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Target 8% plus for 10 years

Black_cats

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Target 8% plus for 10 years

ECONOMY
TBS Report
21 January, 2021, 10:15 am
Last modified: 21 January, 2021, 10:51 am



The eight-lane Dhaka-Bhanga Expressway aims to make the communication easy for the people of 22 southwestern districts. Once the construction of Padma Bridge is completed, the expressway will come to be used in its full capacity. The photo was taken at Abdullahpur in Keraniganj recently. Photo: Mumit M/TBS



The eight-lane Dhaka-Bhanga Expressway aims to make the communication easy for the people of 22 southwestern districts. Once the construction of Padma Bridge is completed, the expressway will come to be used in its full capacity. The photo was taken at Abdullahpur in Keraniganj recently. Photo: Mumit M/TBS

To be an upper middle income country by 2031, Bangladesh needs to double the per capita income of its people from $2,000 now, which will require the economy to grow by more than 8% every year, say the country's top economists.
While a lot depends on how fast the global economy recovers from the coronavirus devastation, they add, extensive preparations are needed at home fronts for export diversification and expansion, bigger investment and higher productivity – which calls for more advanced technologies, innovations and skills development.

Achieving the thresholds for an upper middle-income country is not impossible, they believe, if hurdles to businesses are removed and additional investments are made in human capital – education and public health.

As The Business Standard enters its second year of publication, we have approached an array of economists, businesspeople and experts to know what the economy needs now for achieving Goal 2031 set by Bangladesh.

This is what they said to our reporters Abul Kashem, Jahidul Islam, Mir Jasim, Tawsia Tajmin, Mehedi Al Amin and Sukanta Halder.

If the reform measures being implemented now keep going, it will accelerate the engine of economic growth, expediting the recovery from the damage caused by the pandemic and setting Bangladesh on strong foot to march towards Goal 2031.

The binding constraints on investment are well known – lack of land, availability of utilities, inefficient trade logistics, regulatory complexities, skills shortage, erosion of preferences in international market access and so on, says economist Zahid Hussain.

Economic zones need to be readied for investors, who also want to see unfriendly regulations go before they plan expansion in their businesses.

Once the construction of Padma Bridge is completed, the expressway will come to be used in its full capacity. The photo was taken at Abdullahpur in Keraniganj recently. Photo: Mumit M/TBS



Once the construction of Padma Bridge is completed, the expressway will come to be used in its full capacity. The photo was taken at Abdullahpur in Keraniganj recently. Photo: Mumit M/TBS

Huge amount of investment from both domestic and abroad will require to double the real income by the next 11 years to put the country at the upper middle income level, says Dr Khan Ahmed Sayeed Murshid, director general of Bangladesh Institute of Development Studies.
Higher growth will come with a wider inequality if enough jobs are not created.

Decentralisation of industrialisation and more focus on industries having domestic demand could help reduce inequality, Dr Murshid feels.
Economist Dr Monzur Hossain thinks small and medium enterprises, if supported adequately, could take the economy forward. "This sector has generated the highest employment. It will not be possible to take the country to the level of higher middle income without giving proper attention to the SME sector," he says.

Climate change and its fallout remain a key worry. While striving for higher economic growth, we must not keep our eyes shut to pollution of rivers, depletion of forests.

Environmentalist Dr Saleemul Huq believes Bangladesh's climate related laws are good and if those are implemented, the country can have a much better environment condition in 2031 than now.

We have a huge population with working age, but there is a lack of skills both for domestic and overseas job markets. Educationists call for higher spending in quality education for improvement of skills suiting the future job needs.

Business leader Anwar-ul Alam Chowdhury Parvez strongly believes that Bangladesh will graduate to the next phase of growth in the next 10 years if the planned mega infrastructure projects and 100 economic zones are completed, education is tuned to the skill needs of industries.

"But graduation to a higher income economy would not be possible if we rely solely on apparel and textile sectors. We must improve our light engineering sector," he says.

Economic growth will not be meaningful if people do not get services, their health and rights not protected. If we can ensure that people will get treatments for cancer, diabetes and heart ailments free of cost in the next 10 years, we will get world class healthcare, says Professor Be-Nazir Ahmed, a public health expert.

People's access to services and utilities is one of the indicators of how good or bad governance we have. If citizens' economic and social rights are protected by effectively reducing corruption, Bangladesh's ranking in governance index will definitely turn positive in the next 10 years, former cabinet secretary Ali Imam Majumder hopes.
 
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Surya 1

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Target 8% plus for 10 years

ECONOMY
TBS Report
21 January, 2021, 10:15 am
Last modified: 21 January, 2021, 10:51 am



The eight-lane Dhaka-Bhanga Expressway aims to make the communication easy for the people of 22 southwestern districts. Once the construction of Padma Bridge is completed, the expressway will come to be used in its full capacity. The photo was taken at Abdullahpur in Keraniganj recently. Photo: Mumit M/TBS



The eight-lane Dhaka-Bhanga Expressway aims to make the communication easy for the people of 22 southwestern districts. Once the construction of Padma Bridge is completed, the expressway will come to be used in its full capacity. The photo was taken at Abdullahpur in Keraniganj recently. Photo: Mumit M/TBS

To be an upper middle income country by 2031, Bangladesh needs to double the per capita income of its people from $2,000 now, which will require the economy to grow by more than 8% every year, say the country's top economists.
While a lot depends on how fast the global economy recovers from the coronavirus devastation, they add, extensive preparations are needed at home fronts for export diversification and expansion, bigger investment and higher productivity – which calls for more advanced technologies, innovations and skills development.

