DHAKA, BANGLADESH (28 April 2004) - Boosted by expansion in both domestic and external demand, Bangladesh’s economy is forecast to grow 5.7% in fiscal 2003 and 6% in fiscal 2005, according to a major Asian Development Bank (ADB) report released today.

The Asian Development Outlook 2004 (ADO), an annual ADB publication that forecasts economic trends in the region, says the recent data pointed to an expected increase in industrial production and agriculture in the years ahead.

The forecast marks an acceleration of growth from the country’s recovery in agriculture and industry in FY 2003 (1 July 2002 to 30 June 2003), when gross domestic product (GDP) growth rate was an estimated 5.3%. “The macroeconomic prospects for FY2004-2005 appear favorable with upside potential from a more buoyant global economy,” the ADO says.

Agricultural growth is expected to increase, with preliminary indications suggesting a bumper aman (winter harvest) crop.

A higher budgeted fiscal deficit for FY2004 and a more relaxed monetary stance are expected to spur domestic demand.

Services sector activities, particularly trade, transport, and finance are likely to improve significantly with the anticipated further recovery in export-oriented manufacturing and continued strong food crop production.

Although growth in manufactured exports is projected to moderate with the phasing out of the Multifiber Arrangement (MFA) at the end of 2004, domestic-oriented private economic activity is expected to strengthen as the Government makes progress on structural and economic reforms.

The ADO calls for further improvements in competitiveness of the garment industry as well as an improvement of the overall environment for investment climate including infrastructure development.

The current account surplus is likely to fall considerably during the remainder of FY2004, but remain marginally positive the whole year. This forecast is contingent on the growth in imports continuing to offset the rise in exports. It is also reliant on remittances from overseas workers not changing dramatically due to the instability in the Middle East and fallout from the ongoing fight against terror.

Inflation is likely to increase to 4.7% in FY2004 due to an increase in food prices. Inflation rate for FY2005 is projected to be at 4.2%.

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The need for faster technological development is increasingly felt in Bangladesh. Development plans of Bangladesh have emphasized science and technological research to develop technologies through adoption of imported technology as well as development of indigenous technologies. As the country is heavily dependent on imported technologies, proper planning is required for its effective transfer through acquisition, assimilation and adoption.

A National Science and Technology Policy has been formulated and adopted by the Government. It has laid down the directions for S and T activities and research, institutional and manpower development. dissemination and documentation facilities. The National Council for Science and Technology (NCST) determines S and T policies, reviews the activities of different institutions and provides direction towards S and T research and activities

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Education arena in Bangladesh is not so developed. Literacy rate is low and there is a significant disparity between female and male literacy rates. However, with on going awareness of both the government and NGO’s, literacy rate has been going up. Bangladesh gets International Literacy Prize 1998 from UNESCO for its ongoing literacy rate. It is targeted that, the country will be illiteracy-free by the year 2005.

The education system is divided into 4 levels– Primary (from grades 1 to 5), Secondary (from grades 6 to 10), Higher Secondary (from  grades 11 to 12) and tertiary. Alongside national educating system, English medium education is also provided by some private  enterprises. They offer ‘A’ level and ‘O’ level courses. There is also Madrasa system which emphasizes on Arabic medium Islam-based education. This system is supervised by the lone Madrasa Board of the country.

In 1998 there were about 52,000 primary schools 11000 secondary institutions. The five years of lower secondary education concludes with a Secondary School Certificate (SSC) examination. Students who pass this examination proceed to two years of Higher Secondary or intermediate training, which culminate in a Higher Secondary School (HSC) examination. Five education boards lead by the Ministry of Education deal with education up to HSC level.

Under-graduate level is finished with HSC. Then begins graduation level which is dealt by universities. Universities also offer Master’s and Doctorate degrees.

There are 11 government universities and approximately 20 private universities in Bangladesh. Specialized universities are Bangladesh University of Engineering and Technology (BUET), Bangladesh Agricultural University and Bangabandhu Shaikh Mujib Medical University.

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Bangladesh is indeed a shoppers’ paradise with a rich tradition in handicrafts at throw away prices. While muslin of ancient Dhaka has gone into history, other products such as contemporary paintings, wood works, shital pati (mattress having cooling effect), bamboo decoration pieces, cane and conch shell products, gold and silver ornament, cotton, silk, gold, silver, jute, reed, brassware, traditional dolls and leather goods also receive deep appreciation of the lovers of arts and crafts now and over the past centuries. In addition, Bangladesh is famous for pink pearl.

Pink Pearl : Pink pearls are the best buy in Dhaka. These natural products are unparallel in luster.

Gold & Silver : A wide range of gold and silver ornaments, silver filigree work etc. are considered by many travelers to be unparalleled.

Brass & Copperware : Among the best buys here are brass and copperware trays, wall decorations, vases etc. all are hand made with fine engravings and filigree work. Products made from the hides and skins of animals and reptiles, intricate wood carvings, cane and bamboo products, conch shell, bangles, embroidered quilts, jamdani and silk fabrics can also be bought. These are available in DIT market and a number of exclusive shop in New Elephant Road, Dhaka.

Duty- free Shopping: Duty free sales and display centers run by Bangladesh Parjatan Corporation (NTO) are located in Dhaka, Zia International Airport, Mohakhaii and Sylhet Airport.
These shops enjoy the reputation of being well established with a wide range of goods at unbeatable prices. Goods available include wines and spirits, perfumes, cigarettes, hi-fi stereo and audio-visual equipment, Cameras, Watches and a range of household appliances. All purchases must be paid for in foreign currency.

