logo logo

Dhaka, KL moving ahead to sign FTA deal

Financial Express, Dhaka

Dhaka, KL moving ahead to sign FTA deal

By Nazmul Ahsan

29 July 2011

Dhaka is moving ahead steadily to sign an accord on a bilateral Free Trade Area (FTA) with Kuala Lumpur as the ministry of commerce (MoC) has recently sent its "well-guarded position", containing a template on the proposed FTA to the Malaysian government, a top ministry official said.

The ministry has clearly made the proposal in the "template" to include the provision of ’movement of natural persons’ under the Mode-Four (IV) of the World Trade Organisation (WTO) in the FTA.

It also sought special and differential treatment for the products of Bangladesh to the Malaysian market under the proposed deal.

The MoC has taken the move after Bangladesh Tariff Commission (BTC), following an intensive study on pros and cons of the matter.

The findings of the study recommended to the government last month to go for negotiations with its Malaysian counterpart for the proposed bilateral FTA.

The BTC in its recommendation said the proposed deal will help boost the country’s export of goods and manpower substantially to Malaysia and encourage latter’s investment in Bangladesh significantly.

The Commission said Bangladesh has the potential for export of, at least, 103 of its items to the Malaysian market.

"We are positive about negotiations across the table with the counterparts of the Malaysian government for a bilateral FTA, provided our areas of interest like trade in services and economic cooperation are endorsed by the later," a top trade official told the FE on Thursday.

He, however, said a ’template’ — a pre-draft agreement — sent by the Malaysian government earlier did not mention anything on movement of natural persons under the clause of trade in services that was included in that ’pre-draft’.

"We have discussed the template of the Malaysian side on the proposed bilateral FTA at an inter-ministerial meeting held recently. It was unanimously decided to include movement of natural persons and special and differential treatment for Bangladeshi products in the Malaysian market under the proposed FTA agreement," the official said.

"We have included that decisions accordingly in the revised version of template, which has recently been sent to our counterpart," the official added.

Besides official representatives from different government organizations including those of the ministry of foreign affairs, National Board of Revenue and BTC, the meeting was also attended by the representatives of the business community and think-tank bodies like Centre for Policy Dialogue (CPD) and Bangladesh Institute for Development Studies (BIDS).

In its template, Dhaka has proposed to include issues like socio-economic development, strengthening of economic competitiveness, upgradation of human resource development and promotion of sustainable economic development within the broad areas for economic cooperation under the proposed trade deal, sources said.

Both the countries, however, agreed to progressively liberalise the investment regime, take necessary measures for protection of investment, grant the most-favoured nation treatment, follow a negative list approach and adopt measures against any fraudulent activity under the proposed bilateral FTA.

The study report of the BTC said Malaysia has a large demand for a number of products in which Bangladesh has considerable export capacity.

Although Malaysia is now importing such products from other countries, a suitable FTA may help to divert Malaysia’s import away from other countries to Bangladesh, the report noted.

The report, however, said the extent of benefits for Bangladesh, out of the proposed trade agreement, will significantly depend on special and differential treatment to be provided by Malaysian government on goods and services originating from Bangladesh.

Malaysia has shown its interest for a considerable period of time to strike a bilateral FTA deal with Bangladesh.

Last year, the Malaysian government offered to provide duty-free market access for 19 Bangladesh products under an early harvest system as soon as the negotiations on a bilateral FTA start, a senior trade official said.

Malaysia exported goods worth $703.27 million to Bangladesh in 2009-2010 against its import of $61.98 million from Bangladesh.

The major exporting items from Bangladesh to Malaysia are knitwear, tobacco, home textiles, raw jute, woven garments, dry food, furnace oil and frozen fish.

The composition of Bangladesh’s import from Malaysia includes animal or vegetable fats, boilers, machinery, iron and steel, plastic and articles thereof, salt, wood and articles of wood, sulpher and organic chemicals.

Presently, Malaysia is the largest investor among the member-countries of the Association of South East Asian Nations (ASEAN), in Bangladesh.