Sheikh Hasina’s Bangladesh looks ahead, begins free trade negotiations with 11 countries

SALEEM SAMAD

Bangladesh is poised for exiting least developed status and seeks new avenues with major partners in the region and beyond.

In an exclusive interview with Nikkei Asia, Bangladesh’s Prime Minister Sheikh Hasina declared that her country  is discussing Free Trade Agreements (FTA) with 11 south-east Asian countries to boost trade and commerce, as the country seeks new means to promote exports once preferential tariff exemptions expire in three years.

Bangladesh has to go for a bilateral FTA for trade benefits once it becomes a middle-income country. Without FTAs, Bangladesh will lose competitive advantages over other countries – such as India, Pakistan and Vietnam, which have FTAs with a number of their trading partners.

Hasina will hold parleys with her Japanese counterpart Fumio Kishida in the last week of April. The two countries are expected to agree to upgrade bilateral ties to a strategic comprehensive partnership.

This proactive strategic diplomacy comes, when Japan ramps up infrastructure investment in the strategically situated country on the shores of the Indian Ocean, countering China’s controversial Belt and Road Initiative (BRI).

Source said Bangladesh has begun trade and economic negotiations with Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam with an expectation to ink free trade agreements.

Presently, as a least developed country, Bangladesh gets duty-free market access to European Union, Canada, Australia, Japan and some other countries, reported the Financial Express published from Dhaka.

The United Nations (UN) has strongly recommended that Bangladesh sign FTAs with major trading partners like China to counter a regime without duty-free access facilities following the graduation to developing country status.

The government is now looking for ways and means to sign preferential trade agreements (PTA) with major trading partners. The preferential agreements are vital for Bangladesh to remain competitive in the international market.

Among the other countries, it has made FTA/PTA overtures to are Vietnam, Thailand, Morocco, Malaysia, the USA, Japan, Canada, Senegal, Nigeria, Kenya, South Korea, India, the Kingdom of Saudi Arabia, South Africa, Mexico, Egypt and three regional blocs – the Gulf Cooperation Council, the Eurasian Economic Commission and MERCOSUR (South American trade bloc).

The country also gets duty-free access to a range of products in the Indian and Sri Lankan markets under the South Asian Free Trade Area (SAFTA).

As key regional partners, the governments of Bangladesh and India have heightened their trade and economic cooperation at a proactive trajectory. Bangladesh has become India’s leading South Asian trading partner and the world’s fourth-largest market for Indian exports in the years 2021–2022, said economist Dr Atiur Rahman, former governor of Bangladesh Bank.

The two neighbouring countries agreed to make mutually beneficial arrangements for the use of their waterways, roadways and railways for trade and commerce between the two countries and for the passage of goods between two places in one country and to third countries through the territory of the other under the terms mutually agreed upon.

Such deals will also help Bangladesh to continue getting the duty benefits after it graduates from the league of least developed countries (LDCs). The deadline was set on September 31 this year to ink an FTA with Sri Lanka.

But unfortunately, Sri Lanka is moving very slowly. Bilateral FTAs are becoming instrumental in global trading as the prospects of multilateral trading systems under the World Trade Organisation (WTO) are gradually losing their efficacy. There are more than 200 such deals worldwide. Neighbouring India has signed many FTAs including with the Association of South East Asian Nations (ASEAN) and is trying to sign another with the European Union (EU).

Bangladesh will have to be ready and continue lobbying with the major trading partners for PTAs and FTAs as erosion of preferences will affect trade significantly at the post-graduation stage.

The country should not only try to sign FTAs but also lobby with major countries and trade blocs for signing Comprehensive Economic Partnership Agreements which include trade, tourism and investment, writes Shahid uz zaman Khan in the Financial Express.

There is no denying that the country’s future trade benefits will largely depend on bilateral free trade agreements as the country will lose duty-free facilities and a host of trade preferences once it graduates to a middle-income nation in some years.

First published in the India Narrative, New Delhi on April 22, 2023

(Saleem Samad is an award-winning independent journalist based in Bangladesh. Twitter: @saleemsamad)

Is Bangladesh slowly embracing an Indo-Pacific strategy?

SALEEM SAMAD

Bangladesh is visibly and invisibly leaning towards the superpowers including the United States, China and Russia. But it also has friends and allies in the Middle East. India has been a proven friend, which has partnered Bangladesh’s development.

Bangladesh is now inching closer to embracing the Indo-Pacific Strategy, despite the country’s professed non aligned foreign policy.

