Bangladesh maintains higher average nominal tariffs compared to low-income, middle-income, and high-income countries, as well as most peers, according to an economist. These elevated tariffs, with a nominal rate of 27.6%, create a relative advantage for domestic industries over exports. This discourages production for overseas markets and poses a significant export diversification barrier. Tariffs have become the principal means of protection, incentivizing import-substitute production.
The economist noted that anti-export bias is hindering diversification. Despite exporting 1,377 non-readymade garment products, only 174 are highly competitive. To address this, extending the bonded warehouse facility to more product categories, particularly those with competitive labor cost advantages, was suggested.
The National Tariff Policy 2023, focusing on import taxes like customs duty, regulatory duty, and supplementary duty, could play a role in addressing these challenges. Cash incentives and bonded warehouse facilities were also recommended to boost export diversification.
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