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M Masrur Reaz, the chairman of Policy Exchange Bangladesh, expressed scepticism about the potential immediate benefits for Bangladesh had it obtained membership in the recently concluded BRICS summit.

He pointed out that BRICS, consisting of Brazil, Russia, India, China, and South Africa, has not yet established a trade framework to facilitate commerce among its member countries.

‘While Bangladesh already maintains robust trade relations with two BRICS nations, China and India, these trade engagements are heavily skewed in favour of these two countries,’ he said.

In contrast, Bangladesh’s trade interactions with the other three BRICS nations are minimal, he added.

A prominent economist and public policy expert, Dr. Masrur Reaz highlighted that if Bangladesh aimed to enhance its trade engagement with these countries, it would need to pursue bilateral trade agreements.

Consequently, he expressed doubts about Bangladesh gaining significant benefits from BRICS membership in the absence of such bilateral engagement.

However, Reaz noted that one avenue for Bangladesh to benefit from BRICS is through the New Development Bank, given that Bangladesh is already a member of this financial institution.

In order to maximise the benefits of BRICS, Bangladesh should focus on enhancing its bilateral negotiation capabilities, addressing institutional weaknesses in project management, and boosting trade and Foreign Direct Investment (FDI), he said.

At present, the economist does not foresee significant economic gains from BRICS due to the group’s current operational framework.

He clarified that he does not anticipate substantial diplomatic benefits either.

The primary reason for this scepticism is that BRICS has yet to establish economic arrangements such as intra-BRICS free trade, regional market access, market access facilities, and the removal of non-tariff and tariff barriers among its member countries.

‘Unlike well-established trading blocs like the Association of Southeast Asian Nations (ASEAN), European Union (EU), North American Free Trade Agreement (NAFTA), and South Asian Free Trade Area (SAFTA), BRICS primarily serves as a platform for discussions among its five member countries on various global issues, including economic matters,’ he said.

Reaz observed that BRICS operates as a forum where these nations convene to discuss mutual global concerns, with economics being a significant aspect of their deliberations.

He pointed out that joining BRICS would essentially make Bangladesh a member of yet another international platform, alongside existing memberships in the United Nations, the South Asian Association of Regional Cooperation (SAARC), and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).

In this context, Reaz believed that Bangladesh’s main benefit from joining BRICS at this juncture would be participation in discussions.

Through active engagement, Bangladesh could articulate its concerns, offer opinions, and highlight its priorities on global affairs.

‘If Bangladesh were to join BRICS at this point, its primary advantage would be active participation in discussions. Through these discussions, Bangladesh can articulate its concerns, opinions, and global priorities,’ he explained.

Reaz pointed out that BRICS lacks a common currency, reserve, and market; each member country retains its sovereignty.

He stressed that Bangladesh should approach this bilaterally with individual BRICS nations instead of expecting a substantial increase in global GDP, reserves, or trade.

Highlighting Bangladesh’s strong trade relations with China and India within BRICS, Reaz noted a significant trade imbalance in favour of these countries.

He cited imports of $24-25 billion from China against exports worth nearly $1 billion, and imports of around $13 billion from India compared to exports worth about $2 billion.

Regarding trade with the other BRICS nations, Reaz mentioned that Bangladesh had negligible exports to Brazil and South Africa. In the case of Russia, exports had declined significantly due to the Ukraine conflict.

One potential benefit for Bangladesh, even before becoming a BRICS member, is access to the New Development Bank (NDB).

Reaz explained that the NDB offers multilateral funding with favourable terms, including easier conditions and longer-term financing.

He emphasised that the extent of Bangladesh’s benefit from NDB financing depends on how effectively the country identifies suitable projects for funding.

However, Reaz highlighted weaknesses in Bangladesh’s project development, feasibility assessment, design, and implementation.

He noted that the country has undertaken projects with limited utility, which could pose challenges if it takes on more loans than necessary from the NDB.

He emphasised the importance of sound negotiation capabilities during project discussions, which Bangladesh currently lacks, hindering its ability to secure favourable terms.

He said that Bangladesh needs to significantly enhance its negotiation capacity to achieve better terms during project negotiations.

He acknowledged that the country has a long way to go in this regard, but improving negotiation skills is crucial to maximise the benefits of NDB financing.

Reaz also said that the ultimate benefit from BRICS would primarily stem from trade and Foreign Direct Investment (FDI), despite the challenges involved.

He drew comparisons between BRICS and established trading blocs like the EU or ASEAN, highlighting key distinctions.

‘One significant difference he pointed out is geographical location; BRICS members are dispersed worldwide, lacking the proximity and connectivity seen in more closely located trading blocs,’ he said.

‘Another issue is the divergent geopolitical stances of BRICS countries, with some taking opposing positions on international matters. China and India, in particular, have noticeable tensions and disagreements across a range of issues,’ he said.

Given this context, Reaz stressed that Bangladesh would need to engage in bilateral approaches, which it had not effectively pursued in the past.

He highlighted the country’s heavy reliance on imports despite having deep trade relations with China and India.

While China has granted Bangladesh duty-free access to 98 per cent of its over 8,000 imported items, ‘Bangladesh has not fully capitalised on these opportunities,’ he said.

He noted that a significant portion of Bangladesh’s exports consists of ready-made garments, with just a few products dominating the export portfolio.

‘This limited product diversity poses challenges, and even for these products, maintaining quality standards and compliance is essential to access markets where tariff-free access is available,’ he said.

Unfortunately, Bangladesh has often struggled to meet these stringent standards in export markets, he said.

Reflecting on the past year, he noted that macroeconomic challenges underscored the critical importance of exports for a country heavily reliant on imports, particularly a nation like Bangladesh with limited raw material production.

These challenges, largely driven by the balance of payments issues, impacted the currency’s value, reserves, imports, and ultimately, industrial output. ‘This exposed Bangladesh’s significant dependence on foreign currency,’ he said.

Addressing the dilemma of import expenditures, he stressed that it primarily relies on export earnings to maintain macroeconomic stability and secure the necessary raw materials and machinery to sustain domestic industries.

Masrur Reaz pointed out that Bangladesh had already reduced the letter of credit issuance by 33 per cent to curtail imports.

However, this reduction adversely affected production, contributed to rising prices, and led to supply shortages, exacerbating inflation. He underscored the intricate interconnectedness of these factors.

He further said currently, Bangladesh heavily relies on its export market, with over 90 per cent of exports, ranging from $45 billion to $55 billion, concentrated in North America and European Union countries.

He emphasised the urgent need to diversify and expand into new markets.

He identified China, India, the Middle East, Japan, Australia, and New Zealand as promising opportunities due to their substantial internal market demands.

Reaz stressed the utmost priority of preserving existing markets, particularly in North America and the EU, given the precarious state of Bangladesh’s balance of payments.

He reiterated that in the current circumstances, Bangladesh has two primary solutions: exports and remittances.

He emphasised the vital importance of maintaining current export levels at all costs, as losing the export sector would not only jeopardise the economy and businesses but also threaten food security in Bangladesh amid the existing dollar crisis.