WHAT IS

Ref: http://www.yourarticlelibrary.com and http://kalyan-city.blogspot.com

Foreign Trade

WHAT IS FOREIGN TRADE

Ref: http://www.yourarticlelibrary.com and http://kalyan-city.blogspot.com

The inflow of goods in a country is called import trade whereas outflow of goods from a country is called export trade. Many times goods are imported for the purpose of re-export after some processing operations. This is called entrepot trade.

Foreign trade basically takes place for mutual satisfaction of wants and utilities of resources.

FDI plays a dominant role in the economy of many developing countries through accelerating GDP, export and domestic investment followed by overall economic growth. So it is vital for the government of Bangladesh to carry out effective measures in protecting the prospective foreign investors so that they can get a congenial atmosphere to invest their capital in the RMG sector in Bangladesh

Despite of the RMG sector we also need FDI in ---

• Infrastructural development

• Technology Agricultural

• Food industry management

• Expanding energy sector

• High tech computerized system

INDUSTRIALISTS' THOUGHT“Investment in RMG sector was less than that of the previous year due to political unrest. Factory inspection was also another reason since it cost more to install safety equipment in factories,” Exporters Association of Bangladesh (EAB) President Abdus SALAM MURSHEDY told the Dhaka Tribune.

See more at: http://www.dhakatribune.com/business/2015/dec/15/slow-export-growth-hits-fdi-rmg#sthash.nJUC8ADo.dpuf

Bangladesh does not need any FDI in forward linkage, it needs investment in backward linkage, especially in textile and high-end products as it costs much to establish a factory, said M.A. SALAM.

Political instability was also the reason for slow FDI, but it was not the only reason, If the market becomes vibrant again, the investment will increase, said MOAZZEM(additional research director of Centre for Policy)

FORWARD LINKAGEBACKWARD LINKAGE

Reff: www.tradingeconomics.com

today we have an about USD 140 billion economy which isThe central bank statistics also show that during the first half of FY15, July-December period of 2014, net inflow of FDI was $754 million. Thus, in the second half of the last fiscal (January-June period of 2015) net FDI was $946 million.According to the World Bank's estimation, Bangladesh's FDI-GDP ratio is 1.0% ( 6.4 > 6.7)net inflow of FDI amounted to $1700 million ($1.7 billion) in the fiscal year (FY) 2014-15The central bank data also show that in 2014, the highest amount of FDI came to the textile sector which was $390.92 million followed by banking sector ($311.9 million) & tele-communications ($226.8 million)

http://old.thefinancialexpressbd.com/2015/08/17/104284#sthash.w4ZIEl6P.dpuf

PROBLEMS OF FOREIGN TRADE IN BANGLADESH Legal Constraints: The first and the foremost problems in foreign

exchange operations arise due to legal constraints. Since foreign trade indicates exchange of goods and services between two countries and each country has its own laws, rules and regulations, which are different from other countries, so problems arise in foreign exchange operations. For example, an exporter of Bangladesh receives an L/C from the importer of England in which the goods will be shipped in American ship and delivered in China. In this case according to which country’s law the dispute, if arise, will be settled, is a problem

Geographical Location: From the geographical viewpoint, Bangladesh is not located in such a place to trade vigorously. We have encompassed by India from three sides. And India enjoys a strong industrial base compared to us. Due to economy of scale India can produce the same quality products at a cheaper price. So this is a problem in foreign exchange operation

PROBLEMS OF FOREIGN TRADE IN BANGLADESH

Limited Skilled Manpower: Performing the foreign exchange activities is a very tough job

because it involves proper communication with the client, various banks of the country as well as abroad. A single error may cost thousands of dollars

Limited Export Base: Bangladesh has a very limited export base. It does not have the sufficient supply of raw materials needed to use in the production process. If Bangladesh has the local raw materials, it would be able to use them in the production process. But unfortunately the country has to import the raw materials required in various production processes

PROBLEMS OF FOREIGN TRADE IN BANGLADESH

Political Instability:

Another major problem to conduct foreign Exchange business is thepolitical instability of a country, as the political stability is essential for smooth foreign exchange operations.

PROBLEMS OF FOREIGN TRADE IN BANGLADESH Absence of Policy, Rules and Regulations of Foreign Exchange Operations

as per Islamic Shariah: There is no international Policy, Rules and Regulations of Islamic Banking Regarding Foreign Exchange Operations, so the Islami Banks has to face problems in foreign exchange operations.

Lack of Stable Policy: Policy and structure are an integral part of any kind of operation. It will suggest us how to perform the operation. But if the policy continues to change frequently it is not easy to plan and perform also. With the changes of Government new policies are formed, which is very difficult to cope with. It is hard for the business organizations and businessmen to settle themselves. They are always deviated from the old track, and have to run after the new track. This is another problem of our country.

PROBLEMS OF FOREIGN TRADE IN BANGLADESH Lack Of communications and Transportation facilities:

• Don’t move anywhere in shorten time• Too much vehicles in roads• Airports are available

That’s why foreign investors cant establish their business

Source: WIN/Gallup International's annual global End of Year survey Reference: CPD, world Bank, IMF

The govt. recently offered of a lucrative incentive packages for investors, such as:

# tax holiday,

# tax exemption,

# equity returns,

# duty free importation,

# income tax exemption up to 3years for expatriates

# And deliveries of the countries economic zone

Strong political leadership Ensuring utilities supplies Reducing corruption Strengthening Diplomatic relationship Arranging Trade Fairs

THANKS TO ALL