Bangladesh should aim to join Asean+1 | The Daily Star
12:00 AM, September 23, 2020 / LAST MODIFIED: 12:43 PM, September 23, 2020

Bangladesh should aim to join Asean+1

Says BGMEA chief as experts discuss logistics in cross-border trade

Bangladesh needs to join the Association of Southeast Asian Nations (Asean) plus one in order to boost the country's trade as this single market will become the world's fourth largest economy by 2030 following the US, China and EU, according to Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

"Our trade will grow significantly if we join the Asean," Huq said yesterday while speaking at a virtual discussion on the 'logistics issues and challenges in cross border trade of Bangladesh', organised by the Dhaka Chamber of Commerce and Industry (DCCI).

Various government officials, exporters, researchers, trade body and business association representatives participated in the meeting.

In Bangladesh's context, joining the Asean would be greatly beneficial as a number of its member nations have turned into good destinations for raw materials sent to and from the country, she added.

Petrapole, the Indian side of the Petrapole-Benapole land port and Bangladesh's largest and most active border crossing, is a very important aspect of the country's trade, the BGMEA chief also said.

For instance, hundreds of trucks laden with goods were stranded at the Petrapole end for three days in September, causing untold sufferings to the local businessmen as shipment delays caused the products to deteriorate in quality over time.

And so, port activities need to be expedited a lot to improve trade, Huq said, adding that certain initiatives have been taken to improve the ease of doing business and overall port performance but those measures do not get enough publicity either locally or internationally.

Therefore, strong inter-ministerial coordination among the finance, commerce, National Board of Revenue (NBR), port authorities and other related ministries is crucial to improve logistics services, Huq said.

While discussing the poor state of logistic support for trade growth, Masrur Reaz, chairman of the Policy Exchange, said the port charge for a single consignment in Bangladesh is $408 while the rate in Vietnam is $290 and $211 in Indonesia.

Besides, these rates are declining in both Vietnam and Indonesia, he added.

It takes 168 hours to secure port clearance for a consignment in Bangladesh but in Vietnam, it takes just 55 hours, said Masrur, a former economist for the International Finance Corporation (IFC).

Meanwhile, the combined storage space of all warehouses across Bangladesh is currently about 4.2 million square feet, which is set to increase to around 6.7million square feet by 2022. Due to a lack of formal warehousing facilities in the country, most importers and exporters take it upon themselves to store their products, usually inside their own factories or other private property.

In other countries though, there are third party warehousing facilities, which provide a secured environment and a number of other services to maintain product quality.

These inefficiencies in the country's warehousing and logistics services are the root cause of increased operation costs and extended lead times, which badly impacts a business's competitiveness, Masrur said.

Echoing the sentiment, Zaidi Sattar, chairman of the Policy Research Institute (PRI), said Bangladesh needs to expedite the development of logistics services.

Modernising the country's port customs services is also needed to facilitate trade growth but not as a means to solely increase revenue, he added. The PRI chief also said Bangladesh ships 1,400 various goods abroad each year while 100 new products are added to the export list annually.

"However, 80 different products are excluded from the export list as they cannot compete in the business. So, we need to incentivise the exporters of those goods so that they can sustain their businesses," Sattar said.

Of the country's total export basket, only 290 different products have a yearly export value of above $1 million.

But the remaining goods are still very valuable for the economy and so, the government should facilitate their growth, he added.

Mahbubul Alam, president of the Chittagong Chamber of Commerce and Industry, said nearly 10,000 goods laden trucks from Dhaka enter Chattogram each day to offload export-oriented products.

However, since there is no truck terminal in the port city, mile-long tailbacks on the roads and highways of Chattogram always hamper the trade.

Therefore, the government should build a large truck terminal in Chattogram to house those carriers while being offloaded, he said, while suggesting that the construction of a bay terminal at Chattogram Port and upgrading the Dhaka-Chattogram highway to eight lanes should be completed as soon as possible.

In 2019, the country's premier port handled three million container units, up from two million in the previous year, said Md Zafar Alam, a member of the Chittagong Port Authority.

By this one can understand that although the port's container handling capacity has risen significantly in a short span of time, the handling facilities themselves have not improved as much, he added.

The government has already implemented up to 45 changes to the customs regulations in a bid to better facilitate trade.

However, customs officials need to remain vigilant in order to protect the interests of domestic industries, Alam said.

While delivering his keynote paper, Selim Raihan, executive director of the South Asian Network on Economic Model (SANEM), said Bangladesh ranks 100th on the global logistics performance index, which is the lowest among all its peer countries.

Tariff and para-tariff in trade, border issues, non-automation and customs issues are mainly responsible for Bangladesh's poor ranking in the index, said Raihan, also an economics professor at the University of Dhaka.

DCCI President Shams Mahmud, who moderated the discussion, said his organisation's recent study on Covid-19's impact on international trade found that 42 per cent of all local businesses now need over 15 days from start to finish to deliver their products for export to the sea port.

Similarly, 62 per cent of all businesses wait around 15 days to receive import shipments from the port.

The study also identified that container congestion, port demurrage charges, delays in the customs clearance process, a lack of port infrastructure, hinterland connectivity and high shipping costs are major bottlenecks for the import/export process, which end up increasing operation costs.

Goods shipments are 35 to 50 per cent slower than what they could be due to slow, expensive inland transportation, cumbersome customs and border management processes, inadequate consolidation of terminals, inland clearance depots, trade corridors and a lack of coordination among trade related agencies along the border, Mahmud said.

Abul Kasem Khan, chairperson of the Business Initiative Leading Development, proposed the formation of a separate ministry for logistics services as no particular government body is currently responsible for the industry's wellbeing.

Although, many international companies are trying to come to Bangladesh with investment proposals, they think about the lead time factor because of the poor logistics services available, said Sameer Sattar, a lawyer at the Supreme Court. 

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