RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/168 
9 August 2006  
 
(06-3754) 
Trade Policy Review Body Original: English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
BANGLADESH 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Bangladesh is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Bangladesh. Bangladesh WT/TPR/G/168 
 Page 3 
 
 
CONTENTS 
 
    Page 
I. INTRODUCTION 5 
II. BANGLADESH AND MULTI-LATERALISM 5 III. ECONOMIC AND TRADE DEVELOPMENTS SINCE 2000 5 
III:1 Labour Force and Employment 11 
III:2 Private Investment and Foreign Direct Investment (FDI) 12 III:3 Actual Local Investment 13 
III:4 Private Investment Registration 13 
III:5 Foreign Investment Projected:  Registration Statistics 14 
III.6 Agriculture Sector 14 
III:7 Industrial Sector 15 III:8 Service Sector 16 
III:9 Fiscal Policy and Fiscal Management 18 
III:10 Advanced Value Added Tax (ATV) 19 III:11  External Sector:  Trade Liberalization 19 
III:12 Import Policy and Programme 19 
III:13 Simplification of Tariff Regime 20 III:14 Tariff Reduction 20 
III:15 Trade Openness 21 
III:16 Export growth 21 III:17 Import Growth 21 
IV. REGIONAL TRADE AGREEMENTS (RTAS) 22 
IV.1 The Agreement on South As ian Free Trade Area (SAFTA) 22 
IV:2 The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation 
(BIMSTEC) FTA 22 
IV:3 Asia Pacific Trad e Agreement (APTA) 22 
IV:4 D-8 Preferential Trade Agreement 23 
IV:5 Trade Preferential System Among The Organization of Islamic Conference 
(TPS-OIC) 23 
V. BANGLADESH IN WTO NEGOTIATIONS 23 
VI. CONCLUSION  24 
ACRONYMS   25 
ANNEX    27 
 
 Bangladesh WT/TPR/G/168 
 Page 5 
 
 
I. INTRODUCTION 
1. Bangladesh is a liberal democracy, with a hom ogeneous society and a population with great 
resilience in the face of adversity. The people of Bangladesh irrespective of race and religion have 
been living in total harmony and understanding for t housands of years. The geographical location of 
the country is ideal for global trade and investme nt with easy access to in ternational sea and air 
routes.  
2. Bangladesh is a growing economy, which is now in the process of transition from a 
predominantly agrarian economy to industrial a nd service economy. The public sector concentrates 
mainly on the physical and social infrastructure,  while the private sector is playing an increasingly 
important role in the economic activities of the country. The country is continuously pursuing a 
liberalized economic policy and following a pace of free market mechanism. This has fostered its 
economic growth, attracted FDI flows remarkably  and expanded its export-base. Bangladesh is 
committed to the multilateral trading system (MTS), but  at the same time it attaches importance to its 
regional and bilateral trade.  
3. This is the third trade policy review of Bangladesh. The first trade policy review of 
Bangladesh was conducted in 1992 and the second one in 2000.  
4. Government of Bangladesh believes that this review will play an important role in 
determining and guiding the economic  development objectives to the right path. It will highlight our 
efforts to the world community and draw atten tion of the WTO Members to extend necessary support 
to integrate our economy meaningfully into the multilateral trading system. 
5. The objective of this review is to reflect curre nt economic and trade issues, external trade and 
foreign direct investment environment as well as th e structural changes in major economic sectors, 
multilateral and bilateral trade situ ations. It will also highlight the country’s trade and economic 
endeavour.  
II. BANGLADESH AND MULTI-LATERALISM 
6. Bangladesh is a founder member of WTO since its inception from 01 January, 1995. Since 
joining WTO, the country has been actively invo lved in multilateral trade negotiations to move 
forward the WTO negotiations. It considers that inte gration of the world community, particularly the 
LDCs-- the poorest segment of the international co mmunity into MTS will bring economic and social 
benefits for all. Bangladesh also believes that  MTS will play a significant role in economic 
development, and thereby, improve the living standa rds of people. It will eventually benefit all the 
member countries of WTO and the share of benefits will, of course, reach to the least developed 
countries. The present trend of continuous margina lization of LDCs in the global trading system 
should be addressed to reverse the trend with m eaningful support and cooperation from all countries 
of the world in the multi-lateral trading system; the share of LDCs in the global trade should be 
enhanced to a respectable position.  
7. As regards bilateral and regional trade, the country by now has signed a number of regional 
and bilateral trade agreemen ts for mutual benefit.  
III. ECONOMIC AND TRADE DEVELOPMENTS SINCE 2000 
8. Bangladesh is a low-lying riverine country locat ed between the foothills of the Himalayas and 
the Bay of Bengal. It is the most densely popul ated country in the world with an area of 
147,570 sq. km and a population of 135.2 million in 2004. Bangladesh belongs to the group of least-WT/TPR/G/168 Trade Policy Review 
Page 6 
 
 
developed countries (LDCs). In financial year (F Y)   2004-05, its gross domestic product (GDP) was 
worth Taka 3684.76 billion at current market pri ce (appr.US$ 52.64 billion), recording an increase 
from Taka 2,370.86 billion in FY 1999/2000 (appr. US$ 47.12 billion). During the last decade, GDP 
growth remained steady and fairly robust at an  average annual rate of 5.0%, although there was a 
decline in GDP growth in FY 2001/02 mainly due to worldwide recession. This growth was 5.38% in 
2004-05, which was mainly attributed to the industry and services sector. A pragmatic trade policy with significant liberalization of trade and phenomen al expansion of export, congenial domestic and 
foreign direct investment environment, increased involvement of the private sector in the economic 
activities and the country’s success in checki ng population growth, which stood at 1.48% in 
FY 2004-05 have largely contributed to this grow th. This growth in GDP, in turn, resulted in a 
secularly increasing trend in per capita GDP and a d eclining trend in the number of population below 
the poverty line. During this period per capita GDP increased steadily and stood at US$ 445 in FY 2004-05. The number of population below the poverty line had declined from 46.2 percent in 
1999 to 40.9 percent 2004. The incidence of hardco re poverty also showed a declining trend during 
the same period. Nonetheless, the country has been striving hard to increase its growth over 6 percent 
to achieve the millennium development goals of halving the number of proportion of the population 
living below the poverty line by 2015.  
9. During the last five years both domestic saving and investment continued to increase. 
Increase in shares of domestic savings and total i nvestment in GDP is mainly because of increased 
participation of private sector.   
Table 1:  Some Selected  Macroeconomic Indicators 
  1999/00 2000/01 2001/02 2002/03 2003/04 2004-05 
Current GDP at factor prices (in 
billion Taka) 2,370.86 2,535.46 2,732.01 3,005.80 3,329.73 3684.8 
Constant GDP at factor cost (in 
billion Taka 1995/96 prices) 2,049.28 2,157.35 2,252.61 2,371.01 2,519.68 2655.1 
GDP Growth at Constant price 5.94 5.27 4.42 5.26 6.27 5.4 
Per Capita GDP (US$) 368 362 361 389 418  445 
Inflation (annual average) 2.79 1.94 2.79 4.38 5.83 6.49 
Share of main sectors in GDP, at 
constant factor cost (%)        
Agriculture, forestry, and livestock 19.49 19.51 18.58 18.22 17.97 16.88 
Fishery 6.09 5.51 5.40 5.25 5.11 5.03 
Mining and quarrying 1.03 1.07 1.07 1.09 1.11 1.14 
Manufacturing 15.40 15.59 15.76 15.97 16.16 16.58 
Electricity, gas/ water 1.43 1.46 1.51 1.54 1.58 1.64 
Construction 7.84 8.08 8.41 8.63 8.83 9.08 
Wholesale and retail trade 13.35 13.48 13.77 13.87 13.97 14.12 
Hotels and restaurants 0.63 0.64 0.66 0.67 0.68 0.69 
Transport, storage, and communication 9.20 9.42 9.62 9.76 9.79 10.01 
Financial services 1.57 1.57 1.61 1.63 1.65 1.70 
Real estate, renting and other business 
activities 8.88 8.71 8.63 8.48 8.30 8.14 
Public administration and defe nse 2.55 2.56 2.60 2.60 2.63 2.76 
Education 2.20 2.24 2.31 2.36 2.40 2.46 
Health and social services 2.20 2.19 2.21 2.21 2.22 2.25 
Community, social, and personal 
services 8.13 7.96 7.87 7.72 7.59 7.52 
Table 1 (cont'd)Bangladesh WT/TPR/G/168 
 Page 7 
 
