Digital trade: Bangladesh could earn $0.6b more in exports

Imagine you are a cargo owner in 1450. You hand over your goods to a ship and receive a bill of lading -- a paper document detailing your shipment.

Fast forward to 2024: despite a dramatically changed world, the bill of lading process remains reliant on physical paperwork, used in roughly 40 per cent of containerised trade.

According to a UN expert, Bangladesh could earn $0.6 billion more annually, as the electronic bills of lading could unlock $30-40 billion in global trade volume if these processes went digital.

"Digital trade is crucial not only for Bangladesh but also for global trade efficiency and sustainability," said Rupa Chanda, director at UNESCAP. "The country could reduce trade costs by 11-12 per cent and gain an additional $0.6 billion in exports by embracing digital trade processes."

She made the remarks at a programme on 'Digitalizing International Trade in Bangladesh', organised by the International Chambers of Commerce (ICC) Bangladesh in Dhaka on Sunday.

ICC Bangladesh President Mahbubur Rahman chaired the programme. He said that digitalisation enhances efficiency, reduces costs and broadens market access.

At the roundtable, Mr Rahman introduced the Digital Standards Initiative (DSI) -- a global effort based in Singapore supported by trade and finance entities including the Asian Development Bank and the World Trade Organization.

He said every year, ocean carriers issue about 45 million bills of lading. Many international shipping documents still need to be standardised and mostly paper-based, needing physical exchanges.

In contrast, electronic bills of lading offer swift transactions, cost efficiency and carry less risks of fraud.

Citing a McKinsey study, the ICCB president said that 100 per cent adoption of electronic bills of lading could unlock $30-$40 billion in global trade by reducing trade friction.

He said this shift could also save 28,000 trees annually and cut carbon emissions.

Bangladesh ratified the UNESCAP Framework Agreement on Facilitation of Cross-Border Paperless Trade in 2020.

The roundtable on Sunday marked the first step in introducing the Digital Standards Initiative (DSI), with plans to draft rules and regulations aligned with global digitalization trends by 2027.

At the programme, Adviser to the Prime Minister on Private Industry and Investment Salman Fazlur Rahman said one of the most important components of digitalisation is interoperability.

Highlighting Bangladesh's success in creating an enabling atmosphere for digitalisation, the adviser said Bangladesh is making rapid progress in establishing a digital and cashless Bangladesh.

However successful international digital trade depends on other countries too, he added.

"International trade is not only dependent on Bangladesh but also dependent on the counterparts who also have to make various reforms," he said, adding that there are also some challenges arising from developed countries.

"Now we are seeing more and more protectionism, especially from the United States, even we are seeing that in Europe," he said.

Mr Rahman added that with the rise of technologies, there are growing concerns with cyber defence.

He said artificial intelligence is now evolving faster with exponential growth in its IQ level.

Regarding the export data mismatch among the National Board of Revenue (NBR), the Bangladesh Bank (BB) and the Export Promotion Bureau (EPB), he said the EPB has double-counted the value of merchandise sent abroad from the export processing zones (EPZs).

"The mistake which EPB made was double-counting the export from the export processing zones," he said.

Edimon Ginting, country director, Bangladesh Resident Mission, Asian Development Bank said effective digitalisation of trade will increase growth and create jobs by expanding access to global trade networks for developing economies.

He said there are two key impediments that we need to jointly work on and address. Those include a need for common standards and protocols that will enable effective interoperability among the players in supply chains, from exporters to logistics, customs, warehousing/logistics, finance, etc and the need to enhance legislation supporting the use and enforceability of key documents in trade.

To tackle these two important challenges, ADB, the Government of Singapore, and the International Chamber of Commerce founded the Digital Standards Initiative, he said.

DSI is working on addressing these challenges and helping promote a globally harmonised digital trade environment.

In order to address the lack of recognition of electronic versions of key trade documents such as bills of lading, the United Nations Commission on International Trade Law (UNCITRAL) developed The Model Law on Electronic Transferable Records (MLETR), he informed.

He also said the adoption of MLETR would serve the purpose of further improving domestic legal frameworks and facilitating cross-border trade.

While presenting the keynote, Pamela Mar, managing director, Digital Standard Initiative (DSI), International Chamber of Commerce (ICC) said this is a pivotal moment for Bangladesh as it graduates LDC, expands its international trade profile, and sets targets to become a digital economy.

Digital trade builds on Bangladesh's export manufacturing success while preparing it to compete in the future of trade, she said.

The DSI and our entire network including ICC Bangladesh, stand ready to support the country to make the digital trade transition successful, she added.

Iftekhar Alam, Regional Head for South & South East Asia at the International Islamic Trade Finance Corporation (ITFC), spoke about the ongoing efforts to streamline trade, particularly for major cotton-importing countries like Bangladesh.

Muhammad A (Rumee) Ali, Chairman of ICC Bangladesh Banking Commission, delivered the welcome address, emphasising the critical role of digitalisation in modernising trade infrastructure.

Lawmaker A K Azad, also the vice president of ICC Bangladesh, concluded the event by emphasising the importance of digitalisation for reducing operational costs and enhancing trade efficiency as Bangladesh aims to become a middle-income country by 2026.

Zaidi Sattar, chairman, Policy Research Institute, Mohammad Navid Safiullah, additional decretary, Ministry of Commerce, Mursheda Zaman, joint secretary, Ministry of Commerce, Md Sarwar Hossain, director (Foreign Exchange Policy Department) of Bangladesh Bank, Raich Uddin Khan, first secretary (Customs Automation) National Board of Revenue, Kutubuddin Ahmed, member, ICC Bangladesh Executive Board, Naser Ezaz Bijoy, vice-president, ICC Bangladesh and chief executive officer, Standard Chartered Bank, Md Saiful Islam, former president, MCCI, Muhammad Zahangir Alam, CFO, Square Pharmaceuticals Ltd also spoke, among others.

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