The Financial Express

Time to decode Bangladesh-Israel trade

Time to decode Bangladesh-Israel trade

From now on, Bangladesh passport is 'valid for all countries of the world.' Even a few months ago, the passport contained the words 'valid for all countries of the world, except Israel.' Dropping of the words 'except Israel' might lead many to believe that the government has decided to make a change in its policy towards the 'pariah' state on the Middle East scene.

As the news, revealed by local and international media outlets, sparked debates, ministers concerned came up with their own explanations on the matter. The home ministry, responsible for issuing passport, argued that it is done to enhance international standard of Bangladesh passport.

The foreign ministry clarified that there has been no shift in the country's foreign policy, especially towards Israel. The country will continue to support the rights and freedom-struggle of the Palestinian people. The foreign minister further mentioned that even after dropping the 'except Israel', travel to the Zionist country is still illegal for any Bangladeshi passport-holder. Bangladesh is yet to recognise Israel or establish diplomatic relations with, officially.

However, despite the absence of any diplomatic ties, the trade relations between Bangladesh and Israel are slowly growing. Bangladesh has exported a small number of goods to Israel in the last few years. The latest official statistics, released by the Export Promotion Bureau (EPB), showed that in the FY20, Bangladesh exported goods worth about US$28,067 to Israel. EPB data also showed that total exports to Israel from Bangladesh stood at around $0.50 million in the last decade. The highest amount of goods worth $0.11 million was exported in FY19 while the lowest annual exports were recorded at $2,057 only in FY14. Textile, ready-made garments (RMG) and pharmaceuticals are major exportable items to Israel.

Now a pertinent question is: how can exports take place when there is no diplomatic relations? It is learnt that Bangladeshi products generally landed in Israel through a third country like Singapore, Malaysia or the UAE. For instance, Bangladeshi manufacturers and exporters shipped the products to Singapore and received due payments from the island state.

So, the total transaction is recorded as Bangladesh-Singapore trade. From Singapore, the products are transhipped to a mother vessel bound for Haifa seaport in Israel. In this process, Bangladeshi products ultimately enter the Israeli market. A representative or liaison office of Israeli importers in Singapore conducts the whole deal.

The actual amount of exports from Bangladesh is thus unclear. The World Bank's World Integrated Trade Solution (WITS) database provides a contrasting figure in this connection. It showed that between 2010 and 2018, Israel imported products worth around $333.74 million from Bangladesh. In other words, Bangladesh exported products worth the said amount ($333.74 million) to Israel during the period under review. The figure doesn't tally with data available with EPB. One reason may be Israel records the imports done through the third country, from the country of origin.

Again, WITS data shows that Israeli exports to Bangladesh stood at $3.67 million between 2009 and 2015. No data is available after 2015 in the WITS system. Bangladesh Bank data also doesn't have any mention of Bangladesh's imports from Israel. Therefore, it is necessary to get some explanation on the bilateral trade with Israel.

It appears that in the age of globalisation, it is not possible to contain trade flow, especially when there is a demand. If the direct trade route is blocked, the traders will go for diversion using a well-recognised third country. Israel is also trading with Gulf Cooperation Council (GCC) countries using third counties. In 2018, Israeli exports to the GCC bloc were around $1.0 billion. Though Qatar and Oman had linked trade relations with Israel since 1996, Doha severed it in 2009. Israeli exports to the GCC market are sometimes channelled through Jordan or Turkey, but primarily via European and other non-Middle-East and North African (MENA) countries. In 2020, the United Arab Emirates and Bahrain signed agreements with Israel for normalisation of relations.

Trade through third countries also gradually opens a window of further normalisation of relations. Indonesia is an example in this connection, which is trading with Israel by third countries. Bilateral trade between these two countries reached around $500 million. Indonesian citizens are now allowed to visit Israel procuring visa from a third country such as Thailand. Israeli official statistics showed that in 2019, some 38,700 Indonesians travelled to Israel and occupied Palestinian territory. In a similar vein, travellers from Malaysia to Israel numbered 14,700 although Malaysian passport mentioned that it is 'valid for all countries of the world, except Israel.'

By dropping 'except Israel' from Bangladesh passport, the travel document may not be restrictive for Bangladeshi citizens to visit Israel. Like Malaysians and Indonesians, they may now collect the required visa from Israeli foreign mission in Bangkok or New Delhi. Israel now issues a `loose-leaf' visa which is not attached as a sticker on the passport page. Again, Israeli border control officials no more stamp in passport page of a traveller. Instead, they issue a permit in a separate paper, which travellers have to retain until they exit the country. Thus, there is no seal or sign in the travellers' passports showing that they have visited the Zionist country. Israel adopts the method to attract more tourists from countries with whom it has no diplomatic affiliation. As tourism is an essential source of Israel's economy, contributing around 6.0 per cent to the country's GDP, it needs more tourists to come in. Moreover, an incrementally higher flow of tourists from Muslim-dominated countries is a boon for Israel to enhance its image against the backdrop of repression of the Palestinians, who get wide Muslim supports.

It is unknown whether a few Bangladeshis were earlier daring to visit Israel by acquiring a visa from a third country. That attitude may, however, change in the near future. There is a fear that this may affect support and sympathy to the legitimate and rightful struggle of the Palestinian people. But, trade may continue to grow as Bangladesh is looking for new markets. 

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