Press report on the dialogue “Aid for Trade: Second Generation Issues for Bangladesh,” at the BRAC Centre Inn Auditorium in Dhaka, on Thursday, 24 October 2013.
Published in The Daily Star Business
Aid for Trade: a letdown
A CPD study says the WTO scheme had little impact on Bangladesh’s exports
Star Business Report
Aid for Trade, an initiative of the World Trade Organisation to enhance developing countries’ capacity to trade, could not make any notable impact on Bangladesh due to erratic and low flow of funds, the Centre for Policy Dialogue said yesterday.
Launched in December 2005 at the Sixth WTO Ministerial Conference in Hong Kong, the initiative seeks to mobilise resources to address the range of supply-side and trade-related infrastructure obstacles that developing and least-developed countries face, which constrain their ability to engage in international trade.
The private think-tank, after examining the dataset from 2002 to 2011, came to the conclusion that Aid for Trade (AfT) had no impact at the macro level in Bangladesh.
Although exports have increased since the initiative took off, it is difficult to make any straightforward association between AfT disbursements and export performance in Bangladesh.
Rather, a combination of donor- and state-driven policy changes starting in the late 1980s was instrumental in creating a favourable business environment to boost exports, said Fahmida Khatun, research director of CPD.
Fahmida’s comments came at a dialogue on “Aid for Trade: second generation issues for Bangladesh”, co-organised by the CPD and Geneva-based International Centre for Trade and Sustainable Development, at the capital’s Brac Centre Inn.
Developed countries and donor agencies have disbursed only one-third of the funds they committed annually for the purpose of facilitating trade in the country, she said.
Between 2006 and 2011, Bangladesh received $391.74 million on average as aid for trade per year against the average annual commitment of $1047.99 million, the CPD study found.
“Competing priority of donors, reorientation of donors’ programmes and a lack of adequate demand for such projects from Bangladesh may have contributed to the lower flow of AfT,” Fahmida said.
A sectoral disaggregation of the disbursed AfT in Bangladesh reveals that though total volume of AfT is increasing, the yearly average growth rate during 2006-11 is negative (-28.68 percent) as opposed to 67 percent at the global level, she added.
“Aid for trade is completely a joke for Bangladesh as it does not have any effective impact on the economy,” said Md Mozibur Rahman, chief executive officer of Bangladesh Foreign Trade Institute.
He suggested some of the AfT funds be instead used for the workers’ safety and that the government make a separate AfT strategy to get more funds.
“The most important factor to facilitate trade is policy. Trade is a policy driven variable. If policies are efficient, it will respond accordingly,” said Sanjay Kathuria, World Bank’s lead economist for the South Asia region.
He said the country’s readymade garment industry has flourished due to the supportive trade policies of the government.
“Trade is very important for efficient job creation. For example, one RMG sector in Bangladesh has created over 3.5 million jobs,” he said.
Debapriya Bhattacharya, distinguished fellow of the CPD, said trade policy is a ‘means’ to facilitate export and import and that the country should make ‘strategic trade policy’ by focussing on export diversification and development of local industry.
He went on to call for inclusion of some AfT projects for development of social infrastructure. “Why will the aid for trade only be for the entrepreneurs? It should be for workers, too.”
Fazlul Haque, a former president of Bangladesh Knitwear Manufacturers and Exporters Association, too said that AfT has not brought any significant benefit in the last eight years for the RMG sector.
He urged the government to involve the private sector in AfT projects. “We are still in dark on AfT issue as the government does not communicate with us on it.”
Mustafizur Rahman, executive director of the CPD, chaired the discussion, and Toufiq Ali, former permanent representative of Bangladesh to the WTO and United Nations agencies in Geneva, also spoke.
Published in New Age
Aid for trade should be without condition for effectiveness
CPD, ICTSD discussion told
Staff Correspondent
Centre for Policy Dialogue executive director Mustafizur Rahman speaks at a discussion on aid for trade at the BRAC Centre Inn in Dhaka on Thursday. The CPD in association with the International Centre for Trade and Sustainable Development organised the programme.
