Direct banking, currency alternatives can boost trade with Russia: FBCCI
“Exports [to Russia] have just doubled over the last 10 years, but they are still less than half a billion,” he said at a discussion with a visiting Russian business delegation today (27 May).
Establishment of direct banking channels, exploring alternative currency arrangements, and simplifying trade procedures can significantly boost trade flows between Dhaka and Moscow, FBCCI President Mahbubul Alam has said.
"Exports [to Russia] have just doubled over the last 10 years, but they are still less than half a billion," he said at a discussion with a visiting Russian business delegation today (27 May).
According to data presented at the event titled "Development of Trade and Economic Cooperation between Bangladesh and Russia", Bangladesh's shipments to Russia stood at $0.4 billion, and imports from the country were $0.5 billion in the fiscal 2022-23.
Keep updated, follow The Business Standard's Google news channel
In FY2012-13, exports from Dhaka to Moscow were $0.2 billion.
The major export product from Bangladesh to Russia is ready-made garments (RMG), which account for more than 90% of the total exports to the oil-rich nation, according to the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
The country's apex trade body sees immense potential for further growth in bilateral trade relationships and export diversification through pharmaceuticals, light engineering goods, plastics, processed food, and other products.
The FBCCI president urged Russian investors to invest in Bangladesh's special economic zones, particularly in sectors like infrastructure, energy, and manufacturing.
Currently, Bangladesh has no scope to settle trade in Russian currency as there is no currency swap arrangement between the two nations for this purpose.
However, the Russian Embassy in Dhaka, in a post on its official X (formerly Twitter) account in late 2023, said the Russian government has approved a list of more than 30 friendly and neutral countries, banks, and brokers that will be allowed to trade in the Russian currency and derivatives market. Bangladesh is among the countries on this list.
In response to the Russian Embassy's post, Mezbaul Haque, spokesperson for the Bangladesh Bank, said the central bank has no agreement with Russia about trading in the ruble, and therefore it is not official.
At the event held at the FBCCI office in Gulshan, a representative from a local bank said, "We have to make payments through a third country, which increases costs. Nowadays, it's almost impossible to get payment from Russia because of sanctions and the fear of local and international banks."
"May we have a common platform between both countries, like SWIFT? And may we have the currency swap arrangement from Russia to Bangladesh? If this can be done, banking solutions will be easier, which will help increase trade volume."
Regarding a question at the event, a representative of Sberbank of Russia said they are exploring the possibility of opening a branch in Bangladesh. Russia has gradually become a major infrastructure development and trade partner for Bangladesh. One of the milestones of their cooperation is the Rooppur Nuclear Power Plant, which is a testament to their growing partnership.
AL Rybas, trade commissioner of Russia in India (also concurrently in Bangladesh), mentioned that beyond the Rooppur Plant, new projects for gas production are being coordinated.
"As part of bilateral cooperation through the agro-industrial complex, 2.67 million tonnes of wheat were delivered to the Bangladesh market in 2023, and fertilisers are being supplied. The main export goods from Russia to Bangladesh now are machinery, vehicles, food, and agricultural goods. Besides, export items from Bangladesh to Russia are textiles and agricultural goods," he said.
"There is much scope for expanding the economic partnership between our two countries and for diversifying trade relations into new areas. There is potential for collaboration in high technology, IT, banking, the chemical industry, and mechanical engineering," he added.
Aniruddha Roy, managing director of Leather Industries of Bangladesh Limited, said, "Tax barriers are a problem in supplying goods to Russia. During the Soviet era, we had facilities like GSP, but now Russian customs don't accept such facilities or any other tax privileges."
Alexander V Mantytskiy, Russian ambassador to Bangladesh, and Md Amin Helaly, senior vice president of FBCCI, also spoke at the event.
