Bangladesh can save £315m a year: experts

Bangladesh will benefit the most from the UK's Developing Countries Trading Scheme (DCTS) as it will potentially save £315 million in tariffs annually on its exports to the European nation, according to experts.

The UK introduced its new Generalised System of Preferences (GSP), namely the DCTS, with effect from last January under which developing nations will enjoy duty-free benefits to the UK markets, except for arms.

"The scheme will support Bangladesh's smooth transition from LDC status and take the UK-Bangladesh trading relationship to greater heights," said British High Commissioner to Bangladesh Sarah Cooke yesterday.

It is more generous than GSP because it maximises benefits for developing nations and British buyers, she said.

The DCTS will mostly support Bangladesh because the UK formed the scheme especially keeping the country in mind, she said in an event at her Dhaka residence.

"The scheme will support Bangladesh's smooth transition from LDC status and take the UK-Bangladesh trading relationship to greater heights," said British High Commissioner to Bangladesh Sarah Cooke yesterday.

Cooke hoped that it would support the economic resilience of the country, although export diversification was still a challenge for Bangladesh.

In an online presentation, Sabiha Ahmed, trade preferences policy adviser at the Foreign, Commonwealth and Development Office of the UK, said Bangladesh would benefit from more generous rules of origin compared to the previous GSP.

The threshold for imported non-originating content increased from 70 percent to 75 percent for a large number of products, she said.

Bangladesh can source inputs from up to 95 countries without losing duty-free status by treating the inputs as originating in Bangladesh, she said.

The south Asian country will get the highest benefits of £315 million annually while Bangladesh, Pakistan and Cambodia will get a tariff cut worth £535 million jointly, she said.

Under the DCTS, Bangladesh will automatically move to an "Enhanced Preferences" tier in 2029, which will provide duty-free access to 98 percent of Bangladesh's exports to the UK, including garments, said Ahmed.

The DCTS is about boosting trade and prosperity and retention of the scheme is based on respect for human and labour rights though compliance with international conventions, she said.

This includes those focused on civil and political rights, anti-corruption, climate change and the environment, she said, adding that the UK would closely monitor these aspects.

Bangladesh has huge potential to grab the UK market as it accounts for only 0.7 percent of its $688 billion imports, said Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development (RAPID).

The research firm identified more than 100 non-apparel items with high export potential, from leather goods and footwear, agro-food and processing, fish and shrimp, to light engineering products.

Apparel accounts for more than 90 percent of Bangladesh's exports to the UK. However, the UK's imports are highly diversified with the share of apparel products being just 3.4 percent, he clarified.

"It shows how big of a potential the UK market is for Bangladesh!" he said.

The main challenges to grabbing the market is a lack of knowledge and information about it and absence of established relationships with big brands and retailers of non-apparel products, said Razzaque while presenting a paper.

Moreover, exporters often find it difficult to meet the UK's standard and certification requirements, he said.

He recommended increasing incentives on identifying potential export sectors and launching globally recognised certification and necessary testing facilities.

In the pharmaceuticals sector, Bangladesh needs collaboration with the brains of the drug innovators of the UK, said Syed S Kaiser Kabir, CEO & managing director of Renata Ltd.

Because research and development are key to expanding and grabbing a bigger market in this sector, he added.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, MA Jabbar, managing director of DBL Group, Simeen Rahman, managing director & CEO of Eskayef Pharmaceuticals, Md Abdur Rahim Khan, additional secretary to the Ministry of Commerce, and Md Sameer Sattar, president of the Dhaka Chamber of Commerce & Industry, were present at the event.