Economists and businesspeople on Thursday demanded that the international lenders and development partners should provide unconditional assistance under ‘aid for trade’ initiative as such aid tagged with different conditions had made almost no impact on improvement in the Bangladesh’s trade capacity.
At a dialogue on ‘aid for trade: second generation issues for Bangladesh’, they said lenders took back a large portion of the aid by giving consultation service with their citizens.
The Centre for Policy Dialogue in association with the International Centre for Trade and Sustainable Development organised the programme at the BRAC Centre Inn in Dhaka.
The CPD, in its research, found that AfT had had no impact on the macro economy in improving trade capacity and enhancing export competitiveness of the country because of erratic flow of aid for trade disbursement.
The CPD also said that the contribution of AfT to economic infrastructure development and productive capacity building had been declining since 2006.
‘The AfT should be condition free. Otherwise, the least developed countries like Bangladesh would not be benefited as conditional aid increases transaction cost and aid recipient countries have a few options in choosing appropriate projects,’ said CPD distinguished fellow Debapriya Bhattacharya.
The conditional aid has less flexibility while experts from the donor countries take back a big portion of the assistance, he said.
Debapriya said the government should engage private sector entrepreneurs in adopting projects for improving trade capacity and enhancing export competitiveness.
Bangladesh Foreign Trade Institute chief executive officer Md Mozibur Rahman said that projects under AfT should be demand-driven and integrated with overall economic perspective of aid recipient countries.
‘A large chunk of AfT fund goes to the consultants from the donor countries. The practice should be stopped,’ he said.
CPD executive director Mustafizur Rahman said contribution of AfT to the economic infrastructure and building productive capacity sectors had been declining since 2006 while aid flow to the trade policies and regulations sector saw a huge growth of 686-per cent which is a major concern.
AfT in Bangladesh experienced a negative 20-per cent growth in economic infrastructure sector against 78 per cent global growth during 2002-2005 and 2006-2011. AfT flow in building productive capacity sector also saw a negative 45-per cent growth against 56-per cent global growth in the period.
Bangladesh Knitwear Manufacturers and Exporters Association former president Fazlul Haque said private sector entrepreneurs and exporters could not see any significant benefit of the initiative.
‘Trade is a totally private sector driven activity. But the sector people are being neglected in formulating and implementing projects related to trade capacity building and export,’ he said.
CPD research director Fahmida Khatun presented a keynote paper on effectiveness and impact of aid for trade initiative in Bangladesh.
She also said that the disbursement of AfT declined to $391.74 million in the 2006-2011period than that of $549.28 million in the 2002-2005 period.
On the other hand, total disbursement as a percentage of total commitment of AfT declined in recent period, and the gap between the commitment and the disbursement continues to widen, she said.
Former permanent representative of Bangladesh to World Trade Organisation and UN Agencies in Geneva, Switzerland Toufiq Ali, former commerce secretary Sohel Ahmed Chowdhury, Dhaka Chamber of Commerce and Industry president Sabur Khan, BFTI director Mostafa Abid Khan, World Bank’s South Asia Region lead economist Sanjay Kathuria, Apex Adelchi Footwear Ltd managing director Syed Nasim Manzur, Multimode Group deputy chief executive officer Tabith Awal, BFTI senior fellow Abu Yusuf spoke, among others, at the programme.
Published in The Financial Express
BD can’t reap benefits from AfT for supply-side hurdles : CPD
FE Report
Speakers at a dialogue said Thursday poor countries including Bangladesh cannot reap the benefits from WTO offers including Aid for Trade (AfT) due to supply-side constraints.
They pointed out that the WTO should put more focus on regional projects for providing aid under its AfT programme.
The issues were discussed at the dialogue titled “Effectiveness and Impact of Aid for Trade Initiative in Bangladesh” organised by the Centre for Policy Dialogue (CPD) held at the Brac Centre Inn in the city.
