Exports to Bhutan go up as trade agreement kicks in
Bangladesh's exports to Bhutan could rise on the back of the bilateral trade pact signed last year after shipment to the South Asian nation has already shown a significant upward trend.
Bangladesh struck its maiden preferential trade agreement (PTA) with Bhutan on December 6 last year.
The country was chosen for the first such bilateral agreement out of respect as Bhutan was the first nation to recognise newly independent Bangladesh in 1971.
The agreement allows duty-free export of 100 goods and import of 34.
The beneficiary Bangladeshi products are garments, processed agricultural goods and electronics, while that of Bhutan are fruits and stone.
The eligible export-oriented items include baby clothes and clothing accessories, men's trousers and shorts, jackets and blazers, jute and jute goods, leather and leather goods, dry cell batteries, fans, watches, potatoes, condensed milk, cement, toothbrush, plywood, particle board, mineral and carbonated water, green tea and orange, pineapple, and guava juice.
The items that will get duty-free imports include oranges, apples, ginger, fruit juice, milk, natural honey, wheat or meslin flour, homogenised preparations of jams, fruit jellies, marmalades, food preparations of soybeans, mineral water, wheat bran, quartzite, cement clinker, limestone, wooden particle boards, and furniture.
The deal, albeit only 10 months old, has proven worthy as merchandise shipments have grown significantly recently.
In the fiscal year of 2020-21, earnings from merchandise shipments to Bhutan stood at $6.89 million, a 58.03 per cent rise from $4.36 million a year ago, according to data from the Export Promotion Bureau.
The two-way trade balance is in favour of Bhutan as Bangladesh imports a lot of fruits and stones.
Experts say the signing of the PTA was a good beginning as the country is negotiating trade pacts with major trading partners in order to ensure duty benefits once Bangladesh graduates from the grouping of the least-developed countries in 2026.
However, Kamruzzaman Kamal, director for marketing at Pran-RFL Group, the leading processed food exporter in Bangladesh, said his company had not been enjoying the duty benefit under the PTA.
"So, we are still facing the previous duty of 10 per cent to 100 per cent, depending on products," he said.
Still, though, the company's exports to Bhutan increased nearly 50 per cent year-on-year.
Most of Pran-RFL Group's products, such as fruit juice, yoghurt, candy and flavoured drinks, face a 30 per cent duty on exports to Bhutan.
The edible oil faces the highest duty of 100 per cent, Kamal said, adding that his company shipped Tk 40 crore worth of goods in the last fiscal year.
Kamal went on to say that before the onset of Covid-19, exports to Bhutan were insignificant. Despite the ongoing pandemic and lockdowns, shipments to the South Asian nation have grown steadily.
Khurshid Ahmad, general manager for international marketing of Bombay Sweets & Co. Ltd, says the export of goods like crisps and savoury snacks to Bhutan has increased.
However, over the last few months, the shipment of goods has been slow because of recurrent lockdowns in Bhutan, he added.
Noor Md Mahbubul Haque, additional secretary of the commerce ministry's free trade agreement wing, says nobody has complained about not enjoying the duty benefit to Bhutan under the PTA as the agreement has been in effect since its signing.
"If an exporter does not enjoy the benefit, they should contact us. They should bring it to our notice so that we can investigate and take measures through consultations and negotiations."
He said the ministry would hold talks with Bhutan if needed, but the aggrieved needed first to bring it to the ministry's notice.
Mostofa Azad Chowdhury Babu, vice-president of the Federation of Bangladesh Chambers of Commerce and Industry, also said none had lodged any complaint with the apex trade body.
Rizwan Rahman, president of the Dhaka Chamber of Commerce and Industry, called for carrying out a survey to see if anyone faced any issues in exporting to Bhutan.
The duty structure for garment items was like it was previously, said Shahidullah Azim, vice-president of the Bangladesh Garment Manufacturers and Exporters Association.
Bangladesh exported nearly $0.32 million worth of garment items to Bhutan in the last fiscal year.
"Since the market is not that big, it is not a major target destination for apparel exporters," said Azim.