In confronting the problems of a narrow export base and limited export markets, Bangladesh began a series of trade policy reforms in 1990s, initially focusing on rationalising customs tariffs, the report said adding that the other notable changes included removal of quantitative restrictions and import licensing and the adoption of a flexible exchange mechanism.

In addition to tariff protection, there were a few export incentive schemes. For instance, specific export-oriented schemes including special bonded warehouse, duty drawback, export promotion and industrial parks, and preferential tax measures have benefited sectors such as readymade garment and knitwear, constituting roughly 75 percent of the total export income, the report said.

The United Nations Conference on Trade and Development (UNCTAD) recently prepared the report on 'Bangladesh-Vision for Trade Policy Formulation' on the basis of research and findings of a trade review mission.

The effectiveness of export incentive schemes in promoting trade diversification has been relatively limited, the report mentioned.

It said Bangladesh showed moderately satisfactory economic growth and export performance (15 percent) in recent years, but has not realised its full potential and on present performance is unlikely to meet some of the UN Millenium Development Goals.

The largest gains for the exporters may come from a better and developed infrastructure rather than from selective incentive measures, which favour some industries, the report said recommending that such incentive schemes should be fine-tuned to take account of the cost competitiveness of trading partners, and to promote incremental export.

A sharper focus on product and market diversification should be maintained on the policy agenda, the report suggested.

Bangladesh's weak revenue base is a matter of concern in terms of balance of payment and the reforms will have to be carried out slowly allowing sufficient time to build up an alternative revenue base, it added.

It said import tariffs and other para-tariffs, which have been discriminatory and potentially inconsistent with the WTO principles, should be rationalised on a short-term to medium-term basis.

It also said development of infrastructure needs more foreign direct investment, better revenue base and more technological development in order to achieve optimum national growth and progressively reduce poverty through increased trade.

"Lack of a strong, legal and regulatory environment, poor physical infrastructure, inefficient telecommunication and financial service system, and red-tapism in the government are the major impediments to bolstering trade and commerce," it added.

The reforms in infrastructure and service sectors have to be addressed on an urgent basis and independent regulators have to be put in place without any delay, the report recommended.