CPD Executive Director Prof Mustafizur Rahman conducted the dialogue where CPD Distinguished Fellow Dr Debapriya Bhattacharya, Chief Executive Officer of Bangladesh Foreign Trade Institute (BFTI) Dr Md Mozibur Rahman, former ambassador Dr Toufique Ali, World Bank’s Lead Economist for South Asia Sanjay Kathuria and former commerce secretary Sohel Ahmed also spoke.
Debapriya Bhattacharya said a definition for AfT has not yet been finalised for which the poor countries cannot utilise the offered benefits. He said more focus should be put on regional issues for trade expansion of poor countries.
Sanjay Kathuria said Bangladesh has lack of coordination to undertake projects under AfT. The country’s trade policy also has inadequacy for trade liberalisation.
The policy inadequacy kept the pace of trade liberalisation slow in Bangladesh, he added.
He urged the government to bring change into the trade policy.
Prof Mustafizur Rahman said, “The private sector has now become the largest employment generator in Bangladesh. The government should make the rules and regulations liberalised so that the private sector can grow fast.”
In her keynote paper Dr Fahmida Khatun said the AfT issue was introduced in the 2005 Hong Kong ministerial conference but during the eight years the issue still remains at the discussion level.
“As an LDC (least developed country), even though Bangladesh receives special and differential treatment and preferential market access, the realisation of benefits from such preferences has been partial due to several supply-side constraints,” she said.
Dr Fahmida said lack of good governance, bureaucratic delay and infrastructural weakness hindered Bangladesh’s growth prospects.
President of Dhaka Chamber of Commerce and Industry (DCCI) Md Sabur Khan, Director of BFTI Mostafa Abid Khan, Managing Director of Apex Footwear Nasim Manzur and Deputy CEO of Multimode Group Tabid Awal were also present, among others.
Published in Dhaka Tribune
Bangladesh deprived of ‘Aid for Trade’
The report revealed that the yearly average rate during FY6-11 is negative
Tribune Report Economy
The country’s share of “Aid for Trade” in overall official development assistance (ODA) has declined, despite the aid increased globally, says a report released in Dhaka on Thursday.
The report by Center for Policy Dialogue (CPD) revealed that though the total volume of aid for trade has been increasing since 2002, the yearly average rate during 2006-11 is negative.
The AfT initiative, launched by the WTO in 2005, helps developing countries to develop trade infrastructure so they can become competitive in the global trade. Many developing countries face a range of supply-side and trade-related infrastructure obstacles that constrain their ability to engage in international trade.
“If the present trend of AfT flow continues, it will be difficult for the country to have any meaningful impact of aid for trade initiative towards achieving national development goals,” CPD Research Director Fahmida Khatun said in her report presented at a dialogue on “Aid for Trade: Second Generation Issues for Bangladesh.”
The event was organised by the CPD in association with Geneva-based International Center for Trade and Sustainable Development (ICTSD) ahead of a three-day 9th WTO ministerial conference beginning from December 3 in Bali, Indonesia.
CPD Executive Director Mustafizur Rahman moderated the dialogue participated by local and foreign experts.
According to the report, lack of efficient administrative mechanism, low human capacity, political instability and stringent donor requirements are learnt to be major reasons behind the lackluster aid for trade inflows.
Low implementation level of development programmes has been a perennial problem for Bangladesh, affecting the utilisation rate of aid, it said.
Speakers at the dialogue expressed concern over the dwindling flow of AfT and put importance for more coordinated efforts among donors, government agencies and private sector stakeholders to improve the situation.
They also urged the donors to increase the share of grants in AfT as the major part of the aid still come in the form of loans, sometimes very conditional.
To increase the AfT inflows, they also focused more on south-south cooperation specially increasing trade with India and China the two major trading partner of Bangladesh.
World Bank South Asia Region lead economist Dr Sanjay Kathuria said: “Trade imbalance is nothing new it is a political issue. Trade has relation with employment generation.”