 
  1999/00 2000/01 2001/02 2002/03 2003/04 2004-05 
Total GDP 100 100 100 100 100 100 
Saving and investment (as % of 
GDP)        
Domestic saving 17.90 18.00 18.16 18.21 19.53 20.20 
Gross investment 23.02 23.09 23.15 23.41 24.00 24.4 
Out of this         
Public 7.41 7.25 6.37 6.20 6.2 5.9 
Private 15.61 15.84 16.78 17.21 17.83 18.5 
Central government budget (% of 
GDP)        
Total expenditure 14.54 14.75 14.92 14.61 14.8 15.1 
Current expenditure 7.67 8.10 8.31 8.42 8.5 9.0 
Annual development programme 6.42 6.27 5.51 5.62 5.7 5.6 
Other capital and net lending 0.44 0.38 1.10 0.56 0.6 0.5 
Total revenue, of which 8.47 9.60 10.21 10.35 10.6 10.6 
Tax Revenue 6.78 7.80 7.81 8.30 8.5 8.7 
Non-tax revenues 1.69 1.80 2.40 2.05 2.1 2.0 
Overall budget balance        
    Excluding grants -6.10 -5.10 -4.70 -4.20 -4.2 -4.5 
Including grants -4.50 -4.10 -3.70 -3.40 -3.4 -3.7 
Domestic financing 2.9 2.80 2.7 1.3 2.2 2.1 
Foreign financing 2.50 2.00 2.10 2.30 2.4 2.4 
Medium and long-term external debt 
(US$ million) 16,211 15,074 16,276 17,475    
Exports f.o.b. (US$ million)  5,752 6,467 5,986 6,548 7,603 8,655 
Growth 8.27 12.43 -7.44 9.39 16.10 13.83 
Imports c.i.f. (US$ million)  8,374 9,335 8,540 9,658 10,903 13,147 
Growth 4.60 11.50 -8.50 13.10 12.9 20.58 
Trade- GDP ratio (% of GDP) 29.98 33.63 30.54 31.22 32.76 36.33 
Social indicators        
Population (million) 128.10 130.03 131.60 133. 40 135.20 137.0 
Source:  Bangladesh Economic Review, 2005. 
 
Table 2:  GDP growth by sectors at constant prices (percent) 
Sectors FY-01 FY-02 FY-03 FY-04 
Agriculture 3.1 0.0 3.1 2.7 
Industry 7.4 6.5 7.3 7.7 
Services 5.5 5.4 5.4 5.7 
Source : Bangladesh Bank.  
10. A closer look at the sectoral contribution to GDP reveals that there is a trend of 
transformation of the share of agricu lture sector in favour of industrial sector, while the share of the 
service sector remained stagnant except minor variat ion from year to year. The share of agricultural 
sector in GDP was above 33.21 percent at the begi nning of eighties. Thereafter, it experienced a 
declining trend and came down to 21. 91 in 2004-05. On the other hand, the share of industrial sector WT/TPR/G/168 Trade Policy Review 
Page 8 
 
 
was only 17.08 percent in the beginning of eighti es and it has increased to 28.44 percent in 2004-05. 
This structural transformation of Bangladesh re flects the positive trend of industrialization.  
Table 3:  Gross Domestic Product (GDP) at Current Prices 
(crore Tk.) 
Sector/Sub-sector 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 
(Prov.) 
1. Agriculture & Forestry 
 a. Crops & Vegetables  b. Livestock  c. Forestry 44692 
33418 
6858 4417 45631 
34068 
6893 4674 46003 
33896 
7118 4989 48798 
36024 
7474 5300 52419 
38883 
7916 5620 55394 
40815 
8615 5963 
2. Fishery 13674 13406 13897 14259 14783 15484 
3. Mining & Quarrying  a. Natural Gas & Crude Petroleum  b. Other Mining & Quarrying 2311 
1277 1034 2640 
1502 1138 2997 
1733 1264 3309 
1900 1409 3643 
2085 1558 4042 
2295 1746 
4. Industry (Manufacturing)  a. Large & Medium-scale  b. Small-scale 34837 
24939 
9898 38234 
27340 10894 41805 
2959 
12209 45813 
32377 13435 51527 
36364 15163 58849 
41615 17234 
5. Electricity, Gas & Water Supply  a. Electricity  b. Gas  c. Water 3072 
2579 
343 150 3346 
2804 
375 167 3640 
3053 
399 188 3989 
3318 
438 233 4424 
3683 
480 261 4911 
4090 
532 289 
6. Construction 17622 19334 21159 23016 25397 29040 
7. Wholesale & Retail Trade 29204 32479 35312 39103 44103 50084 
8. Hotel & Restaurant 1463 1590 1740 1944 2202 2502 
9. Transport, Storage & Communication  a. Road Transport  b. Water Transport  c. Air Transport  d. Related Transport Services &   Maintenance  e. Post & Tele-communication 19743 
14463 
2490 
373 772 
 
1645 22129 
16099 
2616 
393 934 
 
2088 25524 
18869 
2725 
413 992 
 
2525 31112 
24096 
2792 
420 
1036 
 
2768 34444 
26860 
2886 
438 
1070 
 
3190 38103 
29359 
2996 
459 
1118 
 
4171 
10. Financial Intermediations  a. Bank  b. Insurance  c. Others  3648 
2828 
660 160 3911 
2988 
760 162 4207 
3179 8061 
167 4718 
3540 
999 180 5197 
3889 1111 
198 5826 
4376 1227 
223 
11. Real Estate, Renting & Business 
Activity  21139 22365 23995 25678 27601 29740 
12. Public Administration and Defense  6234 6695 7117 7783 8624 9855 
13. Education 4386 5852 6352 7064 7873 8936 
14. Health and Social Services 4376 5722 6079 6601 7197 7954 
15. Community, Social and Personal 
Services 20360 21665 23698 26685 30028 33944 
Import Duty 8325 8547 9676 10707 13510 13812 
GDP at Current Market Price 237086 253546 273201 300580 332973 368476 
Growth Rate (%) at Current Market Price  7.91 6.94 7.75 10.02 10.78 10.66 
Source: Bangladesh Bureau of  Statistics (BBS). Bangladesh WT/TPR/G/168 
 Page 9 
 
 
Table 4:  Sectoral Growth Rate of GDP at Constant Prices (Base:  1995-96) 
Sector/Sub-sector 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 
(prov.) 
1. Agriculture & Forestry 
 a. Crops & Vegetables 
 b. Livestock  c. Forestry 6.92 
8.10 
2.74 4.94 5.53 
6.18 
2.81 4.85 -0.62 
-2.39 
4.70 4.91 3.29 
2.88 
4.51 4.43 4.38 
4.27 
4.98 4.18 -0.73 
-3.30 
7.82 4.25 
2. Fishery 8.87 -4.53 2.22 2.33 3.09 4.02 
3. Mining & Quarrying 
a. Natural Gas & Crude Petroleum b. Other Mining & Quarrying 9.48 
14.55 
3.47 9.75 
13.99 
4.19 4.53 
4.93 3.96 7.17 
8.91 4.66 7.66 
8.98 5.68 8.40 
9.04 7.40 
4. Industry (Manufacturing)  a. Large & Medium-scale  b. Small-scale 4.76 
4.35 5.80 6.68 
6.55 7.02 5.48 
4.60 7.69 6.75 
6.56 7.21 7.10 
6.95 7.45 8.43 
8.65 7.91 
5. Electricity, Gas & Water Supply  a. Electricity  b. Gas 
 c. Water 6.78 
6.87 5.61 
8.06 7.40 
7.60 6.05 
7.05 7.63 
7.78 6.53 
7.52 8.02 
7.29 8.77 
20.01 9.09 
9.19 8.81 
8.00 9.08 
9.22 8.96 
6.98 
6. Construction 8.48 8.65 8.61 8.09 8.25 8.69 
7.  Wholesale & Retail Trade 7.30 6.43 6.59 6.09 6.57 6.88 
8.  Hotel & Restaurant 6.94 7.00 6.92 7.00 7.05 7.29 
9. Transport, Storage &  Communication 
 a. Road Transport 
 b. Water Transport 
 c. Air Transport  d. Related Transport Services & 
  Maintenance 
 e. Post & Tele-communication 6.08 
6.32 
1.78 
16.80 13.15 
 
