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Submitted to:
Mr. Bashir Ahmed Bhuiyan Associate professor Department of Business Administration Leading University, Sylhet
Submitted by:
Name Zaber Arbab Chy Md.Maidul Islam Nigar Parbin Rehnuma Tahura Shanu Uddin Rubel Nabila Samad Pintu Chandra Dev Roll 0901010018 0901010017 0901010019 0901010027 0901010054 0901010049 0901010046
Letter of Certificate I am extremely pleased to declare that the following group of students has been given with the topic An Analysis into the Export Import Performance of Bangladesh in perspective of South Asian Countries for writing an assignment. They have reviewed all the relevant literature and have surveyed the assigned organization for collecting of both primary and secondary data. I have supervised them throughout the preparation of the paper. I also certify that the paper is an original one and has not been submitted elsewhere previously for publication in any form. I believe they will try to do their best in all phase of their live.
Mr. Bashir Ahmed Bhuiyan Associate professor Department of Business Administration Leading University, Sylhet
6th September, 2011 To, Mr. Bashir Ahmed Bhuiyan Associate professor Department of Business Administration Leading University, Sylhet
Dear Sir, We were given the topic An Analysis into the Export Import Performance of Bangladesh in perspective of South Asian Countries for writing an assignment for presentation and collection of primary and secondary data. To do so, we sought the relevant information in books, journals, and the assigned organization. We tried to collect all possible information and make this paper acceptable to all but there can be still existing mistake. So we like to request you to consider if any fault is found in paper. Lastly, we would like to request you to accepted our paper and permit us to present it before the panel of experts. Thank you in advance for your assistance and advice in this connection. Yours obediently Name Md. Maidul Islam Zaber Arbeb Chy Rahnuma Tahura Shanu Uddin Rubel Nigar Parbin Nabila Samad Pintu Chandra Dev Registration no 0901010017 0901010018 0901010027 0901010054 0901010019 0901010049 0901010046
Acknowledgement
We are very lucky that we have got lots of support or cooperation from various people while we were preparing this report. At first we express our respected our teacher Mr. Bashir Ahmed Bhuiyan, Associate professor of Leading University, Sylhet for giving us such an opportunity to prepare an assignment on topic An Analysis into the Export Import Performance of Bangladesh in perspective of South Asian Countries which is a great chance to increase our knowledge about training sector, particularly effectiveness of training.
We are also thankful Mr. Bashir Ahmed Bhuiyan and our classmate who helped us directly and indirectly to prepare this report.
Executive Summary:
Not the single country in the world cant fulfill their internal demand with its own production so they need to involve in foreign trade. All country in the world exchanges their product through import & export and fulfills their demand. On the other hand they also earn foreign money by international trade and contribute their economy. Bangladesh also makes their economic structure strong through import & export. This paper attempts to provide synopsis of Import Export performance of Bangladesh in perspective of South Asian countries. In this assignment we will also discuss about the trade policies of Bangladesh which make the import & export system more facilitate as well as we will try to focus on the products that are exchange in south Asian countries. In this paper we will discuss the opportunity of import & export in Bangladesh, and what kinds of problems they are facing.
Table of Content:
Topic
Chapter-1 : Introduction Objective of the Study Scope of the study Limitation of the Study Chapter-2: An Overview about the Import & Export of Bangladesh Bangladesh Trade Overview Bangladesh Trade History Bangladesh trade Strategies Import Restrictions Import Duties Future Trade Agenda Chapter-3 : Product & Country wise Analysis of Import & Export Bangladesh Imports Commodities & Partners Bangladesh Exports Commodities & Partners Import Export performance of Bangladesh in perspective of South Asian Countries Share of Bangladeshs Exports & Imports with Neighboring Countries in her Total Exports & Imports Chapter 4:Problems & Challenges facing by Bangladesh Challenging Issues for Bangladesh Most Problematic Factors of Bangladesh Chapter 5: Recommendations & Conclusion Recommendations Conclusion References
Page No.
