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Bangladesh''s ''cup of woes'' may not reduce post-MFA |
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2004-7-19
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The Balance of Payment (BoP) would be the first casualty with the elimination of textile quotas in 2005 for Bangladesh even as employment situation causes equal worries, according to an IMF working paper.
The Gross Domestic Product could shrink by 2.3 per cent and employment by 4.5 per cent, it says.
"The readymade garment (RMG) industry has been the main source of growth in exports and formal employment in Bangladesh, directly employing about 1.8 million people, or about 40 per cent of manufacturing employment, 90 per cent of them are women," the study, conducted by Montfort Milachila and Yongzheng Yang informs.
The overly dependent Bangladesh export market on the EU and US for its RMG exports has yet to demonstrate its abilities to penetrate in free markets.
"There is a high probablity that a loss in market share will occur after 2004. Fifty per cent of the US market and 35 per cent of the EU market could be lost to competition, leading to an overall loss of 35 per cent of RMG exports."
The report notes that there were opportunities for export diversification in long run, but supply constraints made it difficult to expand non-readymade garment exports in the short to medium term.
This World Bank-led study identified key structural constraints to investment in Bangladesh like defective and insufficient infrastructure, corruption leading to extortion and bribery, ranked by companies as a severe obstacle to business and high levels of non-performing loans which reduce the capacity of banks to lend at reasonable rates, especially to small and medium-sized enterprises. |
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