During the first week of last month, the cabinet approved the draft 'Export Policy 2018-21' by updating the existing export policy of 2015-18. Denim, Active Pharmaceutical Ingredients (API) and Re-agent (shoes made from leather, non-leather and synthetic) have been added to the highest priority receiving sectors in the new export policy raising the total number of such sectors to 15.
Moreover, five new products such as light engineering products (motor cycle, battery), photovoltaic module (solar energy), cashew nuts (raw and processed), live and processed crabs and toys have been added to the special development-oriented sectors. Besides, by-product from wet-blue leather like wet-blue split leather has been declared as an exportable item. Value added tax (VAT) has been reduced to 30 per cent from the existing 40 per cent as a stimulus for exporting.
However, the export policy, unlike the import policy order, is very weak and mostly ineffective in as much as it is not a legally binding policy instrument which could ensure compliance by the respective agencies of the government. There is hardly any country (including India and many members of the World Trade Organisation) which does not follow legally binding export and import policy.
In Bangladesh, the import policy order is legally binding because it is promulgated by the government in exercise of powers conferred under section 3 (1) of the Imports and Exports (Control) Act, 1950. But in the case of export policy this power is not exercised.
To achieve the country's trade and economic development agenda as well as Vision 2021-2041 and SDG-2030 goals and overcome the challenges of LDC (Least Developed Countries) graduation, it is imperative for Bangladesh to reform and streamline its supply and demand-side trade and economic policies and business friendly regulatory regimes along with hard and soft infrastructure. An integrated import and export policy order is one of the most important policy instruments in this regard.
The existing import and export policies (2015-2018) are required to be updated to meet the challenges of time and should be formulated as integrated import and export regulations under section 3 (1) of the Imports and Exports (Control) Act, 1950. This will pave the way for simplification, reduction and removal of red tape and discrimination, unnecessary costs and time. Thus a business-friendly legally-binding policy regime for import and export in a sustainable and predictable manner (not just for 3-5 years) is a must.
The government may make imports and exports rules & procedures, not inconsistent with Imports and Exports (Control) Act, 1950 as it stands amended for carrying out the purposes of the import and export policy order. An updated and amended 2018 draft proposal of the 1950 Act has been submitted by the think-tank Bangladesh Enterprise Institute to the Ministry of Commerce.
Major strategies of the new export policy, among others, should be incremental growth of exports beyond $ 60 billion by 2021 by expediting and implementing appropriate administrative support and facilitation measures as may be specified in the export policy order.
Formation of services export promotion council (SEPC) for promoting and overseeing the sustainable expansion of exports in services sectors is also very much needed. Diversification of export markets under an appropriate and effective foreign trade policy is also needed to ensure predictable and sustainable destinations for our export products and services.
Some global practices, strategies and measures for the promotion and facilitation of exports, compatible with the WTO agreements and practised worldwide, may be specified in the export policy and make it binding on a priority basis. For instance, there should be technical and financial support for obtaining accredited quality certificates for goods and services. Again, the government should withdraw all duty, VAT and SD from all export products and services including all inputs thereof whether imported or locally produced.
It is also not irrational to provide concessional rates on utility (electricity, gas, water and digital services) charges. Operationalisation of factoring services should also be effectively ensured and export-oriented MSMEs (micro, small and medium enterprises) and rural entrepreneurs should be financed through Venture Capital Fund on a priority basis. Export Development Fund (EDF) may be raised annually by at least 30 per cent to finance import and domestic procurement of inputs for the exporting industry.
Exporters also need to be bailed out from the volatility of exchange rate fluctuations by compensating them against respective export Payments Receipt Certificate (PRC) at the rate for each currency to be assessed periodically (weekly/monthly) by Bangladesh Bank.
To create brand value, some technical and financial support are necessary for obtaining global registration of industrial IPR (Intellectual Property Right or trademark, patent and design). It will facilitate value added marketing of Bangladeshi products and services.
Besides support for participation in international exhibitions and market promotion, dedicated physical or virtual display spaces in Bangladesh Missions abroad for Bangladeshi products need to be implemented. While export houses will display their products there, the government may cooperate and facilitate on cost sharing basis.
Manzur Ahmed is an advisor to BEI, BCI, BPGMEA and also former adviser to FBCCI.
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