COMMERCE MINISTER ASSERTS NEW GOVERNMENT

C O N F I D E N T I A L SECTION 01 OF 02 DHAKA 000094 SIPDIS DEPT FOR SCA/PB, EEB/BTA DEPT PLEASE PASS USTR DEPT PLEASE PASS USAID DEPT PLEASE PASS PEACE CORPS E.O. 12958: DECL: 01/25/2019 TAGS: ECON ETRD EINV PGOV PINR PREL BG SUBJECT: COMMERCE MINISTER ASSERTS NEW GOVERNMENT BUSINESS-FRIENDLY Classified By: Ambassador James Moriarty, Reasons 1.4 (b) and (d). Summary ======= ¶1. (U) In a meeting with Ambassador Moriarty 1/25/09 Bangladesh's new Commerce Minister Faruk Khan, a close confidant of Prime Minister Sheik Hasina, expressed optimism about the business climate in Bangladesh under the new government. Elected by a landslide in his constituency, the Minister cited the business community as a major base of support for the Awami League (AL) in the recent parliamentary election. A retired colonel, who received military training in Kansas and participated in an International Visitors Program on governance, Khan spoke highly of the United States and expressed enthusiasm for working with the Obama Administration. He made a plea for more favorable treatment of Bangladesh in US trade policy. Ambassador Moriarty commented on Bangladesh's potential for economic expansion, emphasizing the importance of market-friendly policies in realizing that potential. The Ambassador also inquired about the draft Trade and Investment Framework Agreement (TIFA). Awami League Victory: A Pro-Business Mandate ============================================ ¶2. (C) Khan cited the business community as one of the three main bases of AL support in the recent election, along with women and young voters. The business community, he said, had suffered for seven years under a bad business climate, five years under the "extortionist" BNP-led government and two years of being "targeted" by the caretaker government. Khan declared his message to the business community was, "This is your government" and stated he would heed its input in making the country as business-friendly as possible. He acknowledged improvements at the Port of Chittagong as an important achievement of the caretaker government, citing port operations as an example of where he would seek the advice of business leaders. While stating that keeping staple prices low was a priority, he pointedly avoided the term "price control." He downplayed the role of the Trading Corporation of Bangladesh, a defunct state board, which Sheikh Hasina recently announced she might reinstate to control commodity prices. Trade: Confidence despite downturn ================================== ¶3. (C) According to Khan, Bangladesh's export industries continue to thrive, despite the global economic downturn. As of November, exports were still increasing as importers of goods from other countries switched to Bangladesh's price-competitive products. He felt labor compliance requirements by importers were reasonable and acknowledged their long-term benefit. He raised concern about U.S. trade barriers against garment imports, which disproportionately affect Bangladesh. He expressed hope the U.S. would consider Bangladesh's new democratic commitment, its cooperation on counter-terrorism and its status as a less-developed country. The Ambassador responded that Bangladesh was in part a victim of its own success as other exporters, particularly in Africa, increasingly viewed Bangladesh as a formidable competitor, and were lobbying the USG accordingly. ¶4. (SBU) The Ambassador inquired about the status of the TIFA, a draft of which the U.S. Trade Representative had forwarded to the GOB in June 2008. He emphasized the importance of the TIFA in streamlining bilateral dialogue on economic issues. Khan replied the draft had been approved by the Ministry and that the Cabinet would review it very soon. No reason Bangladesh cannot do well =================================== ¶5. (SBU) The Ambassador commented on Bangladesh's enormous economic potential, and the growing interest in the country by major U.S. companies. He cited Bangladesh's comparative advantage on labor costs and energy reserves, largely untapped, and its entrepreneurial spirit as showing great promise. In a tight economic environment these attributes would increasingly attract business activity away from countries such as China toward Bangladesh. With the right policies in place, he stated, there was no reason Bangladesh should not do well economically. DHAKA 00000094 002 OF 002 Comment ======= ¶6. (C) Referring to the transition in both of our countries Khan declared there was now an unprecedented opportunity to rejuvenate the bilateral relationship and embark on a new commitment to address economic challenges together. He has Sheik Hasina's trust. His efforts to win Cabinet approval for the TIFA will represent an interesting first test of his ability to translate his views on the bilateral economic relationship into reality. MORIARTY