The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has requested the Russian government to give Bangladeshi apparel items duty-free access to its market.
"Since Bangladesh has graduated to 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. For us, the topmost priority is to get preferential market access to Russia," said its president Faruque Hassan recently in a letter to Alexander Vikentyevich Mantytskiy, Russian ambassador to Bangladesh.
Talking to The Business Standard, Faruque Hassan said, "If we can get duty-free access to the Russian market, it will not only open a great opportunity for us to deepen our trade relationship, but also Russian consumers can benefit themselves by availing quality goods at competitive prices."
The BGMEA president mentioned, "You are aware of the fact that the clothing made in Bangladesh faces high tariffs in Russia. Our products face 5% to 20% (mostly 10%) customs duty while being exported to Russia."
Besides, there are some banking related difficulties in trade between Bangladesh and Russia, he also said, adding, "We are interested in working together to identify the barriers within the trade and commerce between two countries and resolve them."
"We are also keen to facilitate direct and joint investments in prospective sectors, such as high-end apparels, non-cotton yarns and fabrics, etc.," he added.
Talking to TBS, Habib Ullah Dawn, president at Commonwealth of Independent States-Bangladesh Chamber of Industry, said Bangladesh has already signed a memorandum of understanding with the Eurasian Economic Union, aiming to make a free trade agreement.
"If Russia gives duty-free market access, it will create a big opportunity for Bangladeshi exporters to explore markets of the Russian-led Eastern European economic union comprising Belarus, Kazakhstan, Armenia and Kyrgyzstan."
At the same time, it will also open markets of the Commonwealth of Independent States as well, he added.
At present, CIS unites are Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine.
The BGMEA president in his letter acknowledged the people of the Russian Federation's support to Bangladesh during the War of Liberation in 1971. Russia was one of the first few countries that officially recognised Bangladesh as an independent nation.
Throughout the journey of Bangladesh toward a developing nation, Russia has always remained as a trusted development partner and a source of investment. The relations between Bangladesh and Russia have grown in depth and dimension, but the bilateral trade is yet to reach its prospects. In fact, economic ties and cooperation are crucial for enhanced bilateral relations.
Russia is one of the major development partners for Bangladesh. "Given the contribution of Russia through development initiatives and infrastructure projects, our bilateral trade remains very insignificant," he noted.
In the fiscal year 2020-21, Bangladesh's total export to Russia was $665.32 million and import from Russia amounted to $481.88 million. So, bilateral trade was worth only $1.1 billion.
"We have a huge opportunity to improve trade. In 2020, Russia's apparel imports from the world stood at $6.91 billion, while the share of Bangladesh was only 11.72%, despite the fact that we are the second biggest source of apparel for Russia," said Faruque Hassan.
"Readymade garments constitute around 90% of our total exports to Russia," he also said.
In FY21, Bangladesh export of apparels to Russia was $593.66 million, which can be increased further, he added.
"From a neutral point of view, Russia can benefit by sourcing from Bangladesh since we produce quality apparels at a very competitive price," Faruque Hassan added.
The BGMEA letter also mentioned, "In the past decade, we have built tremendous capacities in the textile and garment sector in the area of sustainability, especially environmental sustainability, workers' well-being, and industrial relations."
Bangladesh is the home to the highest number of green garment factories in the world. "We have already made a huge investment in technology up-gradation, innovation, and value addition to make the industry more competitive. So Bangladesh is an ideal location for Russia to meet its fashion needs," the BGMEA president noted.
Bangladesh keen on FTA with Eurasian Economic Union
Earlier in January this year, Bangladesh expressed interest in signing a FTA with the Eurasian Economic Union (EAEU).
The commerce ministry requested the foreign ministry 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 blocs 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 get duty free facilities to Eurasian markets that have huge potential for Bangladesh's export products. The country's exports to these countries have increased significantly over the past decade and the amount stands around $500 million.
According to the Export Promotion Bureau, Bangladesh's exports to the EAEU during July-December of the current financial year amounted to $382 million, which was $677 in the previous fiscal year. And, in FY20, Bangladesh exported goods worth $498 million to the EAEU.
Bangladesh has huge potential for the exports of frozen food, knitwear, jute goods and shrimp 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 the commerce ministry officials.
That is why the Bangladesh Bank has taken initiative to ensure a duty-free export facility by signing FTA and swapping currency 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.
During the last decade, the trade volume has increased substantially. In this context, the commerce minister signed a Memorandum of Cooperation between Bangladesh and Eurasian Economic Commission in Moscow in May 2019.
To face post-LDC challenges, the commerce ministry has taken a strategic policy of signing FTA and Preferential Trade Agreement (PTA) with its important trading partners, including the EAEU, for ensuring smooth and sustainable graduation.