FTA with Malaysia may cost Tk 10b in revenue per year
Bangladesh may incur a revenue loss of Tk 10 billion per annum if it strikes a bilateral free trade agreement (FTA) with Malaysia, the revenue officials have informed the Ministry of Commerce (MoC), sources said.
The MoC is now examining the findings of the National Board of Revenue (NBR) regarding possible revenue loss as Dhaka is actively considering signing of the FTA, sources added.
"The opinion of NBR is very much important in this case. We are examining the NBR findings," commerce secretary M Ghulam Hossain told the FE Tuesday.
Sources said the MoC has asked the NBR to submit a product-wise detail of possible revenue losses if the deal is inked.
"The NBR in its report did not elaborate how much revenue will be lost in the case of each product if those enter Bangladesh duty-free. We have asked for providing details," a senior MoC official said seeking anonymity.
The trade gap between Bangladesh and the Southeast Asian nation is substantial. Bangladesh imported goods worth $1.762 billion from Malaysia in 2010-11 fiscal year (FY) while it exported goods worth $43.87 million in the same fiscal.
In FY 2009-10 Bangladesh's import of goods from Malaysia was worth $1.232 billion against its export of goods worth $61.98 million.
Bangladesh mainly imports edible oil, vegetable fat, machinery, mechanical equipment, electrical goods, animal products, base metal, wood and wood articles, sulphur, organic chemicals, plastic, textile, and textile articles from Malaysia.
On the other hand, the major exporting items from Bangladesh to Malaysia are knitwear, woven garments, tobacco, home textile, raw jute, jute goods, dry food, agri products and frozen fish.
A senior MoC official told the FE that the possibility of signing of FTA with Malaysia is very much bleak considering the revenue aspect.
"But if considered in the light of investment and other bilateral issues there are enough reasons for the two countries to ink the FTA," he said adding Malaysian investment in Bangladesh now stands at US$1.5 billion.
Malaysia is a major destination for Bangladeshi migrant workers. Some 0.6 million Bangladeshis are now working in the South East Asian country.
The two Muslim nations have already exchanged template of the trade liberalisation pact and the MoC officials are in discussions with multiple government and private agencies on the pros and cons of the bilateral FTA.
Bangladesh Tariff Commission (BTC) had earlier given its positive views on signing of the FTA with Malaysia.
Meanwhile, in June this year the Malaysian government offered duty-free entry of some 300 Bangladeshi products into its market.
The products include apparel, handbags, shoes, shampoo, suits, children's apparel, wallets, hair colourants, golf balls, imitation jewellery, talcum powder, curtains, tablecloth, blankets, bed sheets, shirts, undergarments, lingerie, nightwear, perfumes and mosquito nettings.
Earlier in April 2010, Malaysia agreed to allow duty-free entry of 19 items of Bangladeshi products into its market provided that Dhaka starts negotiations on FTA with Kuala Lumpur.
However, Dhaka at that time did not respond to the Malaysian proposal since it came with conditions.
