It was not very long ago that BGMEA President Faruque Hassan highlighted the significance of strong regional value chain, more so in view of the ever-evolving global scenario as well as considering the various fallouts and implications of the Coronavirus pandemic.
Taking part in the inaugural session of the 13th edition of the two-day International Conference on Textiles & Apparel (Texcon 2021) with its theme Indian Textiles: Unleashing the next wave of growth, organised by the Confederation of Indian Industry (CII) in October, the BGMEA President while highlighting the importance of forging a strong regional value chain underlined that Bangladesh and India should complement each other rather than compete.
“Through this event, I want to underscore the need and importance of creating a regional value chain in the apparel sector…,” while adding, “We can build a value chain based on raw material supply, production and marketing while also use each other’s expertise, knowledge and technology…”
If one may remember even before the deadly COVID-19 could spread its tentacles in Bangladesh, which led the Bangladesh Government to impose strict countrywide lockdowns that did not even spare the export-oriented RMG sector, on which the country’s economy is dependent, Bangladesh, especially the RMG sector, have had to bear the fallouts of the global outbreak of the pandemic long back.
As the virus first reportedly broke out at China’s Wuhan province to spread later to other areas and rest of the world even later, supply chain took a major hit. For Bangladesh, which is majorly dependent on China for its raw material requirements, the initial challenges were related to sourcing of the raw material following the suspension of economic activities in China.
This was perhaps the first time the importance of forging a strong regional value chain, that not only involves India but other countries in the region that are in close vicinity to Bangladesh, came to fore.
Apart from this, a stronger value chain has even more significance with context to broader business and regional trade, where countries within the region can play vital roles in terms overall economy, be it in terms of exports, raw materials supply, etc.
In the given context, experts emphasised establishing increased connectivity and cooperation amongst the BIMSTEC countries.
BIMSTEC or the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation provides a unique link between the South and South-East Asia with five countries – Bangladesh, Bhutan, India, Nepal and Sri Lanka from South Asia and two countries – Myanmar and Thailand from the South-East Asia coming together on one platform for cooperation in 14 key economic and social sectors of the economy.
It may be mentioned here that this sub-regional organisation came into being on 6 June 1997 through the Bangkok Declaration and constitutes seven member states- five deriving from South Asia, including Bangladesh, Bhutan, India, Nepal, Sri Lanka, and two from Southeast Asia, including Myanmar and Thailand. Initially, the economic bloc was formed with four member states with the acronym ‘BIST-EC’ (Bangladesh, India, Sri Lanka and Thailand Economic Cooperation). However, following the inclusion of Myanmar on 22 December 1997 during a special Ministerial Meeting in Bangkok, the Group was renamed ‘BIMST-EC’ (Bangladesh, India, Myanmar, Sri Lanka and Thailand Economic Cooperation) and with the admission of Nepal and Bhutan at the 6th Ministerial Meeting (February 2004, Thailand), the name of the grouping was changed to ‘Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation’ (BIMSTEC).
Towards forming a strong value chain amongst the BIMSTEC nations, experts highlighted the need to even resolve high tariff issues among the countries for navigating a changing global economic order stemming from some mega-events of the day even as they added this can help in deepening the Bay of Bengal cooperation with augmented trade relations, particularly among the BIMSTEC member countries.
In substantiating their recommendations for looking east to raise intra-regional trade and communications they cited incidents like BREXIT, US-China trade war, and the COVID-19 pandemic that are fuelling the latest geopolitical and economic changes even as they observed the pandemic generated the need for deepening the regional connectivity as it disrupted all kinds of cross-border activities, from trade, transport, tourism, investment to even people-to-people connectivity while adding such great disruptions are upending normal global order and leaving an extremely negative impact on life and business in the Bay of Bengal region.
“Deeper economic exchange in the region makes sense for each country involved,” maintained Centre for Policy Research (CPR-India) Senior Visiting Fellow Dr Sanjay Kathuria even as he added the intra-regional trade among BIMSTEC countries rose steeply to about US $ 45.9 billion in 2019 from US $ 4.8 billion in 2000 while adding, “That trend shows how high the trade potential among the BIMSTEC countries is and the global trade shifts ignited by Brexit, US-China trade war, Australia-China trade war, COVID-19 pandemic, and India’s attempt of decoupling from China etc., will further enable the BIMSTEC countries for regional cooperation.”
The fellow of CPR India also suggested removing tariff barriers in the South Asian region and improving road connectivity within the eastern part of the BIMSTEC with its western part even as he noted that sectors like readymade garments apart from pharmaceuticals, automobiles, plastic, etc. can majorly benefit from it, while Centre for Policy Development (CPD) distinguished fellow, Professor Mustafizur Rahman, said trade connectivity was the most important condition for value-chain development, but, at the same time, investment connectivity, transport connectivity, logistics connectivity, and people-to-people connectivity are also required even as he added that many of these connectivity linkages were disrupted by the pandemic, while adding goods import in BIMSTEC region decreased 19 per cent from US $ 79 billion in 2019 to US $ 64 billion in 2020 while export also dropped by around 12 per cent in the same period.
“From my point of view, the issue of FTA becomes very important if the regional trade connectivity is discussed from the perspective of the pandemic,” he said, adding a massive disruption was observed in the global value chain during the pandemic which taught the importance of more inclusive regional trade connectivity to avoid that type of shock in the future.
Now to give a further boost to cooperation between the BIMSTEC nations, the seven-member body is likely to get a charter with key focus connectivity even as the member countries have completed the negotiation of the BIMSTEC charter and it is expected to be signed in the coming 5th summit with participation of the heads of the Governments in Colombo.
The BIMSTEC member-states have completed the negotiation of the BIMSTEC charter, said BIMSTEC Secretary General Tenzin Lekphell even as he added that the summit, which was scheduled to take place for September 2020, is now scheduled to take place on 6th December 2021 virtually.
It is likely to defer till early next year as the host country, Sri Lanka, is keen to hold it in-person, they said.
In addition to the BIMSTEC charter, three other legal instruments will also be signed in the summit — the BIMSTEC convention on mutual legal assistance in criminal matters, memorandum of association on the establishment of BIMSTEC technology transfer facility in Colombo, and a memorandum of understanding on mutual cooperation between diplomatic academies and training institutions of the member countries, the Secretary General said at a symposium on BIMSTEC organised by the Institute for Social and Cultural Studies and the Ministry of External Affairs of India.
The summit is also expected to reconstitute and rationalise 14 areas of cooperation into seven sectors, where each sector will be led by a member country.
BIMSTEC sectoral plans ‘are strategic’ and institutional agreements and MoUs are founded on strong convictions by the member states, said Tenzin Lekphell.
The member countries have ratified the BIMSTEC convention on cooperation in combating international terrorism, transnational organised crime and illicit drug trafficking, which has entered into force on 16th March 2021.
It may be mentioned here that amongst the BIMSTEC countries, India is already a major export destination for ‘Made in Bangladesh’ apparels even as the export earnings have already crossed the billion-dollar mark even as the country (India) is also a major supplier of raw materials for industries in Bangladesh including the all-important RMG sector while on the other hand following signing of first-ever FTA with Bhutan, Bangladesh’s apparel export the Himalayan kingdom is said to be on the rise.
In the given context, while also considering the views shared by the economists and experts, a stronger link and cooperation between the BIMSTEC nation, one would agree and accept, would be very vital in the coming days.