Bangladesh’s Great Take Off

Comments Off on Bangladesh’s Great Take Off 407

SUBIR BHAUMIK

Bangladesh’s economy, once consigned to be at the very bottom of the comity of nations, is looking up as never before. That should be good for India, because any growth in Bangladesh is bound to rub off on India’s poorly developed eastern and north-eastern states and also because Bangladesh is only too keen partner India in regional development. A recent assessment indicates that if Bangladesh and India partner each other with Nepal and Bhutan and link up appropriately to Myanmar and south-east Asian countries beyond it, the whole region could experience a 60 percent growth in trade in the ASEAN-SAARC region, minus Pakistan. In fact, Indian envoy in Dhaka Pankaj Saran has said India is keen to partner Bangladesh in becoming a middle income country by 2021. The good news is that Bangladesh is already on course to achieve that target before time.

The World Bank has announced in July last year that Bangladesh is no more a lower income country — it has joined the ranks of the lower-middle income country with its annual per capita income close to the $ 1500 mark. The World Bank ranks countries with per capita income between $ 1,046 to $ 4,125 as ‘lower middle income country’.

In this Saturday, Dec. 8, 2012, photo, Bangladeshi garment workers manufacture clothing in a factory on the outskirts of Dhaka, Bangladesh. About a year before a November fire at a clothing factory in Bangladesh killed 112 people, executives from Wal-Mart, Gap and other big clothing companies met nearby in the country's capital to discuss a legally binding contract that would govern safety inspections. But after a spokeswoman for Wal-Mart, the world's largest retailer, got up and said the proposal wasn't "financially feasible," the effort quickly lost momentum. (AP Photo/A.M. Ahad)

RMG sector is the backbone of Bangladesh’s economy

In May last year, the Bangladesh Bureau of Statistics had said the country’s per capita income has touched $ 1314 — up from $ 1,190 previous year. Now the World Bank has stamped its approval. But Bangladesh does not seem to suffer from the complacency seen in India, West Bengal included, where chest-thumping over the smallest of achievements has become the order of the day, So the day after the World Bank announcement, Prime Minister Sheikh Hasina went on record to revise targets — she said Bangladesh now wants to become a higher middle income nation by 2019, instead of 2021 that had been set as the target two years ago. 2019 is when she faces the next election — 2021 is when South Asia’s youngest nation turns 50.

The World Bank and the Asian Development Bank have projected Bangladesh’s GDP growth at 6.3 percent — some economists in Bangladesh say it could be just below 6 percent. The interesting fact is that all economists are circumspect about countries finance minister Muhith’s projections not for economic reasons. Their conservative estimates were prompted by the threat of political strife, but that fear has now receded with the BNP in disarray and the Jamaat hammered as never before.  Many economists say a 6 percent GDP growth would be no mean achievement but Muhith says he is ‘flying high’ because he is sure the violent strikes and blockades by the country’s Islamist opposition is a thing of the past. The World Bank and ADB have both revised their GDP growth projections for Bangladesh and pegged it at 6.7 percent.  World Bank expert Kaushik Basu has endorsed Muhith’s optimism. Though Begum Khaleda Zia has predicted that Hasina’s government ‘may collapse like Hirak Raja’, Muhith entertains no such fears. Bangladesh has set a target of emerging as a ‘middle income country’ by 2021 — the Golden Jubilee of its birth — but Muhith is sure the target will be achieved by the time his government’s tenure ends in December 2018. Somewhat like its success in achieving the Millennium Development Goals 2015 (set by UN) a good two years in advance.

if Bangladesh and India partner each other with Nepal and Bhutan and link up appropriately to Myanmar and south-east Asian countries beyond it, the whole region could experience a 60 percent growth in trade in the ASEAN-SAARC region, minus Pakistan

The bad news for Bangladesh economy is that Muhith, now in mid-eighties, may step down after the 2016-17 annual budget in July. A frontrunner for his job is Planning Minister ‘Lotus” Mustafa Kamal, but he has given no real evidence of his abilities and his close links with the Islami Bank worries many in the Awami League. It may be time that Hasina considers appointing as finance minister a real hardcore public finance professional — a top bureaucrat who has been responsible for much of Muhith’s success may step down from his job , contest polls on an Awami League ticket and step into Muhith’s shoes. The examples of Ashim Dasgupta and Amit Mitra across the border in West Bengal or Manmohan Singh in Delhi is worth consideration for Bangabandhu’s daughter if she is keen to achieve all targets.

