US-Bangladesh business relations: The way forward
US-Bangladesh relations are characterized by well built trade and economic bonds along with trusted developing and trading partner while USA is a strong leading source of resources for Bangladesh. Today's, Bangladesh is one of the fastest growing economy and USA is the top largest economy in the world. Bangladesh has achieved the middle income country's status and it is most densely populated countries in the world. The annual per capita income is about USD 4200 in purchasing power parity. The Agricultural sector contributes for 14.2 per cent of GDP while industry sector contributes 29.2 per cent and Service sector contributes 56.5 per cent of GDP.
According to data available, in 2017, 39.07 per cent of the employees in Bangladesh were involved in the agricultural sector, 21.09 per cent in the industry and 39.85 per cent in the service sector. The gross national savings accounts for 29.7 per cent of GDP of Bangladesh. On the other hand USA is one of the highly developed nations and it is the single most powerful country in the world. The annual per capita income is about USD 59,500 in purchasing power parity. The Agricultural sector accounts for 0.9 per cent of GDP while industry contributes 18.9 per cent of GDP and service accounts for 80.2 per cent of GDP. The gross national savings accounts for 17.5 per cent of GDP of USA.
Bangladesh's emerging buoyant economy, young and expanding population, lower costs of production, and a large market, combines well with USA's technological process, manufacturing skills, and financial resources. Bangladesh provides an excellent opportunity for USA companies who are looking for new areas for investments and markets. Bangladesh's long term need to develop its economic and social infrastructures, in order to grow its economy; and the availability of cash with USA at a time when other players are short of funds presents a rare opportunity for both the countries to strengthen their economic relations.
The United States is the largest export market for Bangladesh and also one of the largest sources of foreign direct investment. The biggest American investment in the country is the operations of Chevron which produces 50 per cent of Bangladesh's natural gas. The main American exports to Bangladesh are agricultural products (soybeans, cotton, wheat and dairy), aircraft, machinery, engines, iron and steel products. America imports apparel, footwear, and textile products, toys, games and sporting goods, shrimp and prawns, and agricultural products from Bangladesh. USA and Bangladesh also need to develop their cooperation in the high technology sectors, such as space research, biotechnology, supercomputers, etc as their joint efforts shall enable them to find solutions to various other problems plaguing the regional and global community.
US investment in various sectors like power & energy, Steels, infrastructure, agriculture, automobiles, fisheries, Hi-tech & light engineering, jute, leather, textiles, ICT, telecom, pharmaceutical machinery/ equipment are more prospective in Bangladesh and the US investors are keenly interested in these fields. To attract investment from USA, the Government of Bangladesh may allocate for establishing a USA special economic zone in Bangladesh. Besides, there are ample scopes to relocate their factories in Bangladesh. If they set up manufacturing units here, they would be able to find market of those products in Bangladesh and export to other nearest neighbouring markets. And this will also enhance job opportunity in Bangladesh by more American investment in power, gas, oil, mineral, energy and communication system to build up our national logistic and infrastructure which can contribute for ending hunger and poverty.
US trade in goods with Bangladesh from January to September, 2018 were increased trend where exports was US USD 1422.70 million against imports was USUSD 4687.90 million which was USD 3265.20 million in favour of Bangladesh. Bangladesh's trade with the United States rose to USUSD 6.11 billion through the first nine months of 2018, according to World City analysis of latest US census bureau data. That is 7.83 per cent above its total trade during the same time period last year. Bangladesh's exports increased 13.52 per cent while imports rose 6.21 per cent. The US deficit with Bangladesh was USUSD 3.27 billion. Bilateral trade in 2018 may be expected to increase at more than USD 8 billion.
Foreign Direct Investment in Bangladesh increased by USD 1706 Million in 2017 and averaged USD 958.13 Million from 2002 until 2017, reaching an all time high of USD 1726 in 2013 and a record low of USD 276 Million in 2004. Day by day the foreign direct investment in Bangladesh is being increased significantly.
Now private sector is the main driving force and it overtakes the public sector. Bangladesh can be an attractive destination for foreign investors including USA because of its geographic location, both vertical and horizontal, along with many promising advantages. In this context, US Ambassador in Bangladesh Earl R Miller emphasized that a strong US-Bangladesh relationship is in the interest of the United States and the American people, Bangladesh and the Bangladeshi people as well as the regional and global community.
Bangladesh needs support from US. Bangladesh is not head to head competitor of USA. It is true that if the competitiveness of Bangladesh is reduced in the textiles and apparel sectors, the other Asian countries will capture the US market rather than the local products of USA or its FTA partner. Even through the US GSP program cover many products and thus many developing countries take benefits, unfortunately it does not help Bangladesh much as mostly exports apparel items in USA are excluded from this privilege.
As a result, exported apparel from Bangladesh faces a stiff tariff penalty in USA ranging from 0 per cent to as high as 32 per cent. So, Bangladesh's RMG must be included in the US GSP program. Our bilateral cooperation is based on a win-win formula for both countries based on a mutuality of interests and believe. Trade and investment, which is essential for economic growth and development, are our shared responsibility for both the countries. Settling GSP issues will facilitates effective and efficient trade management of the two countries.
US-Bangladesh relationship can be developed by helping Bangladesh all out cooperation from USA in achieving its national goals set by the government "Vision 2021" and "Digital Bangladesh" for transforming the country to a sustainable middle income country by 2021 through diversified and innovative economy, to attain sustainable development goals by 2030. And the cooperation should be continued to achieve Bangladesh's goal to be a developed nation by 2041, which will lead to a strong US-Bangladesh relationship going the way forward effectively.
The writer is a Deputy General Manager of Bangladesh Krishi Bank. He can be reached at: email@example.com