5.57 7.92 
6.37 
0.57 
4.62 
18.10 
 
26.92 6.56 
6.73 
0.34 
-16.84 
-4.62 
 
20.95 6.85 
6.64 
0.07 
-1.35 -1.17 
 
17.89 6.21 
6.02 
0.16 
0.84 
-1.35 
 
14.56 8.09 
5.11 
1.66 
2.54 0.41 
 
29.48 
10. Financial Intermediations 
 a. Bank 
 b. Insurance  c. Others 5.50 
3.87 
13.59 
5.54 5.54 
4.01 
13.46 
-0.03 6.70 
5.52 
12.35 
2.05 6.67 
5.91 
10.29 
2.32 7.02 
6.73 
8.06 6.91 8.95 
9.29 
7.56 
10.03 
11. Real Estate, Renting & Business Activity  3.83 3.41 3.42 3.52 3.58 3.64 
12. Public Administration and De fense  5.97 5.88 5.92 5.24 7.06 11.15 
13. Education 7.74 7.11 7.58 7.60 7.69 8.42 
14. Health and Social Services 4.80 4.92 5.30 5.63 6.17 6.88 
15. Community, Social and Personal Services 3.06 3.15 3.24 3.32 3.97 4.79 
Import Duty 1.55 1.85 5.84 3.31 18.17 -2.40 
GDP growth rate (%) at Constant Price 5.94 5.27 4.42 5.26 6.27 5.38 
Source: Bangladesh Bureau of Statistics (BBS).   WT/TPR/G/168 Trade Policy Review 
Page 10 
 
 
Table 5:  Sectoral Share of GDP (%) at Constant Prices (1995-96) 
Sector/Sub-sector 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 
(prov.) 
1. Agriculture & Forestry 
 a. Crops & Vegetables 
 b. Livestock  c. Forestry 19.49 
14.59 
3.02 1.88 19.51 
14.72 
2.95 1.87 18.58 
13.75 
2.96 1.88 18.22 
13.43 
2.93 1.86 17.97 
13.2 
2.91 1.83 16.88 
12.10 
2.97 1.81 
2. Fishery 6.09 5.52 5.40 5.25 5.11 5.03 
3. Mining & Quarrying  a. Natural Gas & Crude Petroleum  b. Other Mining & Quarrying 1.03 
0.58 0.45 1.07 
0.63 0.44 1.07 
0.63 0.44 1.09 
0.66 0.44 1.11 
0.68 0.43 1.14 
0.70 0.44 
4. Industry (Manufacturing)  a. Large & Medium-scale  b. Small-scale 15.40 
11.01 
4.39 15.59 
11.13 
4.46 15.76 
11.16 
4.60 15.97 
11.29 
4.68 16.16 
11.41 
4.76 16.58 
11.72 
4.85 
5. Electricity, Gas & Water Supply  a. Electricity  b. Gas 
 c. Water 1.43 
1.21 0.16 
0.06 1.46 
1.23 0.16 
0.07 1.51 
1.27 0.17 
0.07 1.54 
1.30 0.17 
0.08 1.59 
1.34 0.18 
0.08 1.64 
1.38 0.18 
0.08 
6. Construction 7.84 8.08 8.41 8.63 8.83 9.08 
7.  Wholesale & Retail Trade 13.35 13.48 13.77 13.87 13.97 14.12 
8.  Hotel & Restaurant 0.63 0.64 0.66 0.67 0.68 0.69 
9. Transport, Storage & Communication 
 a. Road Transport 
 b. Water Transport 
 c. Air Transport  d. Related Transport Services &  
  Maintenance 
 e. Post & Tele-communication 9.20 
6.65 
1.18 
0.18 0.36 
 
0.83 9.42 
6.71 
1.12 
0.18 0.41 
 
1.01 9.62 
6.86 
1.08 
0.14 0.37 
 
1.16 9.76 
6.95 
1.03 
0.13 0.35 
 
1.30 9.79 
6.96 
0.97 
0.12 0.33 
 
1.41 10.01 
6.92 
0.93 
0.12 0.31 
 
1.73 
10. Financial Intermediations 
 a. Bank 
 b. Insurance  c. Others 1.57 
1.22 
0.28 0.07 1.57 
1.20 
0.31 0.07 1.61 
1.22 
0.33 0.06 1.63 
1.22 
0.34 0.06 1.65 
1.23 
0.35 0.06 1.70 
1.27 
0.36 0.07 
11. Real Estate, Renting & Business Activity  8.88 8.72 8.63 8.48 8.30 8.14 
12. Public Administration and De fense  2.55 2.56 2.60 2.60 2.63 2.76 
13. Education 2.20 2.24 2.31 2.36 2.40 2.46 
14. Health and Social Services 2.20 2.19 2.21 2.21 2.22 2.25 
15. Community, Social and Personal Services 8.13 7.97 7.87 7.72 7.59 7.52 
GDP 100.00 100.00 100.00 100.00 100.00 100.00 
Source:  Bangladesh Bureau of Statistics (BBS).  
Table 6:  The trend of structural transf ormation of broad sectoral share in GDP and growth rate at constant prices  
(Base year: 1995-96) Share (in percent) 
Sector  1979-80 1984-85 1989-90 1994-95 1999-00 2004-05 
Agriculture 33.21 31.46 29.52 26.02 25.58 21.91 
Industry 17.08 18.70 20.78 24.28 25.70 28.44 
Service 49.72 49.84 49.70 48.70 48.72 49.65 
Total 100.00 100.00 100.00 100.00 100.00 100.00 Bangladesh WT/TPR/G/168 
 Page 11 
 
 
Table 7:  Average growth rate of Sectors (in percent) 
Sector FY 81-04 FY 81-85 FY 86-90 FY 91-95 FY 96-00 FY 01-05 
Agriculture 2.77 2.68 2.40 1.55 4.88 2.13 
Industry 6.51 5.70 5.86 7.47 6.44 7.48 
Service 4.33 3.83 3.58 4.15 4.81 5.73 
Total GDP 4.41 3.72 3.74 4.39 5.21 5.32 
Per capita GDP 2.54 1.54 1.50 2.36 3.83 3.91 
Source:  Bangladesh Bureau of Statistics (BBS). 
III:1 Labour Force and Employment 
11. It has been observed that the Bangladesh ec onomy has been gradually transforming from 
traditional agricultural sector to the industrial and service sector, but agricu lture still remains as the 
major source of services. The agriculture sector it self employs more than 51.69 percent of the total 
force, while 34.75 percent of our population is involved in the service sector, particularly in the hotel, 
tourism, construction, public admi nistration, defense, industries, transport sector etc. According to 
Bangladesh Labour Force Survey 2002-03 conduc ted by BBS, a total of 44.3 million (male 
34.5 million and female 9.8 million) is enga ged in a variety of professions. Among these, 
44.70 percent is engaged in self-employment, 20.09  percent as daily labourers and 13.77 percent in 
full-time employment.  
12. The share of employed labour force (above 15 years) by different sectors of the economy 
according to Labour Force Survey 1995-96, 1999-00 and 2002-03 is shown in Table 8. 
Table 8:  Share of Employed Labour Force 
(Above 15 years) by Sector 
Sector 1995-96 1999-00 2002-03 
Agriculture, forestry and fishery 48.85 50.77 51.69 
Mining & quarrying - 0.51 0.23 
Manufacturing 10.06 9.49 9.71 
Power, gas & water 0.29 0.26 0.23 
Construction 2.87 2.82 3.39 
Trade, hotel & restaurant 17.24 15.64 15.34 
Transport, maintenance & communication 6.32 6.41 6.77 
Finance, business & services 0.57 1.03 0.68 
Commodities & personal services  13.79 13.08 5.64 
Public administration and defence - - 6.32 
Total 100.00 100.00 100.00 
Source: Labour Force Survey, 1995-96, 1999-00 & 2002-03 BBS. WT/TPR/G/168 Trade Policy Review 
Page 12 
 