However, Bangladesh has never strayed from its founding principle of nonalignment and wisdom drawn from its independence hero Bangabandhu Sheikh Mujibur Rahman which can be summed up as Friendship to all and malice toward none.

Bangladesh essentially aims to balance relations with rival states. Many explain that Prime Minister Sheikh Hasina does not keep eggs in one basket. Thus, she wants to maintain diplomatic, economic and strategic partnerships albeit “unequally” with the United States, Russia, China, European Union, Arabs and of course India.

A month ago, the private news agency United News of Bangladesh (UNB)wrote that Dhaka has finalised a draft of its Indo-Pacific Outlook focused on objectives that mirror those of the Indo-Pacific Strategy. The draft plan dwells upon the need for a free, secure, and peaceful region, according to Foreign Policy’s South Asia brief prepared by Michael Kugelman, deputy director of the Asia Programme and Senior Associate for South Asia at the Wilson Centre, a nonpartisan research enterprise based in Washington DC.

Bangladesh It appears is moving closer to a full embrace of the Indo-Pacific Strategy pursued by the Americans and its partners in the region, which revolves around countering China. This move comes as the US and a few key allies have signalled that Bangladesh should be a part of the Indo-Pacific Strategy, according to the brief.

Japanese Prime Minister Fumio Kishida in New Delhi recently unveiled a new plan for the region, calling for strategic collaborations with Bangladesh, including a new economic partnership agreement.

A deep-sea port under construction in southern Bangladesh is shaping up to be a strategic linchpin for Japan and India as the Quad partners aim to counter Chinese influence, writes Nikkei Asia, an influential Japanese economic and finance media outlet.

Dhaka has friendly ties with the USA, and other members of the Quadrilateral Security Dialogue (known as the Quad) including India, and Europe.

Development of the deep-sea port of Matarbari – a natural gateway to both South and Southeast Asia will put a Japan-backed facility just north of Sonadia, another prime location on the Bay of Bengal where China was expected to develop a port. But the Chinese facility did not materialise. Dhaka silently dropped the idea a few years ago, which caused diplomatic hullabaloo with Beijing.

Some leading pundits tend to declare a strategic victory for India in a South Asian great game between big powers. Anu Anwar, a research associate at the Fairbank Centre for Chinese Studies at Harvard University, told Nikkei Asia the Sonadia port deal with China did not succeed because of India’s opposition, which the [government] in Dhaka could not simply override due to its overreliance on Delhi.  Also, India’s tag-team partner, Japan is also considered a winner in this scenario, though some observers see no game at all, says Faisal Mahmud and Ryohtaroh Satoh in a joint article in Nikkei Asia.

In New Delhi, Kishida said the industrial value chain from the deep-sea port in the Bay of Bengal and the hinterland of landlocked northeast states [so-called Seven Sisters] of India which neighbours China, Myanmar and Bangladesh, will be immensely beneficial from “the growth of the entire region. Japanese, Indian and Bangladeshi officials also discussed the plans with G. Kishan Reddy, India’s federal minister for the northeast, welcoming Japan’s initiative, Reuters reported.

An Independence Day message from US chief executive Joseph R. Biden to Sheikh Hasina has caught the attention of many political observers. Bangladesh is scheduled to hold parliamentary elections in January next year, Biden “reminded of the deep value both of our nations’ people place on democracy, equality, respect for human rights, and free and fair elections.” The message ended with the slogan ‘Joy Bangla’ (Victory for Bangladesh), which enthralled masses in Bangladesh.

A series of statements from the chief executive of the United States and other bigwigs of the country demonstrates that the stars are shining brightly over Bangladesh’s sky. In fact, US Secretary of State, Antony Blinken flattered Bangladesh and said the country is “quickly becoming a regional leader.”

On the occasion of the 52nd anniversary of the Independence of Bangladesh, the United States Congress introduced a resolution on 29 March recognising and commending Bangladesh and its remarkable socioeconomic progress under the leadership of Sheikh Hasina, official news agency Bangladesh Sangbad Sangstha (BSS) reported. The resolution said Bangladesh has successfully maintained a moderate Muslim society and curbed extremism in the country, but falls short of describing Bangladesh as a secular and pluralistic nation.

Despite the heart-warming tete-a-tete messages, Sheikh Hasina last week in the parliament in Dhaka did not hesitate to lambast America: “They are lecturing us on democracy and human rights. What’s the situation in their country?”