1-4 2 3 3 4 5-10 6 7 7-8 9 9 10 11-22 12 13-14 15-16 17-22
23-25 24 25 26-28
27 28 29
Chapter-1
Introduction:
The policy of trade liberalization & free market economy in the 1980s has created both challenges and opportunities for Bangladesh economy. The creation of the World Trade Organization has created new way of enjoying the comparative advantage for Bangladesh. At the same time, the globalize trade scenario has opened up the structural limitations of Bangladesh economy, which needs immediate attention through the formulation of appropriate policy and action. Bangladesh continues to suffer from a low-growth, high-poverty syndrome. However, Bangladesh has a large labour force willing to work for low wages resulting in a very competitive position for labour intensive manufacturing exports. It has a large number of entrepreneurial businessmen who are able to develop and run small and medium scale enterprises. It has a sufficient amount of natural gas reserves which can potentially provide low cost energy for a downstream industrial structure. With amicable and mutually beneficial regional cooperation, Bangladesh can be an ideal location for huge foreign direct investments, which can serve as a huge market for goods and services in the South Asia. Bangladeshi international trade is extremely small relative to the size of its population. The population density of Bangladesh is high and availability of land is limited, which results in a continuing pressure a food supply. For that reason government have import foods from other country to fulfill its internal demand. Bangladesh import rate is more then its export rate which constraining the domestic development efforts. The Bangladeshi government struggles to attract export-oriented industries, removing red tape and introducing various financial and tax initiatives.
Primary objective: - Our primary objective is to know about the Export & Import Performance of Bangladesh in perspective of South Asian Countries.
Secondary objective: To know about the Trade policy of Bangladesh. The Opportunity of Export & Import business in Bangladesh. The problems & barriers that we are facing in case of Import & Export. Contribution of Export & Import of Bangladesh is based on perspective of South Asian region.
This assignment gives us a vast verity of knowledge about the policy & procedure that are use in Export & Import.
It also gives us a scope to gather knowledge about kinds of products & services are Exported & what kinds of products Import from foreign country.
Through this assignment we gather idea about the opportunity of Bangladesh in case of Import & Export business.
We also learn through this assignment that why Import & Export relationship is important in South Asian countries.
It provides idea about the competition that Bangladesh facing through Exporting product in South Asian countries.
It also makes us a scope to know about the Problem that Bangladesh face in doing Export & Import business.
Because of sensitiveness, the department does not want to disclose information about the technical information, which led to the shortcomings of this assignment into some extent.
The authorities of Export Promotion Bureau (EPB) are so busy that they could not give us sufficient time for discussion.
Expediting BMRE of existing wet-blue producing tanneries and converting them into finished leather producing and exporting units; Accelerating expansion of improved traditional and semi-intensive methods of shrimp cultivation for enhancing export off Allowing import of high quality foundation-tea for blending and establishing the brand name of Bangladesh tea through marketing; Taking measures to improve quality, increase production and expand market of exportable agricultural products; Undertaking activities for increasing export of computer software, engineering consultancy and services; Expediting steps for export of labor intensive electronic and engineering products keeping in view the market requirements in the USA and other developed countries; Promoting export of electronic components and engineering items to various countries; Providing appropriate financing facilities for production of components of electronic and engineering items for marketing on consignment basis; Expanding the list of products under crash programme beyond 4 products (toys, luggage and fashion items electronic and leather goods) and including 8 more items such as diamond cutting and polishing, jewelries making, stationery articles, silk, gift items, cut artificial flower & orchid, vegetables, engineering consultancy & services for export; Organizing commodity-wise trade fairs of international standard in the country; Developing and expanding infrastructural facilities for export trade; and Creating product-development councils for important products.
Import Restrictions:
The government has moved to reduce the number of items on its list of banned imports and has eliminated the need for import licenses. However, some products are still banned from importation, including certain maps, obscene materials, socially or religiously offensive items, all types of wastes, and substandard or rejected goods, as well as all imports from South Africa or Israel. All commercial importers are issued pass books in which their import authorizations are validated. The issuance of a pass book is a formality for items not on the controlled or restricted lists. Pass books are valid for 12 months.
Import Duties:
Despite some recent reductions, tariffs in Bangladesh remain high, averaging over 50 percent. At the recommendation of the World Bank, Bangladesh has placed a 100 percent tariff ceiling on most goods, with the intention of bringing the ceiling down to 60 percent. A value-added tax (VAT) of 10 to 20 percent and additional fees, typically adding up to 15 percent of the cost and freight value, are also applied to imports. Duties are reduced to 2.5 percent for installation of imported machinery in less developed areas. Duties are also reduced to 2.5 percent for capital machinery and factories which use 70 percent or more indigenous materials and for imported machinery for exportoriented industries. Exemptions from duties and the import sales tax are available for a variety of goods.