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Prior to the time of Bangladeshs’ liberation in 1971, most tourists kept their visits to, Dhaka and Agrabad, however with limited satisfactory accomodation in the rest of Bangladesh at that time, saw neighbouring Kolkata in West Bengal, who were well ahead with their facilities, soar in popularity. It took until the middle of the nineteen nineties for the improvement in accomodation started to show increased numbers of tourist flow.

Tourism alive and Well in Bangladesh.

Since the year 2000 tourists arriving in Bangladesh have been swelling in numbers. Also travelling further within the country and visiting places like Cox’ Bazaar, Teknaf, the Sundarbans, Kuakata, Paharpur and Tetulia. Not only is it international visitors but locals are also taking their holidays and coming to Dhaka, Khulna and Chittgong. All these travellers require appropriate accommodation and the demand in hotel beds and restaurants are now being met for every taste and every budget. Many of the visitors are expariate Bangladeshi coming to Bangladesh not only to visit their families, but for a holiday and to experience the vibrant and culturally rich country of their forebearers. Catering for all these people have seen an increase in the demand for new hotels and restaurants in Dhaka and other tourist locations.

The language of Bangladesh is Bengali (Bangla). Bengali is an Indo-Aryan language it evolved from Sanskrit. Sanskrit being one of the oldest languages documented in the world. Bengali writing is a cursive script like other Indian scripts, originating from the Brahmi alphabet of the Asokan inscriptions. It contains 52 consonants and 12 vowels. English is also spoken in many places.

Travelling through Bangladesh is cheap. Tipping is encouraged in most restaurants frequented by foreigners, expect around 5%. It’s how much of the staff make their wage, so please be thoughtful in this regard as some tourists can be a little stingy, being used to their own countries. “Baksheesh” is Bangla for tipping. When purchasing a souvenir, you’ll find the people skilled in the art of bargaining. This is also custom, remember have fun with it even though you might feel a little frustrated. Just start at around half of what the asking price is and go from there. Walk away if you feel the price is too high, there are many other sellers nearby. Just be aware of the restrictions of your own country and conscience when making a purchase. There are some industries that you you shouldn’t encourage in any country.

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Bangladesh launched deep and wide-ranging trade reforms in the early 1990s which included substantial reduction and rationalization of tariffs, removal of quantitative restrictions, move from multiple to a unified exchange rate, and from fixed to a flexible exchange rate system (floating since May 2003), current account convertibility, and an overall outward orientation of the trade policy regime. In consequence, Bangladesh’s trade integration, measured by the trade-GDP ratio, rose from 18% in 1990 to 32% in 2004. Progress on trade openness stalled since about 1995/96, with only modest progress until about 2000. Liberalizing policies resumed with the launch of the World Bank’s Development Support Credit in FY02-03 and supporting policies pursued under IMF’s Poverty Reduction and Growth Facility.

Bangladesh’s PRSP has laid emphasis on private sector driven export growth and diversification, making export-led growth a key thrust of its poverty reduction and growth strategies. The authorities recognize significant challenges ahead in view of the abolition of MFA quotas that gave its readymade garment sector sheltered access in global markets.

Tariffs and QRs

Bangladesh1Historically, Bangladesh has relied on tariffs and quantitative restrictions to protect domestic activities and raise revenue. Roughly one-half of its tax revenue still comes from import taxes. Average protective tariffs are currently at 26.5% with average industrial tariffs at 25.3% and agricultural tariffs at 32.6%. A notable feature of the present tariff structure is the significant application of para-tariffs (industrial development surcharge and supplementary duties), such that some 38% of the average protection comes from these para-tariffs. The average customs duty is only 15.5% with a top rate of 25% with three non-zero duty slabs of 6, 13, and 25%. Besides, a wide range of consumer goods have high protective rates of 50 – 150%, well beyond the top CD rate. Although most QRs are applied for non-trade reasons, until recently, there were a large number of protective QRs in existence under the Import Policy Order 2003-06. These have finally been removed in January 2005, with the exception of three items, namely, eggs, poultry, and salt, for which the government received waivers from WTO.

Future Trade Agenda

Despite the trade liberalization of the past, tariff protection levels in Bangladesh continue to be amongst the highest in the region. The import regime, however, is cumbersome, though automation of customs procedures (imports and exports) is slowly taking shape. The predominant export industry – readymade garments – and a few 100% exporting firms (e.g. leather goods) are allowed duty-free import of raw materials under bonded warehouse system, while other exports are covered under the duty drawback system.

Bangladesh’s unilateral trade liberalization since the early 1990s has yielded positive dividends in terms of better economic performance. Future trade liberalization program would include: (a) further simplification of the import regime; (b) reduction in the dispersion and average level of nominal (and thus effective) protection, preferably through a pre-announced medium- and long-term schedule of tariff reductions (as done recently by India).

Bangladesh is actively seeking participation in regional FTAs which could be used as platforms for further multilateral liberalization as it needs to pay attention to the costs of FTAs. Given Bangladesh’s high protection, it faces considerable risks of adverse ‘trade diversion’ effects from regional FTA agreements. This is because such (multilateral and bilateral) preferential trading arrangements may lead to shifting of the source of imports away from least cost/most efficient third countries to higher cost member countries. It is therefore critical that Bangladesh continues to reduce the high protection levels with unilateral trade policy reforms. This needs to be continued since thisstrategy will also enable Bangladesh to better manage her ‘regional integration’ objectives/initiatives by helping to minimize the likely adverse ‘trade diversion’ effects of the existing and new regional FTAs.

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