 
Service
34.75%
Industry
13.56%Graph 1:
Share of Employed Labour Force by broad sector in Bangladesh  Labour Force Survey, 2002-03
Agriculture
51.69%
 
III:2 Private Investment and Foreign Direct Investment (FDI) 
13. Bangladesh has shown an impressive growth of both local and foreign investment in recent 
years. The country intended to host private investment of any intensity both from local and foreign sources. Gradually, it is transforming towards a more  competitive destination for FDI (Foreign Direct 
Investment). “The 15
th Survey of Investment-Related Cost Comparison in Major Cities and Regions 
in Asia” conducted by the Japan External Trade Organization (JETRO) in March 2005 found that “the 
investment cost in Bangladesh has become che aper compared to the last year and Bangladesh 
succeeded to develop herself as mo re competitive than other countries which are potential from the 
investment point of view to foreign investors”.  During FY2004-05, private investment registration at 
Board of Investment (BOI) grew by 16 percent. Simultaneously, actual FDI inflow into the country 
during Financial Year 2004 grew to US$ 660.8 milli on implying 49.7 percent growth over 2003. The 
import of capital machinery during the period from FY 2001-02 to FY2004-05 (Jul-Feb) stood at Tk. 
199.80 billion, which is 119 percent higher than th e aggregate of preceding five years. During 
FY2004 capital machinery grew at an accelerated ra te of 62 percent. The manufacturing GDP growth 
is expected to reach 8.43 percent this year (2 006). Owing to an impressive manufacturing growth, 
huge employment opportunities have been created across the various regions of the country.  
600.0
328.3441.4652.5
4001000
800
2002 2003 2004 2005 2006Graph 2:
Actual FDI Inflow in Bangladesh during 2002 to 2004
Source:  Provisional Results of 4th FDI Inflow Survey by BEPZA and Board of Investment (BOI).Note 1:  FDI Target was set since 2003.
 Bangladesh WT/TPR/G/168 
 Page 13 
 
 
III:3 Actual Local Investment 
14. Local investment projects are the principal co mponent (80%-85%) in the total investment 
basket of Bangladesh. Sample surveys of the BOI show s that about 85 percent of the registered local 
projects are either implemented or at the differe nt stages of implementation. Local investment 
proposals registered with BOI during FY2004-05 grew by 3.4 percent. In this period, 1,469 projects 
were registered with the total investment commit ment equivalent to US$ 2,319 million. The sectoral 
analysis of the registered projects shows dominati on of manufacturing sectors like textiles, agro-based 
food & allied products, glass and ceramics, chemical a nd engineering. Sectoral detail is presented in 
the following graph 3: 
Agro-based
5.94%
Food & Allied
5.80%
Textile
45.66%Printing & Pub.
0.87%Tannery & Leather
0.64%Chemical
10.92%Services
23.66%
Misc/NEC
0.11%
Glass & Ceramic
0.50%Engineering
5.91%Graph 3:
Sectoral Distribution of the Lo cal Investment Projects* Regist ered with BOI during FY 2004-05
*  Provisional Results.  Source: Board of Investment, July 2005.
 
III:4 Private Investment Registration 
15. Registration is the initial commitment of inv estment, which is implemented after conducting 
the detail feasibility studies. The time-series data of projects registered with BOI since FY 1991-92 
shows that the total private investment register ed in FY 1991-92 amounted to US$ 116 million, which 
has grown to US$ 3,204 million in the first nine months of FY2004-05.  
Table 9:  Distribution of Private In vestment Projects (Local & Foreign) 
Registered with BOI from FY 1991-92 to FY 2004-05. 
Fiscal Year Local Investment in 
Million US$ Foreign Investment in 
Million US$ Total in Million US$ Growth 
1991- 92 91 25 116 - 
1992- 93  90 53 143 23 
1993-94 457 804 1,261 782 
1994-95 846 730 1,576 25 
1995-96 1,171 1,516 2,687 70 
1996- 97 1,108 1,054 2,162 -20 
1997- 98  1,137 3,440 4,577 112 
1998-99 1,183 1,926 3,109 -32 
1999-2000 1,324 2,119 3,443 11 
2000-01 1,420 1,271 2,691 -22 
Table 9 (cont'd) WT/TPR/G/168 Trade Policy Review 
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Fiscal Year Local Investment in 
Million US$ Foreign Investment in 
Million US$ Total in Million US$ Growth 
2001-02 1,531 302 1,833 -32 
2002-03 2,027 368 2,395 31 
2003-2004 2,313 458 2,771 16 
2004-2005*  2,319 885 3,204 16 
* Provisional Data. 
Source:  IIMC, Board of Investment, July 2005.  
III:5 Foreign Investment Projected:  Registration Statistics  
16. Registration of foreign investment projects (100%  foreign and joint venture) grew by 92.39 
percent during FY 2004-05. Total re gistration in this period stood at  US$ 885 million in 120 projects. 
Analysis shows that services, te xtile, agro-based, chemical and engi neering are the leading sectors of 
investment. However, service sector  is the principal constituent (77% ) which includes telecom, power 
generation, oil and gas, hospitalities etc. (Graph 4). 
Agro-based
3.20%
Food & Allied
1.08%
Textile
8.96%Services
74.84%Misc/NEC
0.08%
Glass & Ceramic
0.81%
Engineering
8.81%Printing & Pub.
0.19%
Tannery & Rubber
0.41%
Chemical
1.61%Graph 4:
Sectoral Distribution of the Fo reign Investment Projects* Regist ered with BOI during FY 2004-05
*  Provisional Results.  Source: Board of Investment, July 2005.
 
