Bangladesh can annually save around $398.5 million from imports through removing 50 products from its sensitive list under South Asian Free Trade Agreement (SAFTA), report of a study revealed.
It said deepening trade relations with neighbours will immensely benefit local consumers by sourcing imports from the region at a considerably lower rate in many product categories, which are currently imported from outside the region.
“The objective of the study was to assess potential benefits to consumers from enhanced trade among the South Asian countries,” Deputy Country Representative of the Asia Foundation Saima Anwer said Wednesday.
She was briefing the media at Dhaka Reporters’ Unity (DRU) on the findings of a recently concluded CUTS study on Cost of Economic Non-Cooperation to Consumers in South Asia.
The study, conducted with support from The Asia Foundation in partnership with a group of like-minded bodies, underlined that a number of product categories with high regional trade potential are kept out of bounds of preferential tariff rates under the SAFTA.
The study covered five of the eight South Asian nations — Bangladesh, India, Nepal, Pakistan and Sri Lanka.
It also showed a minimum consumer welfare gain of approximately $2 billion a year by way of savings on aggregate consumer expenditure on imported products in selected categories.
Of the total gain to consumers, India’s share is estimated to be 30.66 per cent, followed by Nepal 23.48 per cent, Bangladesh 20.46 per cent, Sri Lanka 14.81 per cent and Pakistan 10.58 per cent. About 31 per cent of the current import expenditure of these five countries can be saved.
The CUTS study derived potential savings to consumers by taking the difference between total import expenditure in selected products incurred by a country and likely import expenditure if that country were to import the same products at a lower price from its neighbours.
“Annual gain to Bangladeshi consumers is estimated to be around $398.5 million on account of sourcing imports from its neighbours on 50 product categories,” Research Associate of I-PAG Zarif Islam said citing the report.
“The amount constitutes nearly 14 per cent of Bangladesh’s current import expenditure as it spends $2781.33 million to import the selected items from outside the region, he said.
He said being a key member of SAFTA, the country with huge prospect should follow a more active neighbourhood policy based on economic pragmatism and political magnanimity.
“Tendency to protect domestic industries for fear of uncontrolled import surges is preventing South Asian countries from opening their markets to each other,” another Research Associate of I-PAG Ayman Chowdhury said.
He said Bangladesh can also chiefly gain by importing electrical equipment, pharmaceutical goods, petroleum and oil by-products from the SAFTA region.
“If SAFTA members reduce their sensitive lists, the overpopulated country can increase export mainly in garment sector,” he added.
They also said if South Asian countries continue to shy away from greater regional trade liberalisation, not only they will forgo huge possible savings on costlier imports from distant trading partners but also fail to utilise the opportunity to expand their export markets in the region.
The study also highlighted that deepening regionalism in other parts of the world is resulting in an erosion of South Asian countries’ access to markets of traditional export destinations as well as weakening their export expansion capacity.
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