Policy reforms must for export basket expansion: Prof Raihan

Bangladesh's export basket growth appears relatively stagnant, adding only nine products between 2006 and 2021, compared to competitors like Vietnam's 41, India's 16, and Thailand's 31.

From these products, Bangladesh has earned an average of $823 million annually, whereas Vietnam's earnings amount to $145 billion, Professor Selim Raihan said at a seminar today, citing a study by Harvard's Growth Lab.

In a keynote presentation at the seminar, titled "Bangladesh's Export Readiness: Post-LDC Graduation Perspective," he mentioned that there are both challenges and opportunities after graduation.

"Export diversification is key to addressing these challenges and exploiting their potential. Therefore, there is a need to reform various business investment policies so that new products can be exported from the country," he said at the programme organised by the Dhaka Chamber of Commerce and Industry (DCCI).

Bangladesh is scheduled to be included in the list of developing countries in November 2026, following its graduation from the least developed country bloc.

Raihan, who is also executive director of the South Asian Network on Economic Modeling (Sanem), said Bangladesh is experiencing sluggishness in both economic complexity and concentration on new product opportunities.

Citing a World Bank survey, he identified the main obstacles to business expansion in Bangladesh being the uncertainty surrounding the procurement of raw materials and their high prices.

Customs and trade regulations equally impede business expansion. Furthermore, poor access to port facilities, tax systems, skilled labour, financing processes, standards and certification, business licensing, land availability, litigation processes and transport systems hinder business expansion, he added.

"Import duty should be reduced," he suggested, noting that high tariffs in this sector have hindered the diversification of exports, as Bangladesh's import duties are higher than those of countries competing with it.

Raihan, an economics professor at Dhaka University, also highlighted the fact that the tax payment system in Bangladesh is overly complex and that monetary policy struggles to effectively control high inflation rates.

According to a study by PwC, Bangladesh ranks 152nd among 189 countries in terms of its tax payment system, he noted, emphasising the need for improvement. Comparatively, Thailand ranks 68th, Malaysia 80th, China 105th, and Vietnam 109th in this study.

Furthermore, he mentioned that the currency exchange rate poses another obstacle to Bangladesh's export diversification and proposed adopting market-based exchange rates.

He mentioned the difficulty faced by new entrepreneurs and businesses in obtaining financing in Bangladesh, emphasising the high interest rates and banks' inability to reduce them due to high default rates.

Moreover, he highlighted the private sector's reliance on banks for long-term financing, noting the capital market's failure to fulfil its expected role in this regard.

Quoting a World Bank survey on the benefit derived by the private sector from the banking sector, he revealed that Bangladesh ranks 98th out of 175 countries, significantly lower than countries like China (4th), Malaysia (14th), Singapore (13th), Thailand (17th) and Vietnam (15th).

He further underscored the need for significant improvements in the logistics sector, advocating enhancements in the customs clearance system, increased ability to track and trace consignment trucks, upgrades to trade and transport infrastructure, reduction of shipment costs and accelerated product clearance times to enhance the quality and competitiveness of logistics services.

Raihan also addressed the issue of low worker productivity in Bangladesh due to a shortage of skills, recommending increased government spending on education and health for skill development.

To support this initiative, he proposed according importance to increasing the tax-GDP ratio and attracting foreign direct investment.

DCCI President Ashraf Ahmed, who presided over the seminar at its headquarters in the capital, emphasised the importance of ease of doing business to facilitate exports and called for the reduction of duties.

He also insisted on providing low-interest financing for export-oriented industries and establishing a favourable foreign exchange rate.

As a panel discussant, Asif Ashraf, a director at the Bangladesh Garment Manufacturers and Exporters Association and the managing director of Urmi Garments, highlighted that a sudden policy change would harm the industry. He proposed engaging with the private sector in policy formulation and change.

Mohammad Mahbubur Rahman Patwari, managing director of Sonali Aansh Industries, pointed out that despite the potential, the export of many products is not increasing due to a lack of policy support and insufficient capacity.

DCCI Senior Vice President Malik Talha Ismail Bari emphasised that to tackle the challenges of the post-LDC transition, there should be a focus on increasing exports in fast-moving consumer goods, plastic products, light engineering, halal products, and IT sectors.