III.6 Agriculture Sector 
17. Although agriculture has been playing a vital role in sustainable development of economy, 
ensuring food security and alleviation of poverty,  the dominance of agriculture in the country’s 
economic activities is being decreased gradually. Th e combined contribution of all sub-sectors of 
agriculture (crop, livestock, forestry and fisher ies) to GDP came down from 25.58% in 1999-2000 to 
21.91 percent in 2004-05. However, judging from its contribution in the country’s total employment, 
which accounts for about 51.7% of the total employ ment, dominating role of agriculture is still 
prevalent in the country’s economic activities. Given the country's high incidence of poverty, its dense 
population, and its vulnerability to natural disaster s, including periodic flooding and cyclones, food 
security is a major policy objective of the Government.  
 Bangladesh WT/TPR/G/168 
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Table 10:  Growth Rate of Agriculture and its Sub-sectors including Fisheries  
(Base year 1995-96) 
(In percent) 
Sector/Sub-sector 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 
(prov.) 
GDP growth rate 4.93 4.62 5.39 5.23 4.87 5.94 5.27 4.42 5.26 6.27 5.38 
1. Agriculture -1.9 2.0 5.6 1.6 3.2 6.9 5.5 -0.6 3.29 4.38 -0.73 
a. Crop -3.4 1.7 6.4 1.1 3.1 8.1 6.2 -2.4 2.88 4.27 -3.30 
b. Livestock 2.5 2.5 2.6 2.6 2.7 2.7 2.8 4.7 4.51 4.98 7.82 
c. Forestry 2.8 3.5 4.0 4.5 5.2 4.9 4.9 4.9 4.43 4.18 4.25 
2. Fishery 6.8 7.4 7.6 9.0 10.0 8.9 -4.5 2.2 2.3 3.09 4.02 
Source:  Bangladesh Bureau of Statistics. 
III:7 Industrial Sector 
18. Over the years, the contribution of the industry sector is gradually increasing. Presently, the 
contribution of the manufacturing sector to GDP is 16.58 percent, which is 0.42 percent higher than 
that of the previous year. The manufacturing sector also shows a remarkable growth for the last six 
years (Table 11), which in turn has accelerated the overall economic growth and development of the 
country. This growth is mainly attributed by the RMG (Ready-made Garments) sector. Privatization 
initiatives, setting up of industrial and Special Economic Zones, facilitating SMEs (small scale 
enterprises), moderanization of custom procedures have  all contributed to the growth of the industrial 
sector including the SMEs and ICT (information communication technology) sectors.  
Table 11:  Contribution of Manufactu ring Sector in GDP and Growth Ra te (at constant prices of 1995-96) 
(Tk. in crore) 
Type 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 
(Provisional) 
Small & Cottage 8184.9 
(0.75) 8659.3 
(5.8) 9267.4
(6.6) 10699.6
(7.2) 10780.0
(8.0) 11496.0 
(7.45) 12405.9
(7.91) 
Medium-Large 20803.3 
(4.2) 21708.6 
(4.4) 23130.2
(7.0) 24194.1
(4.6) 25780.8
(6.6) 27572.03 
(6.95) 29956.8
(8.65) 
Total 28988.2 
(3.2) 30367.9 
(4.8) 32397.6
(6.7) 34174.2
(5.5) 36480.8
(6.8) 39068.8 
(7.1) 42362.7
(8.43) 
Note: Figures in parentheses indicate rate of growth.  
Source: Bangladesh Bureau of Statistics.  
19. The present industrial policy aimed to increase the contribution of the industrial sector to 
30-35% of GDP and absorb 35 percent of the labour force through strengthening agro-based and 
agricultural product processing industry, together with  steps to face the challenges of globalization. 
To boost up industrial investment the nationalized co mmercial banks have reduced the rate of interest 
from 10.00-12.50 percent to 9 percent in the thrust industrial sectors, such as textile industry (including readymade garments), agro-based indus tries, computer software and information 
technology, production of artificial flowers, froze n food, (including frozen poultry and meat), gift 
items, 100 percent export oriented finished leat her goods and jute goods, jewellery, diamond cutting 
and polishing, oil and gas, cocoon cu ltivation and sericulture and stuffed toys. The rate of interest has 
been reduced from 8-10 percent to 7 percent for pre-shipment and packaging credit for export of 
RMG, frozen food and agricultural commodities. Besi des, bank rate has been reduced from 7 percent 
to 5 percent to induce reduction of interest rate of bank loans.  WT/TPR/G/168 Trade Policy Review 
Page 16 
 
 
III:8 Service Sector 
20. By now, service sector has become the largest contributor to the GDP in Bangladesh.  Its 
share in GDP stood at 49.65% in FY 2004-05 . Wholesale and retail trade constituted 14.12%, 
transport, storage and communication contributed 10.01%, real estate, renting and other business 
activities accounted for 8.14%, community, persona l and social services accounted for 7.52%. 
However, its share in country’s total employment  was only 34.75% in 2004-05, which suggests that 
the sector's labour productivity is considerably hi gher than the national average. During the Uruguay 
Round, Bangladesh had undertaken commitments in one sub-sector covering five star hotels and 
lodging services under tourism sector. Later in  1998, it also undertook commitment in 
telecommunication under communication services. Bangl adesh has also opted for MFN exemption in 
telecommunication sector. In five star hotels and lodging services, Bangladesh undertook commitment to allow 100% foreign investment.  However, empl oyment of foreign nationals in these hotels are 
limited to higher management and specialized j obs and is subjected to domestic Bangladesh's 
immigration and labour laws, regula tions, guidelines and procedures. Bangladesh also allows foreign 
investment in telecommunication, power sector, insu rance, banking, education and health sector. But 
these are not included in its schedule of commitments.  
21. Foreign employment and workers' remittances contribute significantly to the economic 
development of the country through reduction of unemployment and augmenting foreign exchange 
reserves and income. It may be noted that in FY 2004-05, the remittances from expatriate Bangladeshi 
workers as percent of GDP and commodity export stood about 6.43 percent and 44.47 percent 
respectively. A sizable portion of labour force of the country is employed in different countries of the 
world including Middle East. In order to increase workers' remittances, the government expanded the 
existing facilities for sending remittances through banking channel by providing various incentives 
and implementing of Money Laundering Prevention Act as well. This has increased the remittance 
flow remarkably (Table 12).  
Table 12:  Number of Expatriate Bangladeshis and their Remittances 
Amount of remittance 
Fiscal Year No of employment 
abroad ('000) Million US$ Percentage change 
(%) Crore Tk. Percentage change 
(%) 
1991-92 185 848.00 10.99 3241.5 18.93 
1992-93 238 944.00 11.32 3698.4 14.10 
1993-94 192 1088.80 15.34 4354.8 17.75 
1994-95 200 1197.63 10.00 4814.3 10.55 
1995-96 181 1217.06 1.62 4977.8 3.40 
1996-97 228 1475.40 21.23 6304.3 26.65 
1997-98 243 1525.42 3.39 6951.2 10.26 
1998-99 270 1705.74 11.82 8213.0 18.15 
1999-00 248 1949.32 14.28 9825.4 19.63 
2000-01 213 1882.10 -3.45 10266.0 4.48 
2001-02 195 2501.13 32.89 14377.0 40.08 
2002-03 251 3061.97 22.42 17728.8 23.31 
2003-04 277 3371.97 10.12 19842.0 11.92 
2004-05 250 3848.29 14.13 23694.06 19.41 
Source: Bureau of Manpower, Employment  & Training and Bangladesh Bank. Bangladesh WT/TPR/G/168 
 Page 17 
 
 
22. In FY 1998-99 remittances as percent of GDP and commodity export stood at 3.74 percent 
and 32.04 percent respectively which increased to 6.43 percent and 44.47 percent respectively in FY 2004-05. Individually the position of USA is just  behind Saudi Arabia ove r the last few years. 
Country-wise remittances of expatriate Bangladeshi workers over the last ten years are shown in 
Table 13. 
Table 13:  Country wise Remittances 
(in million US$) 
FY Saudi 
Arabia United 
Arab 
Emirate Qatar Oman Bahrain Kuwait USA UK Malaysia Singapore Others Total 
1994-95 476.87 81.34 72.18 81.27 33.71 174.72 102.23 47.02 50.02 3.03 75.24 1197.63 
1995-96 498.20 83.70 53.28 81.71 30.08 174.27 115.36 41.28 74.43 3.99 60.76 1217.06 
1996-97 587.15 89.64 53.16 94.45 31.52 211.49 157.39 56.20 94.51 6.66 93.23 1475.40 
1997-98 589.29 106.86 57.81 87.61 32.42 213.15 203.13 65.80 78.09 7.69 83.57 1525.42 
1998-99 685.49 125.34 63.94 91.93 38.94 230.22 239.43 54.04 67.52 13.07 95.82 1705.74 
1999-00 916.01 129.86 63.73 93.01 41.80 245.01 241.30 71.79 54.04 11.63 81.14 1949.32 
2000-01 919.61 144.28 63.44 83.66 44.05 247.39 225.62 55.70 30.60 7.84 59.91 1882.10 
2001-02 1147.95 233.49 90.60 103.27 54.12 285.75 356.24 103.31 46.85 14.26 65.29 2501.13 
2002-03 1254.31 327.40 113.55 114.06 63.72 338.59 458.05 220.22 41.40 31.06 99.61 3061.97 
2003-04 1386.03 373.46 113.64 118.53 61.11 361.24 467.81 297.54 37.06 32.37 123.18 3371.97 
2004-05 1510.45 442.24 136.41 131.32 67.18 406.80 557.31 375.77 25.51 47.69 147.60 3848.29 
Source:  Bangladesh Bank. 
23. It would be observed from the table that dur ing 1976 to June, 2005 about half  of total 
expatriate workers were unskilled. There is, however, a significant number of professionals and 
skilled labourers working abroad. In 2001, of the to tal expatriate labour for ce, 42.54 percent were 
engaged as professionals and skilled & semi-skille d workers. This rose to 47.06 percent and 
46.00 percent in 2003 and 2004 respectively. The pi e chart shows that the shares of professional, 
skilled, semi-skilled and unskilled labourers in the total expatriate workforce were 7 percent, 
30 percent, 9 percent and 54 percent respectively in 2003. The number of expatriate Bangladeshis 
classified by skill is shown in Table 14. 
Unskilled
54%
Semi-skilled
9%Graph 5:
Number of Expatriates Classified by Skill
Skilled
30%Professional
7%
 
