Bangladesh is going to enter a bilateral duty-free trade era by signing a preferential trade agreement (PTA) with Bhutan on Sunday.
The signing of the treaty marks the 50th anniversary of bilateral and diplomatic relations between the two countries.
Commerce Minister Tipu Munshi made the remarks while addressing a press briefing at the Foreign Service Academy in Dhaka on Saturday evening.
Tipu Munshi and Bhutanese Economic Affairs Minister Loknath Sharma will sign the PTA on behalf of their respective countries.
Prime Minister Sheikh Hasina and her Bhutanese counterpart Lotay Tshering will join the signing ceremony virtually.
During the ratification of the treaty, both prime ministers are also scheduled to unveil a logo virtually, marking the 50-year friendship between Bangladesh and Bhutan.
Bhutan was the first country to recognise Bangladesh's independence on 6 December, 1971.
In the last 10 years, bilateral trade between the two countries has increased five times.
Bangladesh relies on Bhutan for stone imports, which are increasing day by day as a number of mega projects are going on, said Commerce Minister Tipu Munshi.
"Ours is a large trade market for Bhutan. Similarly, we have great potential to export RMG products," he added.
"We chose to sign the trade agreement with Bhutan out of our gratitude to a true friend, not considering the size of the country, nor even business volume," he continued.
Bhutan is the first country that accredited Bangladesh's independence, when Bangladesh was still far from victory, the minister recalled.
"We will be able to sign a number of PTAs and free trade agreements [FTAs] by June next year as 11 countries – including Indonesia, Nepal and Japan – are opting to do so," he said.
Under the agreement, 100 Bangladeshi products, including RMGs, will get duty-free access to the Bhutanese market while 34 Bhutanese items will have duty-free access to Bangladesh's market, according to the information from the commerce ministry.
Trade between Bangladesh and Bhutan, which amounted to $12.77 million in Fiscal Year 2008-09, reached $49.6 million in FY19.
Of the amount, Bhutan's exports stood at $42.09 million while those of Bangladesh only at $7.56 million, according to EPB data.
Asked about duty loss in the wake of PTA or FTA agreements, Commerce Secretary Md Jafar Uddin said the country's revenue structure mainly depends on customs duty.
"If we sign PTAs or FTAs, those may lead to duty loss, but from the mid- or long-term perspective, benefits will be greater," he said.
Duty loss may be offset by tax or VAT, said the commerce secretary.
"We have no option but to sign the treaty as we have no clear idea if Bangladesh will enjoy the GSP facility in the EU after 2024," he added.
He further explained that the free trade agreements will also help Bangladesh boost its export earnings, which will generate more employment opportunities for people in Bangladesh.