Bangladesh and Singapore may soon start negotiations on a bilateral trade agreement that promises to open a vast vista of trading turf encompassing entire Southeast Asian and Asia-Pacific regions.
Officials said Singapore, the third largest investor in Bangladesh, has shown its interest in signing Free Trade Agreement (FTA) with Bangladesh considering it a potential new hub of regional supply chain.
The consulate of Singapore High Commission in Dhaka, on November 9, met with the Ministry of Commerce (MoC) high-ups with a pledge to go for free-trade deal.
Ministry officials said they had requested a Singaporean delegation from a working group to explore the ways of striking FTA with Bangladesh.
Earlier, the MoC had asked Bangladesh Trade and Tariff Commission (BTTC) to conduct a feasibility study on the proposed trade treaty with the ASEAN member country.
A senior official of MoC said the bilateral trade agreement would need joint feasibility study on several issues.
"The matter would be done through correspondence in the diplomatic channel between the countries," he added.
Earlier in October, the ministry formed a joint working group comprising members from BTTC, the ministry of industries, the National Board of Revenue (NBR) and other relevant entities to work out a framework of the FTA.
A senior MoC official said Bangladesh needs to incorporate labour and export of service in the bilateral pact with the prosperous city state.
In 2020, Bangladesh received US$624 million (S$838.53 million) in remittances from workers in Singapore-the figure is threefold higher than the value of its exports to that country.
Mohammad Masudur Rahman, a Visiting Research Fellow at the Institute of South Asia Studies (ISAS), an autonomous research institute at the National University of Singapore, says Bangladesh would be able to access the market of Regional Comprehensive Economic Partnership (RCEP) and ASEAN if it joins hands with Singapore.
Singapore has been a model state for implementing trade-facilitation agreements of the World Trade Organization (WTO).
Earlier, Singapore had signed FTA with two South Asian countries--India and Sri Lanka.
Bangladesh has yet to sign any deal on free trade with any country while Singapore has FTAs with 26 countries.
"As Singapore is an experienced FTA partner, Bangladesh will find in it a good supporting mentor for its future FTA negotiations roadmap," Mr Rahman says about the merit of such trading arrangement.
Singapore is at the heart of the global supply chain and a core member of many bilateral and regional FTAs, including the Association of Southeast Asian Nations FTA, the RCEP and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
After Bangladesh's graduation from LDC status in 2026, an FTA with Singapore will ensure sustainable market access in the East Asian region, he noted.
From Singapore, Bangladesh imports capital machinery and intermediate goods and exports mostly garment products.
Both Bangladesh and Singapore have excellent scope to increase their primary exports to each other. Bangladesh only imported about US$1.4 billion (S$1.88 billion) worth of capital and intermediate goods from Singapore. The country's garment-product exports to Singapore were worth less than US$200 million (S$268.76 million) in 2020.
Earlier, the Ministry of Trade and Industry of Singapore had held meeting with the Bangladesh foreign minister discussing potential of FTA.
The NUS is working on it and sat with MTI trade experts in Bangladesh and in Singapore last week.
Mr Rahman said Bangladesh has graduated its position in foreign policy of Singapore to second potential trade partner in the last two years from fourth position.
Vietnam has FTA with SG and many other countries that attracted $100 billion foreign direct investment while per-capita FDI in Bangladesh is on the decline.
Initially, some nominal loss of tax revenue may bring a wide opportunity for Bangladesh to access global market after signing FTA.
"When Bangladesh enters into an FTA with Singapore and eliminates its import duties for products from Singapore, it will lead to a revenue loss of about US$245 million (S$329.23 million) for Bangladesh," Mr Rahman said on the basis of his analysis.
Student and labour issues can be covered under the FTA umbrella as New Zeeland and China have such provision in their FTA, he said, for an example.
Research Director of the Policy Research Institute (PRI) Dr Mohammad Abdur Razzaque, also chairman of RAPID, says Singapore can be a gateway to the ASEAN market, but its market is quite small with just $340 billion GDP.
"Market prospect might not be enough in Singapore. Average MFN tariffs are zero there so we need to be mindful of what we can ask from them as trade concessions," he told the FE.
On services and technological aspects, however, Singapore is a global leader.
"But in trade negotiation, we need to find out how we can translate them into opportunities as it has one of the most competitive markets," he said.
Apart from exporting semi-skilled workers, Bangladesh doesn't have much scope of gaining from reciprocity-based trade agreements, he added.
"Ideally, we should be looking for cooperation schemes with Singapore on issues such as trade facilitation, innovation, quality of training and education, and other service sectors," he said.