 
 WT/TPR/G/168 Trade Policy Review 
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Table 14:  Number of Expatriates Classified by Skill 
Calendar Year Professional Skilled Semi-skilled Unskilled Total 
1990 6004 35613 20792 41405 103814 
1991 9024 46887 32605 58615 147131 
1992 11375 50689 30977 95083 188124 
1993 11112 71662 66168 95566 244508 
1994 8390 61040 46519 70377 186326 
1995 6352 59907 32055 89229 187543 
1996 3188 64301 34689 109536 211714 
1997 3797 65211 193558 118511 381077 
1998 9574 74718 51590 131785 267667 
1999 8045 98449 44947 116741 268182 
2000 10669 99606 26461 85950 222686 
2001 6940 42742 30702 109581 188965 
2002 14450 56265 36025 118516 225256 
2003 15862 74530 29236 136562 254190 
2004 19107 81887 24566 147398 272958 
2005 (Up to June) 3161 49766 12073 49519 114519 
Source: Bureau of Manpower, Employment and Training.  
Table 15:  Number of Expatria te Bangladeshis by Country 
Calendar Year Saudi 
Arabia Kuwait UAE Bahrain Oman Malaysia Singapore Others Total 
1990 57486 5957 8303 4563 13980 1385 776 11364 103814 
1991 75656 28574 8583 3480 23087 1628 642 5481 147131 
1992 93132 34377 12975 5804 25825 10537 313 5161 188124 
1993 106387 26407 15810 5396 15866 67938 1739 4965 244508 
1994 91385 14912 15051 4233 6470 47826 391 6058 186326 
1995 84009 17492 14686 3004 20949 35174 3762 8467 187543 
1996 72734 21042 23812 3759 8691 66631 5304 9741 211714 
1997 106534 21126 54719 5010 5985 152844 27401 7458 381077 
1998 158715 25444 38796 7014 4779 551 21728 10640 267667 
1999 185739 22400 32344 4639 4045 - 9596 9419 268182 
2000 144618 594 34034 4637 5258 17237 11095 5213 222686 
2001 137248 5341 16252 4371 4561 4921 9615 6656 188965 
2002 163254 15767 25438 5370 3927 85 6870 4545 225256 
2003 162131 26722 37346 7482 4029 28 5304 11148 254190 
2004 139031 41108 47012 9194 4435 224 6948 25006 272958 
2005 (Up to June) 42120 20851 27616 4910 2341 157 4269 12255 114519 
Source:  Bureau of Manpower, Employment and Training. 
III:9 Fiscal Policy and Fiscal Management 
24. During the last five years Government expe nditure continued to increase, while revenue 
collection increased at faster rate due to the g overnment’s effort at extending and tightening the 
income tax and VAT net . As a result, budget deficit has declined in terms of share in GDP. Presently, 
tax revenue accounts for 80 percent of total Govern ment revenue (Table 16). Government has been Bangladesh WT/TPR/G/168 
 Page 19 
 
 
actively modernizing the tax administration to impr ove its efficiency and rationalize the direct and 
indirect taxes.  
Table 16:  Revenue Receipts 
Particulars 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05
Total Revenue 15008 15333 17385 19020 19767 20074 24342 27893 31120 35400 39200 
Tax Revenue 12054 12124 14261 15390 16167 16079 19778 21332 24950 28300 31950 
Non-tax Revenue 2954 3209 3124 3630 3600 3995 4564 6561 6170 7100 7250 
 As percentage of Gross Domestic Products (GDP)  
Total Revenue 9.84 9.22 9.62 9.5 9.0 8.47 9.6 10.21 10.35 10.63 10.64 
Tax Revenue 7.9 7.29 7.89 7.69 7.36 6.78 7.8 7.81 8.30 8.5 8.67 
Non-tax Revenue 1.94 1.93 1.73 1.81 1.64 1.69 1.8 2.4 2.05 2.13 1.97 
Source:  Finance Division, Nati onal Board of Revenue and BBS. Figures are based on revised budget. 
III:10 Advanced Value Added Tax (ATV) 
25. Advanced Value Added Tax (ATV) has been in troduced since 1 September 2004. The rate of 
ATV is 1.5%. This tax is calculated assuming a minimum 10% value addition at the wholesale to retail level. This VAT shoul d ideally be collected after the sale is made. Due to limited capacity of the 
tax administration in collecting VAT on imported items fo r trade at retail level, the tax is collected at 
import stage. 
III:11  External Sector:  Trade Liberalization 
26. Bangladesh has been pursuing a liberal trade policy since 1990. Massive trade liberalisation 
and reform programmes have been implemented in trade areas during this period. Reforms have been 
initiated to dismantle both tariff and non-tariff barri ers. Steps towards trade liberalisation include a 
moderate protective policy only in consideration of certain sensitive areas like public health, security 
and religious bindings. Simultaneously, more liber al import and export policies and programmes have 
been adopted including reduction in tariff slabs. Bangladesh pursued one-year export and import policies in the first half of eighties, two-year polici es in the second half of eighties and the first half of 
nineties. Since then, five-year export and im port policies (1997-2002) were formulated and 
implemented. After the termination of tenure of these time bound policies, the government has 
announced three-year export and import policies (2 003-2006). These policies are consistent with the 
principles of market economy on one hand and mainta ining favourable balanc e between exports and 
imports of the country on the other. The prime objectives of the trade policy of Bangladesh are to 
strengthen the economy of the country while sustai ning the shocks of rapid changes in global trade 
regimes, trade liberalisation and export-based development strategy.  
III:12 Import Policy and Programme 
27. The Import Policy (2003-2006) has been adopted  to face the emerging challenges arising 
from rapid changes and expansion of world trade and free access of commod ities in accord with WTO 
rules. The import policy has been made consiste nt with the industrial policy. As a result, 
administrative complexities for obtaining prior ap proval from different ministries for establishing 
industries, have largely been reduced. In the im port policy, quality control mechanism of imported 
goods has also been strengthened. Restrictions on import of commodities have been gradually 
withdrawn. With a view to promoting and accelerating export, liberalised import facilities for the export-oriented industries have been in place.  WT/TPR/G/168 Trade Policy Review 
Page 20 
 
