The Hindu Business Line : Bangladesh calls for strategic tie-up in textile sector

BANGLADESH has called for a strategic alliance with India in the textiles sector post-MFA to combine the available synergies of the two countries for emerging as competitive entities in the global market.

Talking to newspersons here on Friday at the sidelines of an interactive session organised by the CII, Eastern Region, Mr Mahmudur Rahman, Executive Chairman, Board of Investment, Bangladesh, said Bangladesh with its strengths in the garments sector, and India with muscle in the primary textiles area should combine their might for mutual advantage in the new emerging world trading environment for textiles as on January 1, 2005, when the quota system would stand abolished.

He said joint ventures in the textile sector in Bangladesh would be beneficial to Indian parties, as Bangladesh in the post-MFA period would still enjoy the GSP benefit (as an LDC exporter), giving it a 12 per cent duty advantage.

Urging the Indian primary textile producers to set up 100 per cent foreign direct investment(FDI)-driven joint ventures in Bangladesh, he said Bengal was already gearing up to provide the backward linkages for the Bangladeshi garments sector.

Pointing out that Bangladesh had the most liberalised FDI among all countries in the sub-continent including India, he said FDI proposals are approved within 72 hours compared to the 35 days it takes in India.

Citing a recent Jetro (Japan External Trade Organisation) study on the investment profiles of several countries, which labelled Bangladesh, as the most cost competitive, Mr Rahman said the cost of doing business was the lowest in Bangladesh.

Inviting investments from Indian entrepreneurs for setting up manufacturing facilities in Dhaka, which was a cost-effective option, he named apparels and textile-related products as the fastest growing industrial sector in the country at an annual average growth of 16 per cent ($5.5 billion).

Mr Rahman also urged Indian entrepreneurs to make use of Bangladesh gas, in Bangladesh, for setting up power facilities. Responding to queries on current state policy with regard to export of Bangladesh gas, he said the priority was to generate greater employment for its people, especially by exporting the gas in a value-added form.

The best way to do this for a win-win situation for both would be for Indian companies to set up new industries in Bangladesh by utilising the gas, he added.

Mr Rahman, who reports directly to the Prime Minister of the country, who is the Chairperson of the BOI, however, conceded that export of gas was very much a political decision.

He also invited investments from Indian companies in the special economic zones (SEZs) of Bangladesh, which has six SEZs at the moment.

Describing his country as most investor-friendly, with 100 FDI permitted in all sectors, Mr Rahman said the power sector now enjoyed a 15-year tax holiday.

Asked where was India now in terms of current investments into Bangladesh, he said out of the total investments of $432 million during 2003, Indian investments were only around 5-6 per cent. "Under any case, not within the first 10 countries."

Earlier, in his address, Mr Touhid Hussain, Deputy High Commissioner, Bangladesh Deputy High Commission, Bangladesh, stirred up a hornet's nest by referring to the non-tariff and para-tariff barriers being imposed by India on Bangladeshi products, particularly automotive batteries, as major impediments to free flow of trade between the two neighbours.

Calling for improved testing and testing standards on the Indian side, he said a new regime of testing now coming up this would benefit both sides.

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