West-China trade war creating new opportunities for Bangladesh: Wahiduddin Mahmud

Bangladesh can take the opportunity of the trade war involving Western countries and China to increase its exports by sourcing cheap raw materials from China and manufacturing export products, economist Dr Wahiduddin Mahmud said today (5 May).

The trade war involving Western countries and China is creating new opportunities for less developed countries including Bangladesh, he said at a two-day international seminar titled "Searching for Development Paths in Changing Global Conditions" organised by Dhaka University's Department of Development Studies and the Daily Bonik Barta at a hotel in the capital.

"To seize the opportunity, the primary challenge for less developed countries like Bangladesh will be how to maintain relations with the China bloc, Russia, and industrialised Western countries.

"If there is a trade partnership with China, manufacturing products can be sourced from there at a lower price, and large-scale credit facilities will be available. However, to increase exports, Bangladesh needs to form partnerships with Western countries, including the United States," said Wahiduddin Mahmud.

Dr Mushtaq Khan, professor of economics at SOAS University of London, Dhaka University Vice-Chancellor Professor Dr ASM Maksud Kamal, Speaker of the National Parliament Shirin Sharmin Chaudhury, and State Minister for Finance Waseqa Ayesha Khan were also present at the programme.

Dr Wahiduddin pointed out that Bangladesh did not take effective steps to regain the GSP [Generalized System of Preferences] facility after the US withdrew it following the Rana Plaza tragedy as the garment sector was not eligible for GSP at that time. However, the US extends this facility to around 150 countries, including 80-90 developing countries, excluding Bangladesh.

"There were many other products covered under the GSP, which were less exported to the US. If the GSP facility could have been retained, there would have been an opportunity to increase the export of those products. Therefore, by losing the GSP, we missed an opportunity for export diversification in the US market," he explained.

"Bangladesh should not be content with the export of low-wage labour and low-cost products," he said, emphasising that it is not feasible to eradicate poverty with low wages.

Dr Wahiduddin added, "If we aspire to receive GSP Plus benefits in the EU after graduating from LDC status, we must adhere to numerous global conventions. Pakistan recently qualified for GSP Plus benefits, which required ratifying many international conventions."

He said Bangladesh should have been cautious of foreign exchange reserves and exchange rates during global crises like the Russia-Ukraine war. "Ukraine's fallout from the war could further reshape the global trade landscape. Bangladesh needs to prepare to capitalise on the opportunities that will arise."

He also noted that many Western companies are relocating from China, with a significant portion moving to Vietnam and Indonesia. Bangladesh has not been able to leverage this advantage.

The economist said if the government has legitimacy in the eyes of the people, is confident, and enjoys public support, then it becomes much easier to safeguard the economic interests of the country, as there is no need to compromise for internal political calculations.

He emphasised the need for accountability to confront global challenges.

The former finance adviser to a caretaker government also said if a government treats its people as ridiculously unimportant, it can compromise both in the domestic and global economic spheres.

Referring to Vietnam as a successful country in attaining global trade benefits, Wahiduddin said despite being an ASEAN member, it has secured free trade agreements with countries including Japan, the United States, the United Kingdom, and the European Union.

"There is public support for the Vietnamese government. The country scrutinises policies through public discussion, and the legitimacy of the government is not questioned," he said.

Dr Mushtaq Khan, professor of economics at SOAS University of London, said at the programme that authoritarian states around the world are facing crises due to a lack of good governance. Over the past twenty years, sovereign developing nations have experienced economic turmoil stemming from foreign borrowing, discretionary spending, and economic instability.

"We now need to prioritise good governance. We must determine how to build high-quality infrastructure at the lowest cost. Many developing countries consider taking foreign loans, but this is a problematic and common misconception. Most authoritarian states are grappling with these challenges."

"Mahinda Rajapaksa of Sri Lanka serves as a prominent example. Once the decline sets in, it becomes very difficult to reverse," he added.

Speaker Shirin Sharmin Chaudhury said various problems including inflation, bankruptcy, food insecurity, and poverty are prevalent in many countries around the world. However, Bangladesh has managed to avoid such critical situations.

"The contemporary world is witnessing numerous changes, with discussions on reforming institutions to address global challenges. Currently, under the leadership of Bangabandhu's daughter, we are tackling these issues," she said.

State Minister for Finance Waseqa Ayesha Khan said, "Bangladesh has made economic progress despite global uncertainty. Many mega-projects have been implemented, placing us ahead of many Asian countries. We have significant investments in rural health and education, and we are already witnessing the positive outcomes of those investments."