Instead of sticking to the revenue loss issue, Dhaka should sign Free Trade Agreement (FTA) with Kuala Lumpur to attract investment, raise export and ensure jobs of Bangladeshis in Malaysia.
This was underscored during a virtual discussion on challenges and opportunities for the business community over the signing of a Bangladesh-Malaysia FTA.
The Bangladesh-Malaysia Chamber of Commerce and Industry (BMCCI) hosted the event, moderated by its president Raquib Mohammad Fakhrul, on Wednesday.
Presenting a keynote, Dr Mostafa Abid Khan, a member of the Bangladesh Trade and Tariff Commission, said Malaysia is one of the major import sources for Bangladesh but not a major export destination of Dhaka's products.
Import duty on potential export items of Bangladesh to Malaysia is low, but that in Bangladesh on important import items from Malaysia is relatively high, he said.
"Therefore, revenue lose to be resulted from tariff reduction is likely to be higher for Bangladesh than Malaysia," Mr Khan mentioned.
However, he said, the coverage of movement of natural person in FTA is likely to benefit Bangladesh. "FTA is likely to encourage investment in Bangladesh from Malaysia."
Speaking as the chief guest, commerce minister Tipu Munshi said Bangladesh is a major beneficiary of global trade openness.
In January 2015, he said, commerce ministers of Bangladesh and Malaysia agreed to sign a bilateral FTA.
"Although some progress has been made, but still we need to put lots of effort to conclude the negotiations and sign the FTA."
The minister said Bangladesh is keen to explore new opportunities and challenges. "Bangladesh will continue to engage with Malaysia and moving forward…to advance each other's economy together."
"We also consider FTA with Malaysia is very much necessary for us," he stated.
Mr Munshi said Bangladesh has to be more competitive and that if FTAs are signed with other countries, more investment can come, although risks are there to lose some revenue.
Malaysian high commissioner in Dhaka Haznah Md Hashim said Kuala Lumpur believes that FTA is an important trade mechanism and acts as a catalyst for sustainable economic growth in an ever-competitive world.
She said Malaysia signed its first bilateral FTA with Japan 15 years ago and also signed a similar deal with Pakistan, New Zealand, India, Chile, Australia and Turkey alongside several regional ones.
"If FTA was ever a mistake," she said, "Malaysia wouldn't have repeated it again and again and concluded it 16 times since 1993 and the latest one was even concluded during the time of current pandemic."
The envoy said Bangladesh is Malaysia's thirtieth-largest trading partner and second among South Asian nations.
The proposed Bangladesh-Malaysia FTA was tabled 11 years ago and it is high time for Dhaka to revisit and conclude it for economic prosperity of the two countries, she said.
"It's our hope that the proposed FTA will provide some kind of protection, certainty and sustainability to Malaysian investors in Bangladesh," Ms Hashim said, referring to some problems facing the investors here.
She also offered that Malaysia could be the gateway for Bangladeshi exportables to the Association of Southeast Asian Nations (ASEAN) market.
Bangladesh high commissioner to Malaysia Golam Sarwar said Malaysian investment in Bangladesh is very poor in terms of volume which does not reflect the real potential that Bangladesh possesses.
Malaysia with its extensive experience in engagement with the 17-plus bilateral and regional FTAs would assist Bangladesh in finding an expedited way to the proposed FTA between the countries, he hoped.
Joint secretary of commerce ministry Noor Md Mahbubul Haq said previously Bangladesh had a conservative position on bilateral FTAs or preferential trade agreements because as a least-developed country Bangladesh has been enjoying duty-free and quota-free access to most of its export destinations.
The benefits were unilateral and Bangladesh did not have to offer any concession in exchange of that, he said.
"Since 2018 when Bangladesh for the first time qualified for graduating from LDC, its position (on FTA and PTA) has changed," he said.
Centre for Policy Dialogue research director Dr Khondaker Golam Moazzem said revenue loss should not be a prime issue for discussion.
"I like to request not to create any obstacle in any kind of discussion on the FTA by raising the revenue loss issue," he said.
BMCCI president Mr Fakhrul said FTA stands for reducing and eliminating certain trade and investment barriers as the business community highly expects an increase in the volume of trade among the two countries.
Malaysia South-South Association executive secretary Ng Su Fun, senior reporter of The Financial Express Syful Islam, BMCCI vice-president Anwar Shahid and former BMCCI president Syed Moazzam Hossain, among others, also spoke.
syful-islam@outlook.com