Machinery and equipment Chemicals Iron and steel Textiles Foodstuffs Petroleum products Cement Pharmaceutical product Electronic products
China: 15.8% India: 15.7% Kuwait: 8.1% Singapore: 7.6% Japan: 4.4%
Every year Bangladesh has to Import different types of food & row material to fulfill its internal demand. The Imported commodities of Bangladesh are Machinery and equipment, Chemicals, Iron and steel, Textiles, Foodstuffs, Petroleum products, Cement etc. Those commodities are Import from China, India, Kuwait, Singapore, & from Japan. Among those Import partners China is first because it provide 15.8% commodity of our total import. Then the second position is captured by our neighbor country India. Bangladesh Import from India about 15.7% commodity of total Import. The 3rd, 4th, 5th position is hold by the Kuwait, Singapore, & Japan. From this analysis we found that in terms of import Bangladesh prefer India rather than other countries of south Asian subcontinent. To make the Bangladesh self dependent country
Government takes different types of policy to reduce Import. Government now support & encourage private business development. It also provides subsidy to agriculture & Industrial sector to make them efficient & Productive.
China 15.8% India 15.7% Kuwait 8.1% Singapore 7.6% Japan 4.4%
Garments Frozen fish and seafood Raw Jute Jute goods Leather Knitwear Leather Chemical products Tea
United States: 24% Germany: 15.3% United Kingdom: 10% France: 7.4% The Netherlands: 5.5% Italy: 4.5% Spain: 4.2%
The major countries to which Bangladesh are exporting are USA, Germany, UK, France, Italy, Netherlands, and Japan. The USA is the main destination of our export commodities which is 24% of the total exports. The second and third positions are held by Germany and UK which constitute 15.3% and 10% respectively. Bangladesh doesnt choose any subcontinent countries for exporting major products. The principle items exported to these countries are readymade garments, frozen foods and home textiles. Without them it also Export Raw Jute, Jute goods, Leather, Knitwear, Chemical products, Tea etc. In foreign market there is a good demand for our garments products, frozen foods, Jute goods & Tea. In 2009 fiscal year only from the Garments sector Bangladesh earn $12.3 billion.
USA 24% Germany 15.3% UK 10% France 7.4% Netherland 5.5% Italy 4.5% Spain 4.2%
1.1 Trend analysis of Total Import Export & Foreign Remittance earning (2007-11):
$35 $30 $25 $20 $15 $10 $5 $0 2007-2008 2008-2009 2009-2010 2010-2011 Total Import( in billion) Foreign Remitence earning( in billion) Total Export( in billion)
In the above trend analysis shows the total Export, Import & Foreign Renitence earnings from 2007-2011 fiscal years. From the trend analysis we can see that from 2007 to 2011 the total Export is gradually increasing but total Import is increasing more dramatically than Export. And we also see several up & downs in case of Foreign Renitence performance from 2007-2011 Fiscal year.
Bangladesh 36.4% India 12.8% Sri Lanka 26.6% Pakistan 7.1% Nepal 14.5% Maldives 2.6%
India 77.2% Nepal 5.4% Pakistan 7.3% Bangladesh 2.3% Sri Lanka 7.5% Maldives 0.3%
Export &Import with Bhutan: Share of Bangladeshs Export with Bhutan is not so good compare to the Import. From 1995-2002 Bangladesh dont Export any goods or services in Bhutan. In 2003 & 2004 Bangladesh export 0.03% & 0.05% goods &services in her total export. From 1995-2004 Bangladesh regularly Import goods & services from Bhutan, But the percentage of Import is gradually decreasing over the last 10 years. In 1995 Bangladesh Import goods & services from Bhutan about 0.13 % of her total Imports. In 1996 the percentage of Import becomes half about 0.07 %. In 1997 Bangladesh Import from Bhutan 0.08% of her total export. From 1999 to 2001 the Import percentage becomes same about 0.03%. Bangladesh Import 0.02% in the year 2002. And in 2003-2004 Bangladesh Import 0.01% of her total import.
