./.RESTRICTEDWORLD TRADE
ORGANIZATIONWT/BOP/G/8
28 April 1999
(99-1714)
Committee on Balance-of-Payments Restrictions Original:  English
1999 CONSULTATIONS WITH BANGLADESH (SIMPLIFIED PROCEDURES)
Basic Document Supplied by Bangladesh
1. Much as we lament it, Bangladesh continues to remain a least-developed country (LDC)
despite its huge economic potential.  Nowadays, however, there is a perceptible surge of confidence in
the country, which we think is a sign of positive and early economic changes.  One of the main
reasons for this optimism is that Bangladesh has had a peaceful election in June 1996, an
unprecedented second in regular succession.  Furthermore, two successive elected Governments havediligently pursued policies of gradual socio-economic liberalization and market-friendly reforms.  The
economic liberalization programme is not over;  it is a gradual and continuous process.
2. During the 1980s, the process of economic liberalization with a thrust on simplification of
export/import regime, gathered momentum.  In the financial year 1989-90, a traditionally large
descriptive list of importables was replaced by a very small list of unimportables.  Items not includedin the second list were freely importable.  In the Import Policy Order now in force two separate lists,
i.e. a small list of items banned and a list of items allowed under conditions, are included.  The items
outside these two lists are freely importable.  Items banned are those with military and cultural
ramifications.
3. Over the last 10 years the total number of unimportables and restricted importables have been
reduced from 703 to 121.
4. The main features of the current Import Policy Order are:
(a) Further withdrawal/removal of import restrictions;
(b) Restrictions on imports of several more items have been removed.  Imports of gray
cloth by export-oriented industries, the predominant intermediate product used by the
huge garment sector, have been further simplified;
(c) The system of allocation of foreign currency by the Government to settle import bills
has been abolished;
(d) The Quantitative Pass Book System has been abolished since December 1994.
Importers are now at liberty to import items from the free list in quantities they
desire;
(e) The limit of import without LC has been raised, from US$2500 to US$5000 each
financial year;  and
(f) Following consultations with the IMF, barter and STA systems have been completely
abolished.WT/BOP/G/8
Page 2
5. Further simplifications on imports of accessories for ready-made garments, fertilizer, cement
manufacturing etc., are under review.
6. Additionally, structural reforms implemented under different Structural Adjustment Facility
(SAF) programmes, and on our own initiative, have liberalized the economy even more.  In addition
to import trade, which has been gradually and continuously deregulated, banking and finance sectorsof the economy have been opened to private sector investment and a stable capital market has been
functioning for some time now.  The privatization programme is continuing apace and no new
investments in the industrial sector from public revenues are made now.  The agricultural sector
remains under careful review with a view towards it s gradual opening.  It must, however, be said that
while implementing reform measures in the agriculture sector, Bangladesh has had to keep in mind
her overriding need for short-term food security and longer-term social stability.  The highly sensitive
domestic fertilizer trade, which keeps the agricultural sector in fine balance, has remained on courseduring the last 3 years and the private sector now plays a dominant role here.  In fact, only
manufacturing of domestic fertilizers remains in the public sector.
7. Over the last few years, Bangladesh has registered an overall average annual growth rate of
about 5%, and we feel confident that we may be able to achieve around 6-7% growth over the next
2-3 years.  According to a recent ESCAP study, Bangladesh's GDP posted a growth of 6% in 1996/97,a jump of almost one percentage point over th e figure for 1995/96, which was 5.1.  The same study
has forecast an average growth rate of 7% a year over the period 1996-2000.  The unprecedented
floods of 1998 have however dimmed growth prospect s in the current year, which is now projected to
be around 4%.  It is, however, estimated that growth should reach pre-flood level of about 6% over
1999-2000.  It should also be said to the credit of Bangladesh that, despite the modest average annualgrowth of about 5% over the last decade, it has b een able to maintain a steady and positive growth
path, avoiding hyper-inflation and capital market vola tility.  The overall poverty indicator, though still
on the high, has steadily fallen in recent years.  Side by side with the Government, the NGOs have
also been involved in poverty alleviation activities,  particularly through providing micro-finance, and
thus opening employment opportunities largely for women.
8. Bangladesh has been aggressively seeking foreign investment in recent years, basing its claim
on the very competitive advantage it enjoys in terms of abundant cheap labour and a flexible labour
market.  Added to the latter, it also claims political stability and a high incentive package as extra
lures for foreign investments.  The Export Processing Zones provide secure tax havens and guaranteed
infrastructural conveniences to expatriate investors.
9. Despite the overall sound health of the economy, the balance-of-payments position in the
short-term remains delicate.  This is largely due to the immediate effects of deregulation and tariffliberalization which have caused a sudden surge in imports, especially of consumer durables.  The
floods of 1998 have further aggravated matters in this area.  At this time of transition, the Bangladesh
economy needs careful monitoring by the Government.
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