He said Bangladesh lacks synchronisation between trade and aid due to policy problem and suggested focusing on developing infrastructure, human resources and long term solution to energy crisis is necessary through cooperation from Nepal, Bhutan and Myanmar.
Chief executive officer of Bangladesh Foreign Trade Institute Mujibur Rahman said investment is a pre-requisite for boosting trade between the two countries. “Trade policy should be formulated to help increase import and export, which might bring an impetus to the national development,” he said.
CPD distinguished fellow Debapriya Bhattacharya said enough discussion was made over the decade about the poverty but clear definition about FTA is yet to be defined. Importance should be given to the regional issues when we talk about the second generation issues.
According to the presentation paper, home-grown projects rather than donor-imposed projects should be given priority.
However in Bangladesh, Aft has addressed some key areas of trade-related needs. Both the government and donors have succeeded in implementing a number of trade-related projects that helped address some of its supply-side constraints, it said.
In case of ownership, it said, AfT projects are closely linked to the objectives of national development policies, but Bangladesh’s effort to mainstream aid for trade into national policies is still limited.
Published in The Daily Sun
Stress on strategic trade policy to help local industries grow
Staff Correspondent
The country’s trade policy must be strategic so that local industries can grow and become diversified, observed speakers at a dialogue yesterday.
“Trade policy of Bangladesh must be strategic, which means that trade policy should be formulated in such a way that local industries can flourish and become diversified,” said Debapriya Bhattacharya, distinguished fellow of the Centre for Policy Dialogue.
“It won’t work if you only work for liberalising trades,” he said, questioning whether the basic objective of trade policy is to simplify exports and imports.
The objective of trade policy should be developing a modern economy, creating employment and industrialisation bringing about structural changes, he said.
CPD organised the dialogue on ‘Aid for Trade: Second Generation Issues for Bangladesh’ at city’s BRAC Centre Inn.
“The question is whether we want to use our trade policy to diversify our trade. If we want so, then opening up all the fronts is not a solution to that,” Debapriya said. “You have to put some regulatory barriers for doing so. Otherwise, our local industries will not find any appropriate place to flourish,” he added.
Speakers said foreign investment would be the key in the coming days to narrow the widening trade gap of the country.
Debapriya said concessional loans from development partners are very important in improving local infrastructure which is seen a major driver of the country’s economy. “Hard-term or debt-creating loans” will not be suitable for improving local infrastructure, he said.
Speakers complained that the private sector is kept outside of policy making and a major portion of foreign assistance for improving trade is spent on arranging seminars, consultancy fees and traveling of officials.
Former chairman of Tariff Commission Dr Mujibur Rahaman was the chief guest, while former resident representative of WTO Dr Toufiq Ali attended the dialogue as special guest, moderated by CPD’s Executive Director Prof Mustafizur Rahaman.
Research Director of CPD Dr Fahmida Khatun presented a keynote paper on the occasion.
She said the main barrier to providing assistance to trades is the absence of a trade policy that also creates lack of coordination among the ministries linked to trades. She said the country cannot tap many of its trade potentials for lack of much-needed coordination.
Published in BSS
CPD suggests forming separate cell for Aid for Trade
BSS – The Centre for Policy Dialogue (CPD), a leading thing-tank, suggested the government for forming separate cell for expediting Aid for Trade (AfT).
Presenting a paper at a dialogue on “Aid for Trade: Second Generation Issues for Bangladesh,” CPD Research Director Dr Fahmida Khatun also advised that effective steps should be taken to define the AfT and identify projects to be addressed under the initiative.
She said the trade policy should also focused on building capacity of home- grown projects with prioritizing expansion of regional trade.
Chief Executive Officer of the Bangladesh Foreign Trade Institute (BFTI) Dr Md Mozibur Rahman, ambassador and former permanent representative of Bangladesh to the World Trade Organisation (WTO) Dr Taufiq Ali, CPD Distinguished Fellow Dr Debepriya Bhattacharya, Lead Economist of the World Bank for South Asia Region Dr Sanjay Kathuria, BFTI Director for Research and Policy Advocacy Dr Mostafa Abid Khan and former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Fazlul Haque participated in the dialogue. CPD executive Director Mustafizur Rahman chaired the dialogue.