0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Export Import
Export &Import with India: India is a neighbor country of Bangladesh. Among the South Asian country Bangladesh perform large share of trade with India. But the share of Export is less than the Import with India. In 1995 Bangladesh Export 0.79% goods & services & Import 11.31%.In 1996 Export Increase to 0.91% & Import Increase to 17.38%. In 1997 Export decreases to 0.59% & in this year
Import Increase to 19.69%. In 1998 Export decreases to 0.20%, which is the lowest share of Export over the last 10 years. In this year Import also decrease to 14.82%. From 1999 to 2004 share of Bangladesh Export become gradually increase, in 1999 Export become 0.31% where Import decrease to 12.37%. In 2000 Export increase to 0.35% & in this year Import decrease to 6.66% which is half of previous year share. In 2001 & 2002 Export become 0.43% & 0.47% & share of Bangladesh Import become 10.88% & 13.40%. In 2003 Bangladesh Export 0.64% & Import 14.16%. In 2004 Bangladesh Import 11.24% & Export 1.27% in her total Export.
20 15 10 5 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Export Import
Export &Import with Nepal: Bangladesh has a good trade relation with Nepal. Every year Bangladesh Export & Import goods & services with Nepal. In 1995 Bangladesh Export 0.03% commodity to Nepal & Import only 0.01% in her total Import. In 1996 Bangladesh Import 0.11% & Export 0.25% of her total Exports. In 1997 share of Exports decrease to 0.13% which is half of previous year & Import increase to 0.15 %. From 1998-2000 Bangladesh dont Export any goods or services to Nepal but Import goods & services from Nepal. In 1998 Bangladesh Import 0.16% commodity from Nepal. In 1999 & 2000 Bangladesh Import very less proportion of goods, In1999 it Import only 0.07% & in 2000 Bangladesh Import only 0.01%. In 2001&2004 Bangladesh dont Import any commodity from Nepal but in 2001 Bangladesh Export 0.02% commodity to Nepal. From 2002-
2004 Bangladesh Export very less share of commodity to Nepal, it about 0.01% on the other hand Bangladesh Import only 0.02% commodity in 2002 & 2003.
0.25 0.2 0.15 Export 0.1 0.05 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Import
Export &Import with Pakistan: As like Bangladesh Pakistan is also a Muslim country. In Pakistan there is a good demand for Bangladeshi products & thats why Bangladesh finds out a excellent market for Export. Every year Bangladesh trade with Pakistan a large share of commodity. In 1995 Bangladesh Export about 1.03% commodities & in this year Bangladesh Import 3.95%. In 1996 Bangladesh Export 1.05% goods & services to Pakistan and Import 1.82%. In 1997 Export decrease to 0.85%, in this year Import also decrease to 0.96%. Bangladesh Export 0.65% & Import 1.11% in the year 1998. In 1999 Bangladesh Export only 0.79% of her total Export and Import 1.24% commodity to Pakistan. In the year 2000 Exported commodity become 0.91% and Import percentage become 1.40%. Bangladesh Export very less commodity in the year 2001, its about 0.56%. In this year Bangladesh Import1 28% goods & services. In 2002 & 2004 Bangladesh Export 0.57% commodity. In the year 2003 Bangladesh Export to Pakistan 0.56% commodity. In 2002 & 2003 Bangladesh Import from Pakistan 1.24% & 1.22% goods & services. About 1.25% goods & services are imported by Bangladesh from Pakistan in the year 2004.
4 3.5 3 2.5 2 1.5 1 0.5 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Export Import
Export &Import with Sri Lanka: Bangladesh has a good trade relation with Sri Lanka. Every year Bangladesh Export goods & services to Sri Lanka & Import different types of commodity, but the share of export is very near to the ground. Bangladesh government is trying their best to create a good quality market of their commodity in South Asian countries and for that reason government trying to facilitate the trade policy. Share of Bangladesh Import is greater than the share of Export with Sri Lanka. In 1995 Bangladesh Export only 0.41% commodity to Sri Lanka & Import 0.11%. In next year, 1996 Bangladesh Export share is less than the previous year, its about 0.11% & in this year Bangladesh Import 0.15% goods & services. In 1997 Bangladesh Import 0.20% goods & services but in this Bangladesh Export only 0.12%. In the year 1998 Bangladesh Export very small percentage of goods & services to Sri Lanka, this is about 0.03%. In 1998 & Bangladesh Import 0.12% commodity from Sri Lanka. In 1999 & 2000 the percentage of Export increases to 0.07% & 0.10%. In 1999 & 2000 the share of Bangladesh Import become 0.12% & 0.13%. Bangladesh Import 0.12% commodity & Export 0.06% commodity in 2001. In 2002 Export decrease to 0.04% & Import share also decrease to 0.01%. In 2003 the Export & Import share become same, its about 0.09%. In 2004 Bangladesh Import 0.08% commodity and Export 0.12% commodity to Sri Lanka.