Amid the dilemma to decide or not to decide on a strategic partnership, China has stepped up its influence in Bangladesh through mega-infrastructure loans, which US officials have privately described as “bad deals” for the country.

It’s indeed an intriguing question as to why Bangladesh wishes to be associated with the Indo-Pacific Strategy and its goal of countering China. No doubt, participation in the US Indo-Pacific Strategy would bring Bangladesh closer to key trade and investment partners.

China is also a major supplier of arms to Bangladesh. So, getting Dhaka’s buy-in to the US-sponsored Indo-Pacific vision would be a strategic victory.

The current governments in Bangladesh and India are very close, and New Delhi is likely to have encouraged Dhaka to embrace the strategy, according to the brief by Wilson Centre.

Even as Bangladesh embraces the Indo-Pacific Strategy, it is still trying to placate China. Dhaka’s draft Indo-Pacific Outlook stipulates that it seeks to avoid rivalries and has no security goals, read the brief.

The Association of Southeast Asian Nations (ASEAN) – includes many states that have cordial relations with China – opted for the same term in its Indo-Pacific coalition. Dhaka has also not indicated that it would join the Quad. Several visits of high-profile dignitaries in recent times from the United States, United Kingdom and European Union enforce that “these countries would want Bangladesh to take part in the Indo-Pacific Strategy read the brief.

Kugelman said Bangladesh has become a battleground for great power competition. It is strategically located, bordering India and serving as a gateway to both South and Southeast Asia. China is definitely concerned about the development of a regional strategic alliance. A few weeks ago, the Chinese Ambassador Yao Wen to Bangladesh squarely blamed Washington for pushing Dhaka into the US-backed Quad against China.

To deepen relations with China, Bangladesh could certainly back off from the US Indo-Pacific Strategy. Bangladesh appears to believe its interests aren’t compromised by stretching the limits of nonalignment, according to the brief.

In the coming years, when the dozens of mega-projects funded by Japan, China, Russia and India are finally implemented, it could be understood which superpower and regional powers wins the heart and minds of Bangladesh.

First published in the India Narrative on April 18, 2023

Saleem Samad is an award-winning independent journalist based in Bangladesh. Views expressed are personal.  Twitter: @saleemsamad

“Doctor Of The Poor” Gave New Hope To Bangladesh

SALEEM SAMAD

My mindset was first awakened after reading the cover story Dr Zafarullah Chowdhury (popularly known as Zafar Bhai) and his dream hospital Gonoshastya Kendra in a defunct weekly Bichitra on 25 January 1974.

Later, on the first-page news photo in a defunct Dainik Bangla newspaper, dozens of women health workers of Gonoshastya Kendra (People’s Health Centre) from the outskirts of Dhaka, riding bicycles arrived at Central Martyrs Memorial in Dhaka to pay homage to the language martyrs on 21 February 1974.

I along with Nadira Majumder, correspondent of weekly Robbar and myself (The New Nation) regularly visited Gonoshastya Kendra in 1981 to understand Dr Zafarullah Chowdhury’s concept of his war against “drug imperialism” of the multinational companies in Bangladesh and health for all campaign.

The international drug producers were profiteering from third-world countries, like Bangladesh in over-invoicing imports of raw materials, over-pricing packaging materials and producing unnecessary medicaments.

We were doing serious research and interviews of the national committee headed by Dr Nurul Islam, Zafarullah and others when they were drafting the crucial National Drug Policy and a voluminous document reasoning for banning thousands of drugs and listing a hundred or so essential drugs which have to be produced under the generic name.

The drug policy completely knocked down the business of the multinational companies in Bangladesh. The drug policy for the first time was pinned on the world map for a pro-people initiative.

Despite the drug policy being severely criticised by drug producers and hundreds of doctors, the military dictator General HM Ershad went ahead with full steam to implement the policy.

Several ambassadors spoke to the government to delay the implementation, citing unemployment of hundreds and thousands of employees and the shortage of drugs in the market which will jeopardise the healthcare system in the country.

Zafarullah was confident and so was the Health Ministry admitting that there will be a shortage of drugs in the market and could be replenished from the competitive world market.

Gonoshastya Kendra believed in alternative healthcare which needs to reach the rural areas, where people cannot afford it and most importantly where rural people have never seen a doctor in their life.

The centre produced thousands of barefoot doctors mostly women, recruited from rural areas. They went to remote inaccessible regions to provide healthcare to pregnant women, children and treatment of elderly people.

