Bangladesh should focus on FTA with South Korea: Youngone chief

Kihak Sung, chairman and CEO of Youngone Corporation, has stressed the importance of enhancing workers' productivity and signing of a free trade agreement with South Korea for Bangladesh to prepare for post-LDC graduation. 

"The production efficiency of my factory in Vietnam is 89%, while it is 59% in Bangladesh. That means while Vietnam can make three pieces of a product, we can make two. We have to seriously work on this so we can be a true competitor in the world market," the South Korean investor said at a dialogue in Dhaka on Tuesday.

He said Bangladesh should focus on signing a win-win FTA with South Korea, considering the scenario when Bangladesh graduates from the category of least developed country (LDC).

He also urged Bangladesh to use South Korea's experience in Foreign Trade Agreement (FTA) as it is the number one in the world in terms of FTA success rate.

"An easy tax regime, smooth inland transportation system and product diversification are essential for an easy export process," the CEO of Youngone Corporation, one of the largest foreign investors in Bangladesh, said at the virtual dialogue on "Bangladesh-South Korea Trade and Investment Cooperation: In the context of LDC graduation." 

He stressed the need for a stable and high quality energy supply to support investments in sectors like information technology. 

Terming the IT sector a very promising one, he said Youngone Corporation has already built a high-tech park together with the Bangladesh government and in the next two years the corporation will invest a minimum of $200 million.

He went on to say that in the next five years, readymade garments exports to South Korea will cross $1 billion and might reach $1.5 billion. He also identified the South Korean seafood market as a potential destination for Bangladeshi sea food exporters.

He laid emphasis on making customs and port services smoother and tax regime easier, so that goods are exported in a timely manner, which is very important.

"Inland transportation needs to improve. I have a lot of ideas about how we can improve, but we need to listen to each other carefully," he said.

In his opening remarks, DCCI President Rizwan Rahman said South Korea was the 10th largest exporter to Bangladesh in 2021. In that year, bilateral trade between Bangladesh and South Korea amounted to around $1.52 billion with a negative balance of $727 million for Bangladesh.

"Bangladesh has many promising and priority industrial sectors like agro and food processing, plastic manufacturing, jute and jute goods, light engineering and automobiles sector, hi-tech parks, 4IR technologies and structured economic zones where Korea can invest in the form of joint ventures," said Rizwan Rahman.

"Currently, around 95% of our export items to South Korea receive duty-free quota-free (DFQF) facilities under the preferential scheme for LDCs. These facilities will not exist after our LDC graduation, so we urge Korea to extend the DFQF and slow down the tariff rationalisation facility till 2030," he said.

"Considering our deep economic ties, the feasibility of signing FTAs can also be assessed. We believe that FTAs will enhance economic ties between South Korea and Bangladesh as well as in the South Asian region," Rizwan Rahman added.

Attending the programme as the chief guest, Masud Bin Momen, Secretary, Ministry of Foreign Affairs, expressed his hope that after Bangladesh's LDC graduation, South Korea will continue its preferential treatment for Bangladeshi export items.

Momen said the government will have special focus on revisiting decades-old bilateral agreements, exploring the possibility of signing FTA to facilitate deeper partnership, regular exchange of trade missions and direct connectivity between Dhaka and Seoul.

He also underscored the importance of creating skilled human resources for Bangladesh to face the forthcoming challenges regarding enhancing productivity.  

M Delwar Hossain, ambassador of Bangladesh to South Korea, said, "After the LDC graduation, we will need product diversification to increase our exports to South Korea in order to mitigate the trade gap. South Korea is the fifth largest foreign investor in Bangladesh."

"Most of the Asian countries have comprehensive preferential trade agreements with Korea. Our cost advantage would be offset by tariff benefits enjoyed by other countries. Such a situation will adversely affect the Korean market," he added.

Jong Won Kim, director general at KOTRA, Shahab Uddin Khan, advisor at Korea-Bangladesh Chamber of Commerce, DCCI Vice President Arman, among others, also spoke at the programme. 

Participants at the dialogue said after graduating from the LDC basket back in the 70s, South Korea put more emphasis on diversified export-oriented industrial sectors. That is why South Korea today is a pioneer in manufacturing and exporting electronics, chemicals, heavy industry, automobiles and machineries.

Bangladesh can replicate this transformation from labour intensive industries to an export-oriented industrial sector to overcome the upcoming challenges of LDC graduation as well as prepare for the future, they viewed.