0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Export Import
It is clearly evident that in terms of exports, South Asia has not been any significant export destination of Bangladesh. In fact, over the last 10 years, there has not been any major change in this pattern. In 1995, Bangladeshs exports to the South Asian region accounted for only 2.3 percent of her total exports, which by 2004 came down to only 2 percent. In 1995 Bangladeshs imports from the South Asian region accounted for 15.5 percent of her total imports, which by 2004 declined to 12.6 percent. Among the South Asian countries India has been one of the major sources of imports for Bangladesh. One important aspect of Bangladeshs trade with India is that Bangladeshs informal border imports from India have always been thought to be very high. Though there has not been any comprehensive quantitative assessment on the informal border trade between India and Bangladesh, it is pointed out by few studies that the informal and illegal trade between India and Bangladesh could be as high as three quarters of recorded trade. However, such informal trade is mostly one way from India to Bangladesh. Therefore, if such informal imports from India were taken into consideration, Indias share in Bangladeshs total imports would rise considerably.
The outcome of the analysis points us to the fact that, apart from the imports from India, South Asian countries have not been the major trading partners of Bangladesh. As far as export destinations are concerned, Bangladeshs major trading partners are the EU and US. On the other hand, apart from India, other major import sources for Bangladesh are China, Singapore and Japan.
Poor quality infrastructure particularly road networks and electricity supply. The economy is not diversified and is highly dependent on the agricultural sector; services and apparel only make up a small percentage of the economy. High cost of finance and limited access to long term finance options. Largely unskilled labor force, limited spending on education has led to a decline in attendance and in the quality of education. Political instability and safety risks, political, ethnic threaten to undermine stability. Slow pace of reform due to government bureaucracy and lack of alignment of policies at the various levels of government. High levels of corruption, even within the judiciary, undermine investor confidence.
Chart 1.1: The Most Problematic Factors for Doing Business in Bangladesh
Recommendations:
After analyzing this assignment we would like to suggest something about the Import & Export. Bangladesh should go for the comprehensive and pragmatic policy to become a more competitive trading country such as-
o Broaden the countrys sources of economic activity, including by diversifying exports particularly the agricultural commodities, to reduce external
vulnerabilities and promote growth. o The government should provide supportive conditions that would facilitate the expansion and diversification of exports.
o The government should continue to support the growth of domestic demand and private-sector led investment through a reduction in government activity, which crowds out private investment.
o Significantly higher FDI inflows would be needed to support a higher growth environment in Bangladesh to compensate for domestic resource constraints and to enable Bangladesh to benefit from associated knowledge and technological spillover effects. The current ban on FDI inflows into the RMG sector also needs to be removed in order to bolster Bangladesh's prospect for the post-ATC quota era.
o Surrounded by increasingly competitive countries, Bangladesh must avoid discriminating against foreign investment or ownership. In this context, the investment environment would become more attractive by reducing restrictions on foreign ownership both in manufacturing and service sector.
o Improving governance is crucial in every sector and to achieve for that requires a clear long-term vision as well as pragmatism in exploiting opportunities to strengthen the overall framework o f public accountability.
Conclusion:
From the forgoing study we have got a clear picture of the situation of the Import and Export performance of Bangladesh. Throughout the study we only focused on the Import & Export performance of Bangladesh in perspective of SAARCE countries. By making this assignment we find that the share of Bangladesh trade is very low rather than the rest of the world. We also find that among the South Asian country Bangladesh Import & Export significantly with India. So Bangladesh should try to trade with other countries in South Asian region in equal manner. In this assignment we also tried our best to collect some information about the problematic factor of Bangladesh. In the end of our study we have some recommendations which might be very useful for improvement of the current position.
References:
Collect Information from Export Promotion Bureau (EPB) Gather Information from different Import & Export related web-site. Collect data through Internet.