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Bangladesh-Nepal Economic Ties

Weekly Telegraph, Kathmandu

13 October 2004

We face similar development challenges and we can learn from each other
— H.E. Huyamun Kabir, Ambassador of Bangladesh, Nepal

Bangladesh-Nepal Economic Ties

It is gratifying to note that our approach has brought some visible results, which have been well recognized. In its recent report, UNCTAD has mentioned that Bangladesh was one of 22 countries, which have been able to reduce poverty through effective implementation of liberalized trade policy. The Report also praised success of Bangladesh in securing gender parity in enrolment in primary and secondary level of education, ensuring supply of drinking water to 97 percent of its population and reducing child mortality rate by two thirds.

Despite excellent bilateral relations between Bangladesh and Nepal, one is struck by the fact that over the years our economic relations remained at a less than desirable level. Consistent with the priority set for economic diplomacy by the Government of Prime Minister Begum Khaleda Zia, our effort over the last one- year has been to modify the direction and introduce new dynamism in our economic relations.

It is recognized today that Bangladesh has emerged as a regional hub for RMG, Pharmaceutical, ceramic tiles, chinaware, cement and light engineering products. Bangladesh’s export has been growing at a consistent rate of 12% over the last fifteen years, thanks to growing appreciation of our products in global market. We also believe that business community and consumers in Nepal have the right to choose quality products at a competitive price.

There are other relevant factors why Nepal should benefit from doing business with Bangladesh. I would mention four of them. First, proximity is an important factor to promote bilateral trade and other economic interactions between Bangladesh and Nepal. It reduces cost of transaction and consolidates bilateral relations. Second element is the complementarity of our economies, which should be explored effectively for our mutual benefit. Thirdly, we face similar development challenges and we can learn from each other to utilize trade and other economic tools to address needs of our common people. Lastly, we have now an information infrastructure in place to facilitate easy flow of business information between Bangladesh and Nepal. We are in constant touch with Chambers in Kathmandu; we have opened a Bangladesh Business Information Desk at Birgunj Chamber of Commerce and Industry. We shall soon set up a Bangladesh Business Information Centre at Morang Chamber of Commerce and Industry. With all these interactions, we do hope that bilateral business will pick up.

In addition, economies are changing fast as well. Globalization and regionalization supported by revolution in technology have changed economic landscape and this inexorable process affects all of us. Trade alone may prove inadequate tool for ensuring progress and redressing inequality unless it is backed up by matching investment, transfer of technology and unhindered market access for products. We would therefore urge Nepalese business community that while they explore business opportunities in Bangladesh they should not miss out on excellent investment opportunities there, which could multiply benefits. Bangladesh is a good investment venue, with variety of sectors to invest, such as cement, ceramics, electronics, electrical items, pharmaceuticals, fertilizer, food processing and garments, among others. Export Processing Zones in Bangladesh are success stories. According to World Investment Report 2004, in percentage terms Bangladesh received highest foreign investment in 2003 among South Asian countries.

Again, one has to understand that economic activities are also diversifying at a horrendous speed. On the one hand, service sector is increasingly occupying complementary role in economic inter-actions; on the other hand, value of professional services has increased significantly. Let me give you an example. One statistics show that from 1977 to 2002 annual imports of business, technical and professional services in US was to the tune of $ 16.3 billion. Another report of UNCTAD indicates that developed countries will invest in offshore business processing to the tune of $24 billion by 2007, which was $1.3 billion in 2002. There is no reason to believe that some outsourcing will not take place within developing countries, including in South Asia. Keeping that perspective in mind, we have included Tourism and Education as components in Bangladesh Fair. Recognizing the value of tourism, last SAARC Summit decided to observe 2005 as SAARC Tourism Year. We intend to seize on this potential. Tourism itself has emerges as a good business opportunity, indeed it is one of the fastest growing sector of economy in many countries, including in Nepal. Bangladesh is interested to work with Nepal in promoting bilateral and regional tourism. We do hope additional air services that may commence soon between Dhaka and Kathmandu will accelerate the process of cooperation in this regard. Dhaka-Kathmandu Bus service may also positively contribute to this process. We hope that tour operators in Nepal will be able to work out some business deals with Bangladesh tour operators during the fair.

A fair amount of educational cooperation already exists between Bangladesh and Nepal and we want to expand it. It is our hope that private universities in Bangladesh, which now number more than 55, will be able to assist in this process.

Another point that I believe is useful to remember is that our bilateral interactions are likely to be deeply affected by the process of regionalization that is taking shape in South Asia. SAFTA may take effect in January 2006; Free Trade Agreement within BIMSTEC along with implementation of WTO rules will seriously condition our economic interactions. What perhaps is required is to take a creative approach to seize on new opportunities and to thwart emerging challenges. In this context, new thinking is a must with proactive policy framework if we intend to protect our common interest. After all, in the new global context, one can survive by sharing one’s strengths and exchanging one’s advantages with others. This is all the more necessary for smaller economies such as ours. Good news is that we may not be alone in our efforts. International financial organization, such as, ADB is working with South Asian Sub-regional Economic Cooperation (SASEC) in several areas, such as transport, Energy and Power, Tourism, Environment, ICT, Trade, Investment and Private sector cooperation to assist countries of South Asia to adjust their economies and reap benefits from meaningful cooperation in the fast changing regional context.

(Excerpts: Welcome address, Bangladesh Trade Fair, 8 October 2004)