The concept of barefoot healthcare medics encouraged the government to launch a nationwide primary healthcare programme. The best example is the nationwide child immunisation drive by the government by trained paramedics. Child immunisation was much higher than the World Health Organisation (WHO) target of 75% and Bangladesh attained between 93% and 98% every year since 2005.

Well, fearing the doctors and physicians will be posted in rural areas, away from the luxuries of city hospitals, the Bangladesh Medical Association vehemently opposed the national primary healthcare programme.

The medical doctors’ apex body criticising the programme said it takes several years to train a doctor and a couple of years for nurses (including internship), therefore the mobilisation of medics will be a major challenge.

Zafarullah scoffed at their criticism and said it is possible to train barefoot medics within six months, who can perform delivery of infants including obstructive births.

The world’s largest NGO, BRAC partnered with Gonoshastya Kendra to train thousands of medics to cover millions of the population in villages.

The drug policy buoyed the massive growth of home-grown medicament entrepreneurs who are presently producing drugs in Bangladesh and exporting to more than 150 countries worth US$163.83 million (2021-22).

No other medical colleges or para-medic training institutions in Bangladesh have compulsory field (rural) training experience, except for those under Gonoshastya Trust.

The 82-year-old doctor of the poor had the vision to reach the rural poor to ensure that the global ‘Health For All’ campaign was meaningful.

When the health message of smoking-related diseases was not known to many, his institution was a pioneer to announce job opportunities and even for students in medical college and para-medics, with a strict note in red letters that only non-smokers should apply.

The patient’s suffering, agony and pain caused by smoking-related disease is widespread. The government’s ban on smoking in public has not been able to deter people from smoking, ignoring the harms of nicotine and second-hand smoke.

Well, besides a series of successes, he has had a few failures in his life. He attempted to bring about a change in politicking and government, which he miserably failed. In 1981, he wanted to form a coalition of the left-leaning, muktijuddhas (liberation war veterans) and mainstream Awami League to support his candidate, a liberation war hero General MAG Osmany for the president.

The plan was scuttled and a major setback in the presidential campaign when Awami League nominated constitutional author Dr Kamal Hossain as their candidate for the election against Bangladesh Nationalist Party (BNP) candidate Justice Abdus Sattar who obviously won with a wide margin.

Zafarullah did not have any properties or business in his or his family’s name anywhere. All the institutions and establishments are under Gonoshastya Trust. He left behind the entire country to mourn his death but left behind his legacy of pro-people healthcare institutions.

First published in The News Times on April 13, 2023

Saleem Samad is an award-winning independent journalist, media rights defender, recipient of Ashoka Fellowship and Hellman-Hammett Award. He could be reached at <saleemsamad@hotmail.com>; Twitter @saleemsamad

Pakistan’s fingerprints in formation of Rohingya militant group ARSA are unmistakable

SALEEM SAMAD

Initially Bangladesh, Myanmar and India failed to accept Arakan Rohingya Salvation Army (ARSA) a jihadist outfit. The militant group was described as ‘Rohingya Muslim vigilantes’ with a limited ordinance, disorganised, therefore nothing to be worried about.

The name ARSA first surfaced in August 2017, when the outfit claimed responsibility for attacks on several border police and army posts of Myanmar at the international borders with Bangladesh.

The attacks sparked Tatmadaw’s (Myanmar military) brutal genocidal campaign against Rohingya Muslims. The troops torched hundreds of villages and went on a killing rampage.

The ethnic community was forced to flee from the volatile Rakhine State of Myanmar and later sheltered in Bangladesh. The country hosts nearly 1.2 million Rohingyas.

The panicked Rohingyas poured into Bangladesh, through porous international borders, fuelling a historic migration crisis in Asia.

India is now worried that the jihadist outfit’s presence at the border of Bangladesh-Myanmar-India. ARSA’s recent skirmish with Myanmar troops has raised their eyebrows, while Bangladesh is alarmed by the visible presence of ARSA in the territory.

The ARSA militants are mostly recruited from the Rohingya refugees. It was not to anybody’s surprise that the leadership are Pakistan-born Saudi émigrés. They raise funds mostly from Rohingya living in Pakistan, Saudi Arabia and the United Arab Emirates (UAE).

Meanwhile, news surfaced that an undisclosed partnership between Bangladesh and Myanmar military led to a joint operation to address the ARSA insurgency.

The documents from a December 23 meeting of the Central Committee for Counter-Terrorism of the Myanmar Home Affairs Ministry, published by a private ‘Khit Thit Media’ on last January 10 have been verified by security experts.