Dr Md Mozibur Rahman said investment should be increased for sustainable growth in trade when trade policies should be made for the benefit of the people, instead of making them only for the benefit of importers and exporters.
Dr Debepriya Bhattacharya said there was no alternative to prioritizing the regional issues for expansion of trade. He said Bangladesh had increased its financial capacity in the past few years to expand its trade, but social capacity requires further boost to ensure sustainable trade environment.
Dr Sanjay Kathuria said the third world countries require steps to create and ensure investment-friendly environment to attract foreign direct investment, which would also help increase employment.
CDP in association with the International Centre for Trade and Sustainable Development (ICTSD) organised the dialogue at the Brac Centre in the city.
Published in The Independent
‘Aid for trade’ inflows decline by 28.68pc
Special Correspondent
Bangladesh receives a disproportionately small share of global capital of the “Aid for Trade (AFT)” initiative to enhance its trade-related capacities mainly because of lack of adequate capacities and trade facilitation measures. According to a study, initiated by a civil society think Centre for Policy Dialoge (CPD), Bangladesh receives a negative growth of 28.68 per cent AFT flow during the period of 2006-2011 as against the global annual growth of 67 per cent during the period.
The aid flow for economic infrastructure and productive capacity, that constitute 97 per cent of the AFT fund, experienced a large cut during the period from 2002-11 leading to the lowest disbursement.
“If the present trend of AFT flow continues, it will be difficult for the country to have any meaningful impact of AFT towards achieving national development goal,” said CPD Research Director Fahmida Khatun who presented the paper at a dialogue on “Aid for Trade: Second Generation Issues for Bangladesh.”
Lack of efficient administrative mechanism, low human capacity, political instability and stringent donor requirement are learnt to be major reasons behind the lackluster AFT inflows. “Low implementation level of development programmes has been a perennial problem for Bangladesh which affects the utilization rate of aid,” said the CPD director.
Speakers at the meeting expressed their grave concern over the dwindling flow of AFT and stressed the need for more coordinated efforts among donors, government agencies and private sector stakeholders to improve the situation. They also urged the donors to increased the share of grants in AFT as the major part of the aid still come in the form of loans, sometimes very conditional.
To increase the inflows of AFT, they also focused more on south-south cooperation specially increasing trade with India and China, the two major trading partner of Bangladesh. World Bank South Asia Region lead economist Dr Sanjay Kathuria also suggested Bangladesh to reduce it imbalance with neibouring India through increasing import.
Sanjay suggested for more trade, increasing import, developing infrastructure and human resources and have a sustainable long term solution to energy crisis, if necessary through cooperation from Nepal, Bhutan and Myanmar.
But many of the speakers were not confident about increase in AFT flows from the neighbouring India and China in the light of track record.
Tariff and Non-tarif barriers, they said would have undermine the existing trade arrangements. Support from India and China forms only a fractional of total official development assistance (ODA) to Bangladesh.
Bangladesh Foreign Trade Institute (BFTI) Chief Executive Officer Dr Mozibur Rahman, who attended the programme as the chief guest also criticized the donors for their profit motive mentalities and consultancy business. He said that the present form AFT is not effective in Bangladesh stressing the need for a proper AFT strategy. He also highlighted the urgency for inclusion of social aspects in trade policy. “The trade that does not help reducing poverty is not purposeful….,” said the BFTI chief stressing the need for inclusion of social safety net with trade.
To increase AFT, CPD’s distinguished fellow Dr Debapriya Bhattacharya also stressed the need for regional cooperation which he said might help to overcome the bottlenecks hindering trade and business. Held at the Brac Inn auditorium, the meeting was addressed, among others, by DCCI President Sabur Khan, former Commerce Secretary Sohel Ahmed Chowdhry, CPD’s Executive Director Dr. Mustafizur Rahman, industrialists Nasim Manzur, Fazlul Haque and Tabith Awal.
