The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has called on the Russian government to grant Bangladeshi garments duty-free access to its market.
“Since Bangladesh has become a middle-income country, there will be certain changes in market access after 2026, we need to diversify our exports to markets where we have clear potential. ‘achieve preferential market access for Russia’, President Faruque Hassan said recently in a letter to Alexander Vikentyevich Mantytskiy, Russian Ambassador to Bangladesh.
Speaking to The Business Standard, Faruque Hassan said: “If we can gain duty-free access to the Russian market, it will not only open up a great opportunity for us to deepen our business relationship, but Russian consumers will also benefit. quality goods at competitive prices. »
The BGMEA Chairman mentioned, “You are aware that garments made in Bangladesh are subject to high tariffs in Russia. Our products are subject to customs duties of 5-20% (mainly 10%) when exported to Russia.
In addition, there are banking-related difficulties in trade between Bangladesh and Russia, he also said, adding, “We are interested in working together to identify barriers to trade and commerce between the two countries and solve them”.
“We are also keen to facilitate direct and joint investments in promising sectors, such as high-end garments, non-cotton yarns and fabrics, etc.,” he added.
Speaking to TBS, Habib Ullah Dawn, Chairman of the Commonwealth of Independent States and Bangladesh Chamber of Industry, said that Bangladesh has already signed a memorandum of understanding with the Eurasian Economic Union, aimed at concluding a free trade agreement.
“If Russia grants duty-free market access, it will create a great opportunity for Bangladeshi exporters to explore markets in the Russian-led Eastern European Economic Union, comprising Belarus, Kazakhstan, Armenia and Kyrgyzstan.”
At the same time, it will also open up markets in the Commonwealth of Independent States, he added.
Currently, the CIS units are Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine.
In his letter, the Chairman of BGMEA acknowledged the support of the people of the Russian Federation to Bangladesh during the liberation war in 1971. Russia was one of the first countries to officially recognize Bangladesh as a nation independent.
Throughout Bangladesh’s journey to a developing nation, Russia has always remained a trusted development partner and source of investment. Bangladesh-Russia relations have grown in depth and dimension, but bilateral trade has yet to reach its prospects. In fact, economic ties and cooperation are crucial for the strengthening of bilateral relations.
Russia is one of Bangladesh’s main development partners. “Given Russia’s contribution through development initiatives and infrastructure projects, our bilateral trade remains very insignificant,” he noted.
In the financial year 2020-2021, total exports from Bangladesh to Russia were $665.32 million and imports from Russia amounted to $481.88 million. Thus, bilateral trade was only worth $1.1 billion.
“We have a huge opportunity to improve trade. In 2020, Russia’s clothing imports from the world amounted to $6.91 billion, while Bangladesh’s share was only 11.72%, despite being the second largest. great source of clothing for Russia,” says Faruque Hassan.
“Ready-to-wear constitutes around 90% of our total exports to Russia,” he also said.
In FY21, garment exports from Bangladesh to Russia amounted to $593.66 million, which can still be increased, he added.
“From a neutral point of view, Russia can benefit from sourcing from Bangladesh since we produce quality garments at a very competitive price,” added Faruque Hassan.
The BGMEA letter also mentioned: “Over the last decade we have developed enormous capabilities in the textile and apparel sector in the area of sustainability, in particular environmental sustainability, well-being labor and industrial relations.
Bangladesh is home to the largest number of eco-friendly garment factories in the world. “We have already made huge investments in technological upgrading, innovation and value addition to make the industry more competitive. Bangladesh is therefore an ideal place for Russia to meet its needs in terms of mode”, noted the president of the BGMEA.
Bangladesh keen on FTA with Eurasian Economic Union
Earlier in January this year, Bangladesh expressed interest in signing an FTA with the Eurasian Economic Union (EAEU).
The Ministry of Commerce requested the Ministry of Foreign Affairs to make a formal proposal to the Eurasian Economic Commission regarding the signing of the FTA.
The countries belonging to the European Union, one of the largest economic blocks in the world, had a foreign trade volume of $7,311 billion in 2020. The gross domestic product of the countries is $1,634 trillion.
Bangladesh does not enjoy duty-free facilities in Eurasian markets which have huge potential for Bangladeshi export products. The country’s exports to these countries have increased significantly over the past decade and the amount stands at around $500 million.
According to the Export Promotion Bureau, Bangladesh’s exports to the EAEU during the months of July to December of the current fiscal year amounted to $382 million compared to $677 million in the previous fiscal year. And, in fiscal year 2020, Bangladesh exported goods worth $498 million to the EAEU.
Bangladesh has huge potential for exports of frozen foods, knitwear, jute products and prawns to countries in the region.
Exports are not growing at the desired level due to the lack of duty-free facilities and the complexity of direct banking transactions with Russia due to US sanctions, according to Commerce Ministry officials.
This is why the Bangladesh Bank has taken the initiative to provide duty-free export facility by signing an FTA and exchanging currencies with the Central Bank of Russia.
Following the signing of the Trade and Investment Framework Agreement or TIFA with the United States in 2014, Russia also proposed the formation of an intergovernmental commission with Bangladesh to enhance trade, investment , scientific and technical assistance, which the two countries signed in 2017.
Over the past decade, the volume of trade has increased dramatically. In this context, the Minister of Commerce signed a Memorandum of Cooperation between Bangladesh and the Eurasian Economic Commission in Moscow in May 2019.
To address the post-LDC challenges, the Ministry of Commerce has adopted a strategic policy of signing an FTA and Preferential Trade Agreement (PTA) with its major trading partners, including the EAEU, to ensure a smooth and sustainable graduation. .