The document stated that “During 2022, there have been only 4 skirmishes between our [Myanmar] forces and ARSA. We were able to meet, discuss and coordinate with the Bangladesh Border Guard Force over ARSA.

“The result was that Bangladesh special forces launched a military operation in the refugee camp where ARSA took shelter, killing the ARSA’s 2nd in Command and 2 terrorists. From one intelligence exchange with Bangladesh, we learned that the ARSA leader Ataullah and 60 of his followers are facing legal actions in Bangladesh.”

The Naypyidaw (capital of Myanmar) labelled ARSA as an “extremist Bengali [Bangalee] terrorists, also Rohingya Muslim terrorists,” warning that its goal is to establish an Islamic state in the region [South-East Asia].

In a rare interview with an international media, Ataullah Abu Ammar Jununi, commonly known simply as Ataullah, the supremo of ARSA said that their objective would be “open war” and “continued [armed] resistance” until “citizenship rights were reinstated” of Rohingyas in Myanmar.

Despite the denial of Ataullah, who was born in Karachi and moved to Saudi Arabia, of having links to the Islamic State or ISIS in a video and said he turned his back on support from Pakistani-based jihadists, security agencies of Bangladesh and India are sceptic of his claim.

A security expert in Bangladesh explains that ARSA has ideological differences from other terror outfits and has reason to distance itself from the transnational jihadist network.

The global terror network’s footprint is absent in the region. The territory is too hot to handle, as some experts explained, especially when India remains a deterrent to the physical presence of jihadists and terror networks.

The exodus of more than one million Rohingyas from restive Rakhine State has also brought the ARSA operatives and sympathisers into Bangladesh.

The security agency in Bangladesh has trained their eyes and ears on their activities. The agency explains ARSA is also known as ‘Al Yakin’ in the refugee camps – the militants prey on the refugees.

ARSA operatives are responsible for widespread kidnaps, extortions, tortures and executions of suspects. The crimes are committed to collect funds for local operations in the world’s largest squalid Rohingya camps in Cox’s Bazar, in southern Bangladesh.

Cash-starved Al Yakin, the volunteer group of ARSA is mostly responsible for gang war in the refugee camps to establish dominance over other non-militant groups in the camps.

The recruiters from sleepers-cell disseminate a message that joining ARSA or ‘Al Yakin’ was a Farj (a religious obligation).

However, ARSA remains focused on recruitment and indoctrination, followed by establishing small units and engaging in rudimentary military training.

Often breaking news from Rohingya refugee camps of robbers, dacoits, and armed gangs killed in encounters by anti-crime forces – the slain victims are radicalised Rohingya militants.

Despite ARSA’s name still commands a mix of cautious respect and fear among some in the Rohingya camps. The members remain low profile to avoid confrontation with Bangladesh security forces.

For funding the militant’s network, the foot soldiers are also engaged in providing armed escorts to cross-border smugglers and drug traders.

The intels still believe ARSA have a low ordinance and the militants were unable to launch any large-scale armed clash with Myanmar troops after August 2017.

However, Myanmar security forces do not agree and said that last year in mid-September, “the Arakan Army launched attacks in cooperating with ARSA from a certain distance on the Taungpyo Latwal police outpost near BP-31 between Myanmar and Bangladesh using small and heavy arms and three shells fell into the Bangladesh side and three exploded.

“On the other hand, their hit-and-run tactics were significantly neutralised after Myanmar troop’s crackdown on Rohingya Muslims [ARSA],” said Myanmar’s official website Info Sheet.

Myanmar blames Pakistan’s dreaded spy agency ISI for its share in mentoring the jihadist outfit. Their theory that ARSA has been raised, funded, provides logistics and indoctrination was masterminded by ISI and is also believed by both Bangladesh and India.

Consequently, the encampment at No-Man’s-Land or Zero-Point was attacked once again on January 18, 2023, resulting in the camp’s destruction, and the forced displacement of all Rohingya refugees living there, writes Saifur Rahman, a Rohingya journalist who is living in exile in a third country.

ARSA’s militancy capability remains poor due to strict surveillance by security agencies of India and Bangladesh and sharing mechanism of intels – reducing ARSA into a toothless tiger.

First published in the India Narrative on 7April 2023

Saleem Samad is an award-winning independent journalist based in Bangladesh

Is USD hegemony in South Asia likely to dent as India-Bangladesh consider INR trade?