 
28. Phenomenal changes and amendments have b een incorporated in the Import Policy to 
promote foreign investment, ensure availability of quality goods to the consumers at reasonable 
prices, develop human resources and create employment opportunities. 
29. Under the import policy, expatriate Banglad eshis can import capital machinery and raw 
materials in any quantity, while the foreign investor s, as part of their equity share, can import the 
same on cost, insurance and freight (c.i.f.) basis.  Raw materials import has been made easier for 
100 percent export-oriented industries.    
III:13 Simplification of Tariff Regime 
30. The applied MFN tariff (i.e. general exemption rate) of 2005/06 contains four tariff bands 
(zero, 6% (basic raw materials), 13% (intermediate goods), 25% (finished goods)) as compared to 
five tariff bands (zero, 5%, 15%, 25%, 37.5%) in 1999/2000.   
III:14 Tariff Reduction 
31. The unweighted average rate of protection w as 47.4 percent in 1992-93, which was reduced 
to 13.54 percent in 2004-05. The weighted averag e rate of protection was 23.06 percent in 1992-93, 
which was reduced to 9.59 percent in 2004-05. The un-weighted and weighted rates of customs duty 
have been presented in Table 17 and 18, respectively. 
Table 17:  Impact of Tariff Reforms on Average Rate of Customs Duty 
Financial Year Un-weighted Average (%) Import Weighted Average (%) 
1992-93 
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 
2004-05  47.4 
36.0 25.9 22.3 21.5 20.7 20.3 19.5 18.6 
17.13 16.51 15.62 
13.54  23.6 
24.1 20.8 17.0 18.0 16.0 14.1 13.8 15.1 9.73 
12.45 11.48 
9.59 
Source:  National Board of Revenue. 
Table 18:  Impact of Tariff Reforms on Average Rate of Custom Duty by Type of Commodities. 
Financial year 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 
Classification UW 
AV W. 
AV UW 
AV W. 
AV UW 
AV W. 
AV UW 
AV W. 
AV UW 
AV W. 
AV UW 
AV W. 
AV 
Primary goods Intermediate goods Capital goods Final consumer goods 15.6 
17.1 16.1 31.0 13.6 
15.1 
9.9 
16.5 15.7 
17.7 11.3 29.6 14.9 
15.0 10.4 20.3 20.10 
15.61 
6.97 
26.00 9.43 
16.18 
3.26 
13.96 20.98 
14.89 
8.03 
22.94 11.92 
15.86 
7.97 
11.72 19.90 
14.44 
7.85 
21.27 11.28 
15.12 
6.42 
10.68 17.61 
12.46 
7.28 
18.22 8.99 
12.72 
5.22 
15.08 
Source:  National Board of Revenue. Bangladesh WT/TPR/G/168 
 Page 21 
 
 
III:15 Trade Openness 
32. It appears from a comparison between fiscal year 1993-94 and 2004-05 that Bangladesh’s 
trade openness gradually incr eased during this period. 
III:16 Export growth  
33. Bangladesh experienced an impressive export growth during the 80s and 90s of the last 
century. During the last three decades, yearly expor t growth has reached double digit, which is rather 
impressive for a least developed country. This robust  growth of export is attributed to continuous 
trade liberalization programme, structural reforms, privatization etc.  
34. The export earnings in FY 2004-05 stood at 8, 654.82 million US$ which was 13.83 percent 
higher than the previous year. Analysis of compos ition of exports by major categories reveals that 
export earnings increased compared to the same peri od of previous fiscal year in respect of woven 
garments (1.70%), knitwear (31.26%), agricultu ral products (100.61%), fertilizer and chemical 
products (62.34%), frozen food (7.81%), raw jute ( 20.69%), jute goods (24.76%), tea (0.19%), leather 
(4.50%) ceramic products (19.44%), engineering pr oducts (103.06%) and footwear (28.18%) etc. On 
the other hand, export earnings decreased only for pe troleum by products (5.24%) etc. Table 19 shows 
the export growth in Bangladesh.  
Table 19:  Export Target  and Achievements from 2001-02 to 2005-06 (million US$) 
Year Export target Export  Earnings Target Realized  (%) Growth over previous 
year (%) 
2001-02 5,950.02 5,986.09 100.60 -7.44 
2002-03 6,405.00 6,548.44 102.20 9.31 
2003-04 7439.00 7,602.99 101.04 16.10 
2004-05 8,565.78 8,654.52 101.02 13.83 
2005-06  
(up to February, 2006) 10,159.20 
(6,504.93) 6,624.21 101.83 17.91 
Source:  Export Promotion Bureau (EPB). 
III:17 Import Growth 
35. The country’s import continued to increase in ta ndem with export (Table 21). Despite the 
widening of trade deficit, country’s balance of payment situation improved gradually since 2001-02 
mainly because of increased workers’ remittanc e from abroad. During the FY 2000-01 Bangladesh 
faced the worst balance of payment situation due to  increase in trade deficit and decrease in worker 
remittance, largely attributed to economic slow dow n all over the world. Bangladesh’s external trade 
remains vulnerable to natural disaster and ex ternal factors. During FY 2004-05, Bangladesh 
experienced countrywide flood twice in succession,  which has adversely affected all economic 
activities country-wide including agriculture.   
Table 20:  Comparative Statement of Import Figures in Different Sector  
(crore. Tk.) 
Sector 2003-04 2004-05 Change (%) 
1. Industrial Sector    
A. Industrial raw material 18,878.81 21,687.82 (+) 41.88 
B. Capital Machinery 4,688.10 6,673.55 (+) 42.35 
Table 20 (cont'd)  WT/TPR/G/168 Trade Policy Review 
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Sector 2003-04 2004-05 Change (%) 
2. Commercial Sector    
A. Essential Commoditie s 4,671.80 7,839. 66 (+) 67.81 
B. Other Commodities 15, 854.95 18,324.00 (+) 15.57 
3. POL Sector 5,966.39 9,665.81 (+) 62.00 
4. Bonded Ware House 13,605.18 13,588.68 (-) 0.12 
Total 63,665.23 77,779.52 (+) 22.17 
Source:  Import Wing of the Ministry of Commerce. 
Table 21:  Year-wise Import in Bangladesh 
(crore Taka) 
Sl.  Year Import Expenditure Changes from the previous year 
(%) 
1. 1999-2000 42,277.49 - 
2. 2000-2001 46,525.73 (+) 10.50 
3. 2001-2002 46,524.82 (-) 0.01 
4. 2002-2003 53,750.90 (+) 15.53 
5. 2003-2004 63,665.23 (+) 18.44 
6. 2004-2005 77,779.52 (+) 22.17 
Source: Import Wing of the Ministry of Commerce.  
IV. REGIONAL TRADE AGREEMENTS (RTAs) 
36. Bangladesh has signed a number of RTAs namely: 
IV.1 The Agreement on South Asian Free Trade Area (SAFTA) 
37. The Agreement on South Asian Free Trade Ar ea (SAFTA) has come into force from 01 
January, 2006. The member countries are Bangladesh,  Bhutan, India, Pakistan, Maldives, Nepal and 
Sri-Lanka. Under SAFTA, tariff reduction will st art from 01 July, 2006. The sensitive list of 
Bangladesh includes 1,254 items for non-LDCs and 1,249 items for LDCs. 
IV:2 The Bay of Bengal Initiative for Multi- Sectoral Technical and Economic Cooperation 
(BIMSTEC) FTA  
38. The framework agreement on FTA was conc luded in 2004. Member countries are 
Bangladesh, India, Myanmar, Sri Lanka, Thailand, Ne pal and Bhutan. This Agreement covers trade in 
goods, services and investment. It covers trade in  goods, services and investment. The LDCs under 
the BIMSTEC are eligible to derogatio n so that their products of export interest are not included in the 
negative list of non-LDC developing members. Nego tiation on trade in services and investment are 
expected to be completed by 2007.  
IV:3 Asia Pacific Trade Agreement (APTA) 
39. The Bangkok Agreement concluded in 1975, has r ecently been revised and renamed as Asia 
Pacific Trade Agreement (APTA). The member coun tries are Bangladesh, India, Sri Lanka, China, 
the Republic of Korea and Lao People’s Democrat ic Republic. Under this agreement, China has 
provided 100% tariff concessions to 83 items of Ba ngladesh at 8-digit level and Republic of Korea Bangladesh WT/TPR/G/168 
 Page 23 
 
