Melanie sent the piece below:
The fatcats who benefit from restricted trade in Bangladesh are rearing
their uglies. And they do so in a piece of propaganda, which says not a
good word for freer trade, but tries to make a case for keeping the
Bangedeshi free of better and cheaper.
Not that either is useful in a landlord dominated economy, which will strip
the benefits of a free market from the people with higher Rents.
Here are some excerpts from the "news" item.
"competition from cheaper imports."
This should lower prices and make wages more useful, but not if the
government has already been busy.
"Heavily taxed raw materials like dyes, chemicals and yarn have pushed up
prices of locally manufactured fabric."
Government interference apparently makes it difficult to compete. I would
suggest that instead of bringing back import restrictions, they remove the
tax load so people can compete (and the poor can buy).
"Stiff competition from cheaper imports and smuggled goods"
Goods are smuggled because people want them. And this means the poor -
unless you think that the rich buy up all the Tee-shirts.
"The labour-intensive electric fittings industry is in the doldrums. The
industry had grown in 1992-93, exporting products to Middle Eastern and
European markets, but the lifting of tariff restrictions has been a death
blow."
This is almost funny. Apparently, the locals can compete against the
competition in the Middle East and Europe, but collapse on their home ground.
Then, we find a reason.
"The imposition of 15% value-added tax (VAT) on local production has also
added to the burden of manufacturers, who are unable to compete with the
imported goods in so far as price competitiveness
is concerned."
Let's go to the government that added 15% plus to the prices of everything
and ask them to help us. Unfortunately, that's like asking the local
burglar to set up our security system.
A former president of the Electrical Manufacturers Association said:
"foreign goods have invaded the local market. Our products can compete only
if duty on raw materials was lowered, and locally manufactured items
exempted from VAT, he added."
Oh, on top of the other problems the Bangladeshi have is the government
(again) raising all basic costs by taxing raw materials, a silly policy
that hardly raises "competitiveness" to a new level.
"Economist Abdullah Harun warned of mounting losses of small and medium
enterprises, which are up against unequal global competition. The
government has to improve infrastructure - power supply, transportation,
port facilities, customs clearance - if local industry was to compete, he
advised."
Fancy him bringing up all these things (where perhaps the US can help)
when what they really need is more import restrictions so that the peonage
of the people can continue.
Harry
____________________________________________
>TRADE LIBERALISATION KILLS BANGLADESHI SMALL BUSINESSES
>
> Trade liberalisation - removal of non-tariff barriers and
>reduction of import duties - is said to have adversely affected
>some 7,000 businesses in Bangladesh, mainly small and medium
>enterprises, with many closing or on the verge of collapse.
>
>By Tabibul Islam
>
>
> Dhaka: Stiff competition from cheaper imports and smuggled
>goods has slowed down industrial growth of small and medium
>enterprises in Bangladesh, forcing closure of several factories in
>various parts of the country.
>
> The textile industry, on which the economy was pegged to take
>off, has been pushed close to collapse by competition from cheaper
>imports. Heavily taxed raw materials like dyes, chemicals and yarn
>have pushed up prices of locally manufactured fabric.
>
> The situation has worsened because of rampant corruption at
>all levels. For instance, customs officials can be bribed to turn
>a blind eye to the illegal flow of goods over the border.
>
> An ailing textile industry, which is the biggest employer
>after agriculture, has been laying off workers, and shutting down
>units. There are more than 10,000 hosiery mills alone across the
>country, and thousands of people work on hand- and power-looms.
>
> Yusuf Abdullah Harun, president, Federation of the Bangladesh
>Chambers of Commerce and Industry, said trade liberalisation -
>removal of non-tariff barriers and reduction of import duties - has
>adversely affected some 7,000 businesses, mainly small and medium
>enterprises.
>
> A large number of loss-making detergent and biscuit factories
>are on the verge of closure. Even transnational corporations like
>Lever Brothers, which dominates the local market here, have
>switched to marketing Indian-made products.
>
> Similarly, British-based GEC has substantially reduced its
>local manufacturing activities, retrenching thousands of people.
>Fans made in India, China, Pakistan, Taiwan and Malaysia are
>available in shops everywhere, while popular local brands like
>'Millat', 'Jumana' and 'Hira' have all but vanished from the
>shelves.
>
> The labour-intensive electric fittings industry is in the
>doldrums. The industry had grown in 1992-93, exporting products to
>Middle Eastern and European markets, but the lifting of tariff
>restrictions has been a death blow.
>
> The imposition of 15% value-added tax (VAT) on local
>production has also added to the burden of manufacturers, who are
>unable to compete with the imported goods in so far as price
>competitiveness is concerned. Smuggled products at lower prices
>have entered the market in a big way, analysts said.
>
> Enayet Hossain Chowdhury, former president of the Electrical
>Manufacturers Association, said foreign goods have invaded the
>local market. Our products can compete only if duty on raw
>materials was lowered, and locally manufactured items exempted from
>VAT, he added.
>
> Economist Abdullah Harun warned of mounting losses of small
>and medium enterprises, which are up against unequal global
>competition. The government has to improve infrastructure - power
>supply, transportation, port facilities, customs clearance - if
>local industry was to compete, he advised.
>
> Illegal cross-border trade has been frustrating industrial
>revival plans. What the government needed to do was to rationalise
>trade and taxation policies to enable Bangladeshi business to take
>on international competitors.
>
> Dr Muzaffar Ahmed, a well-known economist, however, advised
>the need for controls on liberalisation, arguing that mere adoption
>of a liberal trade policy and the opening up of the economy would
>be counter-productive. For instance, the gap between the poor and
>the rich has widened in Bangladesh with the new rich lacking even
>a social conscience, Dr Ahmed observed.
>
> The trend was new for Bangladesh, which, despite having the
>highest concentration of poverty, is not so inequitable. The lowest
>40% of the population command around 23% of national wealth,
>according to Human Development in South Asia 1997, a report
>prepared by an Islamabad-based NGO. Income disparities between
>the 65 districts of Bangladesh are not as wide as in the various
>regions of India and Pakistan.
>
> Normally the income disparity is between 10% and 25%, the
>report states. According to Dr Qazi Kholiquzzaman Ahmed, an
>economist, the government must not remove all state controls on the
>economy, because investments in the country's human capital were
>essential.
>
> Currently Bangladesh only invests $5 a year per person on
>providing education and health services, very low compared to
>Pakistan's $10, India's $14 and Malaysia's $150.
>
> 'Wherever Bangladesh has invested in skill-training, as in the
>garments industry, it has made tremendous progress. However, such
>investments in human capital have been very limited and need to be
>greatly accelerated,' the Human Development report states.
>
> 'Reliance on market forces is not a panacea for all economic
>ills... the dogmatic reliance on market forces is unjustified and
>misplaced,' asserted Dr Kholiquzzaman.
>
> He questioned the right of Bangladesh's donors like the United
>States, European Commission and the World Bank to insist on
>'unfettered market mechanisms', when they themselves set aside
>billions of dollars for agricultural subsidies in their own
>countries. - Third World Network Features/IPS
>
>-ends-
>
>
>About the writer: Tabibul Islam is a correspondent for Inter Press
>Service, with whose permission the above article is reprinted.
>
>
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>
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>
>
>1740/98
>
*****************************
Harry Pollard (818) 352-4141
Henry George School of Los Angeles
Box 655
Tujunga CA 91042
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