India and Bangladesh are considering dumping the dollar and trading in their own currencies

SALEEM SAMAD

Amid a dollar crunch following the Coronavirus pandemic and the Russia-Ukraine war, New Delhi and Dhaka are considering trading in the Indian Rupee.

The Russia-Ukraine conflict came as the sword of Damocles as the conflict in Eastern Europe has caused an unprecedented rise in fuel prices worldwide.

For the same reason, the US dollar – the most common international currency – is also rising. It has also been weaponized to some extent by the US to isolate Russian President Vladimir Putin over his war on Ukraine.

Owing to a rise in imports and the slow inflow of foreign remittances by expatriates, Bangladesh has been dented by dollar crisis affecting imports of fuel and export-oriented factories, dependent on imports of raw materials.

Bangladesh’s $416-billion economy is battling rising prices of energy and food as the Russia-Ukraine conflict widens its current account deficit, and dwindling foreign exchange forces sought $4.5 billion loan from the International Monetary Fund (IMF).

In Bangladesh, the cash US dollar rate climbed to an all-time high of Bangladesh Taka (BDT) 112 on 26 July last year and in February 2023 was BDT 108.35. Inflation Rate in Bangladesh averaged 0.53 per cent from 2011 until 2023, reaching an all time high of 3.47 per cent in August of 2022.

Bangladesh’s neighbour and major trade partner India is also being affected by the rising dollar. The Indian Rupee (INR) – declined to a record low of more than 80 to the dollar, adding to worries of imported inflation as well as an external deficit blowout, according to Bloomberg.

Well, Bangladesh is contemplating trading with India using the INR, instead of the US dollar, reports a private news agency United News of Bangladesh (UNB).

Quoting government officials, the agency said, the commerce ministry placed a written recommendation at Prime Minister Sheikh Hasina’s cabinet meeting for the possibility of using INR instead of the dollar.

Bangladesh wants to cut dependency on the dollar, commerce minister Tipu Munshi said recently, and it does not see a problem in dealing with INR.

Meanwhile, the Bangladesh Bank has explored the pros and cons of using Indian currency in trade and commerce.

A central bank’s top official who is privy to the bilateral decision told UNB that an agreement has to be reached between neighbouring countries after Dhaka and New Delhi signed an agreement on using Rupee.

India proposed Bangladesh introduce the Rupee as a medium of bilateral trade at the Bangladesh-India ministerial meeting on trade, held in New Delhi last December.

Then, on the sidelines of the meeting of G20 Finance Ministers and Central Bank Governors held in Bengaluru, India on 24-25 February, the Bangladesh Bank governor Abdur Rauf Talukder and Reserve Bank of India governor Shaktikanta Das discussed switching to ‘de-dollarised’ payment system.

“I am not sure how useful it might be for us, because of the trade deficit. We import goods worth around $10 billion from India but export goods worth around just $2 billion. Where will we find the excess rupee, questioned Dr Khondaker Golam Moazzem, research director, Centre for Policy Dialogue.

Accordingly, the trade deficit of Bangladesh with India has increased from 19 per cent to 33 per cent in the fiscal year 20-21.

Meanwhile, India is trading in Rupees with Russia, Mauritius, Iran and Sri Lanka and recently with Malaysia.

On the other hand, top lender State Bank of India has asked exporters to avoid settling deals with Bangladesh in the dollar and other major currencies as it looks to curb exposure to Dhaka’s falling reserves.

“The country is facing a shortage of foreign currency due to higher import bills and weaknesses of Bangladeshi taka against the dollar in recent times,” the SBI said in an August 24 letter sent to its branches and seen by the Reuters news agency.

India is one of the largest trading partners of Bangladesh. The existence of different tariffs, non-tariff and anti-dumping barriers in India, however, mean that our exports to India are comparatively low in comparison to our imports, says Salim Ahmed, a banker and analyst.

The Indian government has amended its Foreign Trade Policy to allow international trade invoicing, payment and settlement in the Indian rupee, activating the mechanism announced by the Reserve Bank of India to facilitate trade in the domestic currency.

Salim Ahmed explains, under this mechanism banks in Bangladesh will open a ‘Rupee Vostro’ account in India with any Indian bank to settle our trade transactions in INR. From an Indian perspective, it is a special INR Vostro account to them. Similarly, India will open an INR Vostro account in Bangladesh with any bank for settling their trade transactions with us.

First published in the India Initiative @india_narrative on 3 April 2023

Saleem Samad is an award-winning independent journalist and is based in Bangladesh