Intra-Trade on Jute of Two D-8 Countries: Bangladesh and Pakistan

Dhaka, Bangladesh | March 01, 2008 by D-8 Secretariat

Pakistan will increase its imports of jute from Bangladesh, a delegation of Pakistan Jute Mills Association (PJMA) said recently, as reported by Bangladeshi news source. The visiting six-member team of Pakistani business leaders led by PJMA president Abdul Khaliq was speaking at a press conference at Radisson Hotel in Dhaka city.

Bangladesh Jute Association (BJA) and PJMA jointly organised the press conference. Chairman of BJA Reazul Karim also spoke on the occasion.

Bangladesh at present exports about Tk 300 crore worth of raw jute a year to Pakistan. The country imported 20,000 metric tons of jute from Bangladesh last year. The trade volume between the two countries has been growing progressively from US$166.9 million in 2000-2001 to $320.2 million in 2006-07. Bangladesh’s trade gap with Pakistan was around Tk 342 crore in the last financial year as the country exported more than import.

Pakistani businessmen also expressed their interest to explore the vast potential of Bangladesh in various economic areas, including the jute sector and enter into joint ventures with their Bangladeshi counterparts.

PJMA Chairman Abdul Khaliq said the business leaders of the two countries, for the first time, jointly presented the hindrances to the raw jute trade to the Bangladesh government, as the quality of jute produced in Bangladesh was one of the best in the world.

He said the two trade bodies discussed ways to improve trade between the countries as well as sat with government agencies on the industry’s problems. Khaliq stressed the use of electronic equipment in measuring and maintaining the standards of raw jute, as practiced nowadays in the international arena.

“The bottleneck in the industry is shipping; only three vessels from Bangladesh have anchored at the Karachi port in the last three months,” he added.

Reazul Karim echoed him and added that for this reason about 30,000 tonnes of raw jute was lying with Bangladeshi exporters. He demanded that raw jute should be officially declared an agricultural product.

Agricultural exporters in Bangladesh enjoy some incentives as the government has declared it a thrust sector.

“At least one break-bulk vessel of the Bangladesh Shipping Corporation (BSC) should be allowed to used every month to regularise the exports out of Mongla port. Otherwise, both the countries would suffer a great loss,” the BJA chairman said.

He further said that the two trade bodies had met the BSC managing director and asked him to resolve the problems and that the BJA also demanded withdrawal of ‘flag protection’ clause.

Karim pointed out that the government did not identify raw jute as an agricultural product. So, the industry was being deprived of the subsidies and facilities. He urged the government to include raw jute under the category that would lead to increased export earnings from the sector.

Intra-trade between D-8 is among the most important sector that has been boosted through D-8 cooperation. The organization is scheduled to meet for the 9th HLTO (High Level Trade Official) in Islamabad, Pakistan, in March 27-28, 2008 to discuss the finalization of Rules of Origin (RoO). It is expected that this meeting will be the last round to discuss RoO, so that the PTA which has been signed by head of states in Bali, Indonesia, in May 2006 can be fully ratified. D-8 Secretary General, Dipo Alam, believes that once RoO is implemented and PTA is ratified, the intra-trade volume among D-8 countries will soar. It is expected that within 10 years of time, the total trade volume of D-8 shall increased from 750 billions US$ to nearly 1 trillion US$ — considering that the average growth of D-8 countries is above 5%. Thus, the intra-trade among D-8 can reach around 15-20%. This success will hopefully accelerate the growth of intra-trade among other member states of OIC (59 states), which in turn will be a propelling success to the increase of South-South trade, since the population of D-8 of more than 800 million peoples represent the majority of developing countries.

D-8 Organization is known to have close trade arrangements among her member states. Turkey, for example, has FTA with Egypt, Indonesia, Malaysia (through ASEAN FTA); and soon Indonesia will also have FTA with Pakistan.

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