The Regional Comprehensive Economic Partnership (RCEP) is a historic economic partnership, and it will transcend into a game-changing trade partnership in future. It will be a significant and bold decision if Bangladesh joins this group.
The 15 countries in this group are among the fastest growing economies of the world and include some of the world's largest economies such as China, Japan and South Korea. The RCEP also includes all 10 countries of the ASEAN, plus Australia and New Zealand.
There was always a discussion in Bangladesh on how to become a part of the ASEAN block. Now, if Bangladesh can join the RCEP, Dhaka will enter an even larger group than the ASEAN, comprising the ASEAN block.
Since the 2000s, the Asia Pacific region has witnessed the rapid rise of China, creating a new economic landscape in the region, supported by the ASEAN countries. The region's GDP amounts to USD 26.2 trillion. It means the region controls almost 30% of the global GDP. Countries like Bangladesh, and Vietnam are also growing rapidly, transforming into major economic growth centers as well.
The successful formation of the RCEP will truly establish the 21st century as the Asian Century.
So, the question is, how will Bangladesh benefit by joining this group?
Benefits will come in many forms, as long as the partnership with the block is an effective one. And, the association of so many countries is a strong indication that this new partnership will be an effective one indeed.
However, the scope to maximise the opportunities will greatly depend on the ability to design the right strategies and make timely decisions. For Bangladesh, like other countries in the group, RCEP will increase market access, create investors' confidence and also improve efficiency on the supply side.
It should be kept in mind that there will also be multidimensional challenges. The products and services of other member countries will also get access to our internal market, of which the impact assessment is unknown to us. We need to make the required improvements and adjustments.
But, usually, it is seen that the developed economies incur the biggest gains due to larger product basket and industrial diversification - therefore, in the short term, countries like China, Japan and South Korea will benefit the most.
According to a CNBC report, China will gain around $100 billion, Japan $46 billion, South Korea $23 billion and the ASEAN bloc $19 billion. Indicating that everyone is benefitting from the partnership. How much Bangladesh will gain, still needs to be estimated. But it is good to know that there are mechanisms within the group creating a level playing field for all participating countries, given the economic advancement of each country.
Today, Bangladesh is the 36th largest economy in the world. In less than 10 years, according to HSBC, Bangladesh will emerge as the 26th largest economy in the world. Meanwhile, Dhaka Chamber of Commerce and Industry (DCCI) in 2010 projected Bangladesh will become the 30th largest economy by the year 2030.
Numerous other reports forecasted the economic progress and prosperity of Bangladesh.
Bangladesh has been growing consistently, supported by strong macroeconomic fundamentals, political stability and demographic dividend adds to our strength. In fact, demographic dividend is the biggest advantage for Bangladesh.
Almost 56% of our population are aged between 18 to 40 years. Bangladesh has the 8th largest workforce in the world supported by a vibrant and growing GDP of USD 320 billion, with rising disposable income levels - this demonstrates the future capabilities of the country.
Today, to accelerate our growth and become an economic powerhouse, such partnerships will propel our advancements further, and since we are already moving towards a developing country status, we will have to enter such arrangements given that we will be giving up many benefits that LDC status country receives.
To create opportunities, we must have a strategic plan with short term, mid-term and long-term goals and objectives. As we will have duty free access to one of the largest markets of 2.2 billion consumers, we will have the advantage of supply side benefits to the various raw materials for building new industries, in effect, helping us to create our industrial diversification that will ultimately lead towards export diversification. We need to create opportunities for technology transfer through partnerships, join-ventures, etc.
Most importantly, some of the members of RCEP are top investors of the world, therefore through RCEP, Bangladesh will be in a better position to attract foreign direct investment (FDI) from RCEP members. So far, Bangladesh has not been able to attract the required amount of FDI into the country. Given Bangladesh's economic foundation, close to 3%-4% of GDP should be the yearly FDI coming into Bangladesh.
The challenges and limitations
On the contrary, there will be various challenges when entering such a large trading block, and we must have pragmatic policies and strategies to counter the challenges.
First and foremost, we need to become competitive and remain competitive to face the new economic realities. Today, we remain very competitive inside the factory area, but our competitiveness slowly diminishes as we move out of our factory premises; we must address these concerns and improve our competitiveness. We must also address the various reforms needed to create an improved business environment for our industries to cope and sustain our place in a regional partnership.
There is a strong need to reform our policies to address the global changes in motion. Our policy coordination and policy simplification, including improving various processes from taxation to land registration, need to gain momentum. Our reforms must be fast tracked and focused towards creating increased economic freedom for our citizens. Government has already embarked on many development plans which will indeed help improve our competitiveness, but we need to expedite the process.
On the other hand, the demand for an efficient infrastructure including transport eco-system is a mandatory precondition for Bangladesh to accelerate its growth; and gain from the RECP partnership. Therefore, extensive focus on the development of a sustainable modern transport eco-system to improve connectivity - including port infrastructure and logistics efficiency to increase the overall transport and country competitiveness - will be critical to maximise opportunities arising from RCEP.
In this connection, we need to work towards a National Logistic Policy to enable Bangladesh to become the transportation hub for the region. Bangladesh today is the natural gateway between South Asia and Southeast Asia, now it needs to develop the capabilities to truly become the economic gateway, this includes the establishment of a logistics hub for the region.
Japan, as we all know, further strengthened bilateral cooperation through the Japan-Bangladesh Comprehensive Partnership and after which the "Bay of Bengal Industrial Growth Belt" was launched. Under this cooperation, Bangladesh would see accelerated industrialisation of the Dhaka-Chattagram - Cox's Bazar belt area and beyond, which would encompass developing the economic infrastructure, improving investment environment and fostering connectivity turning the region into an economic powerhouse and the gateway between South Asia and Southeast Asia.
And the RCEP partnership will catapult Bangladesh into the next level of economic prosperity and connectivity. Bangladesh is indeed at a critical juncture of its economic development momentum, partnerships like RECP can help accelerate our progress to attain the vision to become a developed country by 2041.
We must not miss this opportunity rather maximise it to solidify our place in the Asian Century.
Abul Kasem Khan is the chairperson of the trustee board of Business Initiative Leading Development (BUILD).