Business leaders, who attended the meeting, highlighted the urgency for involving private sectors in policy discussions and various trade and business forum so that they can portrait the real picture.
In case of RMG, the CPD study said, FDI played a far greater role than aid in supporting the industry. During the 2002-12 period, a total of 17 trade related technical assistance projects were undertaken under the AFT projects.
The AFT initiative of the World Trade Organization (WTO) was designed to address the attendant concerns of these countries. Under the initiative, developed countries and development agencies are to provide support to developing and LDCs to enhance their trade-related capacities.
Published in bdnews24.com
Aid fails to push Bangladesh forward
Staff Correspondent, bdnews24.com
Bangladesh has made little progress through the last decade, though trade aid was up across the world, says a report of the Centre for Policy Dialogue.
This aid has contributed to trade policy and regulations in the country and but not to infrastructure development and capacity building, according to the report.
However, the amount of trade aid Bangladesh received has not helped its development, as donors are withdrawing the aid given on many excuses, says the report: ‘Effectiveness and Impact of Aid for Trade Initiative in Bangladesh’.
CPD Research Director Fahmida Khatun presented the report at a meet held by the think-tank, titled ‘Aid for Trade: Second Generation Issues for Bangladesh’, at BRAC Centre Inn Auditorium in Dhaka city on Thursday.
Though the Aid for Trade (AFT) was designed to support trade-related capacity building towards strengthening global integration of the LDCs, its effect has been mixed in Bangladesh, he said.
According to the report, the world saw an AFT growth of 77.2 per cent in infrastructure, while, for Bangladesh, it dropped by 20 per cent in 2006-11 fiscal.
In the same period, the world had an AFT growth of 56.03 per cent in capacity building, while it went down by 44.81 per cent in Bangladesh.
But the picture of trade policy and regulations was found to be good in the CPD report.
Bangladesh had an AFT growth of 686.03 per cent in trade policy and regulations while the world figure was 59.54 per cent.
The CPD director said Bangladesh had begun receiving an increasing amount of AFT since 2002 but it had decreased by 28.68 per cent on an average from 2006 to 2011.
In the same period, the AFT had grown by 67 per cent on average.
CPD Executive Director Mustafizur Rahman presided over the meet in which BFIT Executive Director Mozibur Rahman and and CPD Distinguished Fellow Debapriya Bhattacharya spoke.
Mozibur Rahman said Aid for Trade is not being effective in developing countries, like Bangladesh, as developed countries look at developing nations as consumer states only.
Officials from the developing countries get the scope for education tour and shopping at bigger malls only, through technical projects in the name of training abroad, he said.
Debapriya Bhattacharya said, “Donors attach many conditions while providing technical aid to developing countries.”
“They also made it compulsory to appoint a consultant and purchase all the things related to the project from the donor countries, which stand in the way of proper use of foreign aid locally.”
The CPD Distinguished Fellow demanded unconditional Aid for Trade to remove all that stands in the way of implementing a project locally.
World Bank South Asia Regional Integration Lead Economist Sanjay Kathuria said it would not do if Aid For Trade was confined only within the boundary of Trade Policy and Regulations.
Internal employment had to be created. Besides, boosting expertise in trade development was also important, he said.
Former Commerce Secretary Sohel Ahmed Chowdhury, who also spoke at the CPD dialogue, criticised the World Bank.
He said there were bad experiences in receiving donor money. For instance, most money of the World Bank had to be spent on appointing the World Bank consultants in Export Promotion Project.
These trade aids are used neither in infrastructural development nor in increasing productivity. Rather, most of the aid is used in the name of training and travelling abroad.
Dhaka Chamber of Commerce and Industry President Sabur Khan said, “The government frames policies at different times for increasing export, but private investors have little say at that.”