Japanese Prime Minister Shinzo Abe (R) and Bangladesh Prime Minister Sheikh Hasina (L) pose for a photo after a signing ceremony at the Prime Minister's office in Dhaka on September 6, 2014. Japanese premier Shinzo Abe secured Dhaka's support for Tokyo's bid for a non-permanent seat in the UN Security Council as he started a three-day visit to Bangladesh and Sri Lanka aimed at offsetting China's mounting influence in South Asia. AFP PHOTO/ Munir uz ZAMAN (Photo credit should read MUNIR UZ ZAMAN/AFP/Getty Images)

Prime Minister Hasina with her Japanese counterpart       Getty Images

Bangladesh has a current account surplus of more than $ 2 billion, likely to improve further if oil import prices stay low. Its foreign exchange reserves has touch $ 25 billion and its annual remittance inflow has crossed the $ 15 billion mark. Its ready-made garment exports touched $ 17 billion in 2014-15 and is likely to touch $ 20 billion if India opens up its markets fully.

The Bangladesh garment exporters association BGMEA and BKMEA met PM Narendra Modi during his Dhaka visit and asked for land in Gujarat to set up a massive warehouse for facilitating easy market access in India. After Bangladesh’s decision to allow transport of goods and people between Indian mainland and its remote northeast , these are the kind of favours India needs to do without much delay to create win-win situation. Bangladesh has also streamlined its labour exports, cracking down hard on illegal migration, specially agents who promote it for huge commissions. Illegal migrants don’t send back remittances, legals do.

Bangladesh’s effort to build the 6.5 kms railroad bridge on the mighty Padma with its own resources will, when completed, link the Dhaka capital region to 21 southern districts. Economist’s estimate that will add I percent to national GDP.

Instead of one, Bangladesh is now seemingly going for 2 deep sea ports — one at Matarbari funded by the Japanese, the other at Sonadia possibly funded by the Chinese. It intends to boost its railways and water transport with the additional $ 1 billion line of credit extended by India. This is good news for India which seeks to access its Northeast by using these ports. Chittagong and Mongla are old ports not capable of taking the additional load Indian cargo traffic will put on Bangladesh’s networks.

103241258

New Delhi and Dhaka opening the 28th land port at Banglabandha – Phulbari that gives Bangladesh access to the Himalayan countries of Bhutan and Nepal

Former DONER minister, Mani Shankar Aiyar had once said that India should allow Bangladesh private capital to invest in Northeast because Indian private capital just won’t. Tripura has taken the cue, getting food-and-beverage giant PRAN to invest in a fruit processing unit near Agartala. Possibly a tyre plant using Tripura rubber is likely when Bangladesh’s Nitol-Niloy Motors goes ahead with its plans to manufacture Tata’s Nano cars in Bangladesh.

The recently-held Tripura Conclave, a private policy dialogue platform in the state, has urged Bangladesh’s fledgling IT industry to use Tripura as its backyard. This is because Tripura’s capital Agartala will soon emerge as India’s third Internet Gateway after Mumbai and Chennai following an India-Bangladesh agreement to extend the submarine Net cable from Cox’s Bazar to Agartala. During Modi’s Bangladesh visit, India also signed an agreement with Bangladesh to purchase 10 GBPS (gigabytes per second) surplus bandwidth that can go upto 40 GBPS after the second year.

Coordinated with Bangladesh’s own plans to develop its IT industry and earn $ 1 billion for IT exports by 2017, one could be looking at the replication of a Bangalore-Hyderabad syndrome in Bangladesh and India’s east. The organisers of the Tripura Conclave, a policy brainstorming private effort, is looking at the prospects of an IT park on the lines of the one that  Bangladesh’s Summit Group is setting up in Gazipur north of Dhaka in partnership with Infosys. More such trans-border ventures is sure to benefit eastern and northeastern states in dire need for investments. Rising income in Bangladesh also means more students and tourists, medical and otherwise, flowing into eastern India, spending heavily on shopping to education to medical treatment. It is no secret how many of Calcutta’s hospitals break even on patients from Bangladesh.

Instead of one, Bangladesh is now seemingly going for 2 deep sea ports — one at Matarbari funded by the Japanese, the other at Sonadia possibly funded by the Chinese

Foreign ventures in Bangladesh, multiplying steadily in recent months, are looking to extend production facilities in eastern and northeastern Indian states to improve market access and also target markets in Myanmar and China and beyond. On the other hand, Indian business houses not yet confident of investing in Bangladesh are looking to invest in Tripura which promises power, peace and proximity to Bangladesh as its selling points. Ratan Tata’s recent visit to Agartala is significant — after bitter experience in both Bangladesh and West Bengal (at Singur), the former Tata chief may be looking at a safe place not far from the bigger markets of Bangladesh and West Bengal. That he stressed on Tripura’s excellent connectivity pointed to a gaze at markets beyond the tiny state.

Bangladesh has also unfolded plans to develop, in partnership with India, its ‘blue economy ‘, something that could positively impact on the growth in India’s East. With its new coastal shipping agreement with India, the thrust on ‘blue economy’ opens prospects for much cross-border investments. For the mandarins in Nabanna, it may often be useful to look east in the immediate neighborhood rather than far west to London or far east to Singapore for investments and growth. Tiny Tripura has done that rather smartly.

 

Similar articles