are dismantled simultaneously. The devils of FTA are in the details which need to be skillfully negotiated.

On a regional level, South Asian Free Trade Agreement (SAFTA) is an example within the framework of Saarc. The details of the Safta will need to be thrashed out. Each country reduces ever year the tariff and within a period of seven years (for India, Pakistan and Sri Lanka) it would come to 5 per cent and for Least Developed Countries ten years (Bangladesh, Bhutan, Maldives, and Nepal) Each country would submit a negative list that may contain hundreds of products which are excluded from tariff concessions.

On the global level, trade negotiations take place within the World Trade Organisation (WTO). The WTO negotiations are complex having myriad of WTO rules and regulations. Unless one develops expertise, it will be difficult to negotiate and advance country's interests.

The December ministerial meeting of WTO in Hong Kong has demonstrated that Bangladesh did not receive what it wanted so far export of ready made garments are concerned. There were many factors involved for such failure but the most important one appeared to be the complacency that Bangladesh would get concessions as a Least Developed Country.

Another aspect of economic diplomacy is the encouragement and motivation of non-resident Bangladeshis (NRB) abroad to invest either alone or jointly with foreign partners in Bangladesh. However for the diplomatic missions abroad, often it becomes hard to sell to most NRBs to promote in investing in Bangladesh for the reasons which are responsible for slow growth in domestic private investment in the country. Good governance, a strong judiciary, and congenial law and order are requisites for sound investment climate in the country and perception of the absence of these seems to make NRBs shying away from investment.

A distinctive feature of economic diplomacy is the involvement of private sector in decision-making process. The inputs of private sector are important in determining the policies of economic diplomacy.

Often there is a clash between politics and economics. The government decides political environment while private sector deals with economic interests. In such instances, political considerations override economic interests. For example, Bangladesh private sector may wish to develop trade with Israel, but on political considerations they cannot engage in bilateral trade.

A tension erupts between regulated domestic and open international trade regime. International trade regime opens up market for foreign goods while private sector opposes liberal trade regime because they think their products will suffer because of competition. Eventually private sector realizes that it is a better option for open trade regime so that they can be competitive in an environment of trade liberalization.

There needs to be a harmonious relationship between government and private sector for achieving competitiveness in exporting goods abroad through economic diplomacy.

There have been policy reforms in the past in areas which are relatively easy to undertake but reforms which involve institutional and structural change have yet to be made. The fundamental impediment in economic progress is poor governance. Furthermore access to reliable power, ports, telecommunication, transport and skilled manpower has been a constraint for private sector in boosting competitiveness

The boosting of export competitiveness has a multi-faceted dimension. Unless infrastructure and structural reforms are undertaken by the government to facilitate competitiveness, the task for the missions abroad will be limited. The role of Bangladesh missions abroad is only a part of the whole.

Barrister Harun ur Rashid is a former Bangladesh Ambassador to the UN, Geneva.