 
has provided 100% tariff concessions to 139 items at 10-digit level. The APTA will come into force 
from 1 July 2006.  
IV:4 D-8 Preferential Trade Agreement 
40. Preferential Trade Agreement among the eight developing muslim countries (popularly 
known as D-8), was established in 1997 with eight  countries namely Bangladesh, Egypt, Iran, 
Indonesia, Malaysia, Nigeria, Pakistan and Turk ey. The group was formed to accelerate economic 
growth and development among member countries through enhanced co-operation. A framework 
agreement on trade preferential system among the members of D-8 countries was signed in 1997. Negotiation has been completed for signi ng the preferential trade agreement.  
IV:5 Trade Preferential System Among The Organization of Islamic Conference (TPS-OIC) 
41. Framework Agreement on Trade Preferential Sy stem among the members of OIC (TPS-OIC) 
was agreed in 1991. Only 23 out of 57 members of  OIC signed the Agreement. As of January 2004, 
14 countries including Bangladesh have signed th e Framework Agreement. Bangladesh signed the 
Agreement in 1997 and ratified it in January 2004. It  was decided that tariff would be reduced to 
agreed slabs (25%, 15% and 10%) in four installmen ts by developing countries and six installments 
by LDCs. Moreover, LDCs would be given three- year grace period to implement tariff reduction.  
V. BANGLADESH IN WTO NEGOTIATIONS 
42. Over the past four decades, the number of LDCs  have increased, but their share in the world 
export has declined over the past 20 years and hit the rock bottom of a mere 0.4% in nineties and increased slightly to 0.6 per cent at the beginning of  this millennium. This is an evidence of their 
failure to benefit from the leapfrogging growth of gl obal trade, which had taken place during the last 
four decades. Consistent with their sharply declini ng share in world trade, GDP growth in many LDCs 
slackened in the post –Uruguay Round period, and indeed several of these countries experienced 
economic regression. Fortunately, Bangladesh has b een an exception in this regard, posting an 
average annual growth of over 5 per cent during th e 1990s. But this impressive growth performance 
can hardly be ascribed to multilateral trade liberali zation, which has occurred under the aegis of the 
WTO. So a binding commitment on duty-free and quota-free market access for all products 
originating from the least developed countries on a secure, long-term and predictable basis with 
realistic, flexible and simplified rules of origin  to match the industrial capacity of LDCs like 
Bangladesh is extremely important to ensure th eir integration into multilateral trading system. 
43. The Hong Kong Ministerial Declaration includ ed a separate paragraph (Para-47) and an 
annex (Annex-F) to address the concerns of LDCs. This had laid the useful foundation for resolving 
the long standing duty-free and quota-free market a ccess for products of LDCs both in developed 
country markets as well as in the markets of deve loping countries declaring themselves in a position 
to do so. The export baskets of LDCs are extrem ely narrow and most of the LDCs depend on a few 
items for trade. It is apprehended that the ite ms of major export interest of LDCs including 
Bangladesh may be included in the 3% exclusion list of developed and de veloping countries. The 
duty-free and quota-free market access in the US and Japanese markets are extremely important for 
Bangladesh. About 76 percent of our export earnings  come from readymade garment/ apparels sector 
alone. During 2005, export from Bangladesh was US $ 8, 654.52.million of which textile and apparels 
export was US$ 6,417.67 million. A total of ap proximately 1.8 million employees are directly 
employed in this sector, of which more than 90 percent are female. It is also to be noted that the tariffs 
on apparels (like other industrial goods) are likel y to come down under the Non-Agricultural Market 
Access (NAMA) negotiations in the WTO, and c onsequently the preferential margins would be WT/TPR/G/168 Trade Policy Review 
Page 24 
 
 
eroded in the days to come. It is necessary to addr ess the loss of preference margin due to MFN tariff 
reduction by appropriate trade remedial measures. So , it is important that this duty-free and quota-free 
market access is accorded now. Moreover, existing GSP facilities must be continued. In addition, 
compensatory mechanisms have to be devised to he lp develop our export potentials. Rules of origin 
should also be simplified to ensure meaningful market access to the LDCs 
44. It is well recognized that with the gradual elimin ation of subsidies, price of food stuff will go 
up resulting in price spiral of food items of the LDCs . This may, in turn, negatively affect the least 
developed countries and net food importing countries in terms of availability of basic foodstuff at 
affordable price. Article 16 of th e Agreement on Agriculture states that “Developed country Members 
shall take such action as is provided for within the framework of the deci sion on measures concerning 
the possible negative affects of the reform programmes on least developed and net food importing 
developing countries” .  
45. Non-tariff barriers (NTBs) are often restricting the country’s ability to have meaningful and 
predictable market access. The facilities offered by  the developed countries under preferential tariff 
margin are often nullified by the application of NTBs. Bangladesh had already notified to WTO about 
the NTBs that it had faced in different markets. Thus, the NTBs faced by the LDCs should be dealt 
with separately, and on priority basis.  
46. The major objectives of LDCs in services negotiation are the liberalization of market access 
in sectors and modes of supply of export interest to LDCs, especially in Mode 4 of the General 
Agreement on Trade in Services (GATS) and flex ibility in undertaking commitments. Trade in 
services is an area where LDCs can contribute to, a nd benefit from, significantly. It will not only 
provide great returns to the LDC service provide rs under Mode 4, but the developed countries will 
also be able to overcome the increasing scarcity of less skilled persons that arises from population 
ageing and improvement of the overall levels of educa tion and training. In this context, it is therefore 
requested to implement the LDCs modalitie s as adopted by the WTO Members on 
03 September 2003. 
47. As regards trade facilitations, LDCs will only be  required to undertake commitments to the 
extent consistent with their individual needs a nd capabilities.  In addition, there is provision for 
technical assistance to LDCs to implement th e commitments resulting from the negotiations.  
However, in the case of non-availability of such assistance, LDCs will not be required to implement 
the commitments emanating from the negotiations. It  is to be ensured that these flexibilities are 
maintained in any final outcome of the negotiations.  
48. 'Aid for Trade' is important to address the supply-side constraints and also to meet SPS and 
TBT requirements. Bangladesh should be offered meaningful package under this programme to 
expand her export basket and undert ake trade facilitation measures. 
VI. CONCLUSION 
49. The developed world has been extremely help ful in Bangladesh’s effort to improve the 
quality of life of its people, by extending trade-relate d facilities and cooperation. It is expected that 
they will continue to do so in the days to come  to facilitate Bangladesh’s integration into the multi-
lateral trading system by meeting the challenges and reaping the benefits offered by the WTO. Bangladesh WT/TPR/G/168 
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ACRONYMS 
 
BBS  Bangladesh Bureau of Statistics 
BEPZA  Bangladesh Export Processing Zone Authority  
BIMSTEC  The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic 
Cooperation 
BOI  Board of Investment 
BOP  Balance of Payments 
c.i.f.  Cost, Insurance and Freight  FTA  Free Trade Area 
FY  Fiscal Year 
RMG  Readymade Garments  
SAARC  South Asian Association for Regional Cooperation 
SAFTA  South Asian Free Trade Area 
SAPTA  South Asian Preferential Trade Agreement 
VAT  Value Added Tax 
Exchange rate: 1 US dollar =Taka (           )   as on 30-04-2006 Bangladesh WT/TPR/G/168 
 Page 27 
 
 
ANNEX 
  
Annex Table 1:  Average Rates of Foreign Exchange with US Dollar 
FY Taka-Dollar average exchange rate 
1971-72 
1972-73 1973-74 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 7.3000 
7.8763 7.9664 8.8752 
15.0541 15.4260 15.1168 15.2231 15.4900 16.2586 20.0652 23.7953 24.9437 25.9634 29.8861 30.6294 31.2422 32.1399 32.9214 35.6752 38.1453 39.1395 40.0009 40.2005 40.8365 42.7008 45.4563 48.0644 50.3112 53.9592 57.4347 57.9000 58.9353 61.3939 
Source:  Statistics Departme nt, Bangladesh Bank. 
 
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