Achieving the thresholds for an upper middle-income country is not impossible, they believe, if hurdles to businesses are removed and additional investments are made in human capital – education and public health.

As The Business Standard enters its second year of publication, we have approached an array of economists, businesspeople and experts to know what the economy needs now for achieving Goal 2031 set by Bangladesh.

This is what they said to our reporters Abul Kashem, Jahidul Islam, Mir Jasim, Tawsia Tajmin, Mehedi Al Amin and Sukanta Halder.

If the reform measures being implemented now keep going, it will accelerate the engine of economic growth, expediting the recovery from the damage caused by the pandemic and setting Bangladesh on strong foot to march towards Goal 2031.

The binding constraints on investment are well known – lack of land, availability of utilities, inefficient trade logistics, regulatory complexities, skills shortage, erosion of preferences in international market access and so on, says economist Zahid Hussain.

Economic zones need to be readied for investors, who also want to see unfriendly regulations go before they plan expansion in their businesses.

Once the construction of Padma Bridge is completed, the expressway will come to be used in its full capacity. The photo was taken at Abdullahpur in Keraniganj recently. Photo: Mumit M/TBS



Once the construction of Padma Bridge is completed, the expressway will come to be used in its full capacity. The photo was taken at Abdullahpur in Keraniganj recently. Photo: Mumit M/TBS

Huge amount of investment from both domestic and abroad will require to double the real income by the next 11 years to put the country at the upper middle income level, says Dr Khan Ahmed Sayeed Murshid, director general of Bangladesh Institute of Development Studies.
Higher growth will come with a wider inequality if enough jobs are not created.

Decentralisation of industrialisation and more focus on industries having domestic demand could help reduce inequality, Dr Murshid feels.
Economist Dr Monzur Hossain thinks small and medium enterprises, if supported adequately, could take the economy forward. "This sector has generated the highest employment. It will not be possible to take the country to the level of higher middle income without giving proper attention to the SME sector," he says.

Climate change and its fallout remain a key worry. While striving for higher economic growth, we must not keep our eyes shut to pollution of rivers, depletion of forests.

Environmentalist Dr Saleemul Huq believes Bangladesh's climate related laws are good and if those are implemented, the country can have a much better environment condition in 2031 than now.

We have a huge population with working age, but there is a lack of skills both for domestic and overseas job markets. Educationists call for higher spending in quality education for improvement of skills suiting the future job needs.

Business leader Anwar-ul Alam Chowdhury Parvez strongly believes that Bangladesh will graduate to the next phase of growth in the next 10 years if the planned mega infrastructure projects and 100 economic zones are completed, education is tuned to the skill needs of industries.

"But graduation to a higher income economy would not be possible if we rely solely on apparel and textile sectors. We must improve our light engineering sector," he says.

Economic growth will not be meaningful if people do not get services, their health and rights not protected. If we can ensure that people will get treatments for cancer, diabetes and heart ailments free of cost in the next 10 years, we will get world class healthcare, says Professor Be-Nazir Ahmed, a public health expert.

People's access to services and utilities is one of the indicators of how good or bad governance we have. If citizens' economic and social rights are protected by effectively reducing corruption, Bangladesh's ranking in governance index will definitely turn positive in the next 10 years, former cabinet secretary Ali Imam Majumder hopes.
Simultaneously, Bangladesh should focus on development in new technology intensive areas. Mere textile and other labor intensive works are good to some extent only. BD should focus on Film industries, IT, automobile etc. so that their growth remains sustainable.
 

Black_cats

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Per capita GNI will have to rise above $4,046 by 2031

ANALYSIS
Zahid Hussain
20 January, 2021, 10:50 pm
Last modified: 21 January, 2021, 10:51 am



This will require about 8.5% growth every year in nominal dollar GNI from now onwards


Per capita GNI will have to rise above $4,046 by 2031 from the current $2,000 in nominal dollar terms to attain the status of upper middle-income country (UMIC). This will require about 8.5% growth every year in nominal dollar GNI from now onwards. Shortfall each year will increase the growth required in subsequent years. Yes, the thresholds change, but the point is to get the economy on track to UMIC status.
A lot needs to happen on both the external and domestic fronts for this to be possible. The global economy must turn around from the ongoing crises. Exporters would be unable to diversify and expand without a sustained global recovery. Covid-19 related constraints on global connectivity are likely to ease by the end of this year and a new-normal will emerge. Whatever the new normal may be, be rest assured it will present both opportunities and challenges.

Taking advantage of the opportunities and coping with the challenges will require increase in the level of investment and improvement of productivity through technological advancement. The binding constraints on investment are well known – lack of land, availability of utilities, inefficient trade logistics, regulatory complexities, skills shortage, erosion of preferences in international market access and so on. The technical solutions are known as well. The government has taken several initiatives in line with the known solutions, but implementation progress is short of what is needed to get sustained 8 plus percent growth.

Investors are interested in the economic zones in Chattagram, Narayanganj and areas around Dhaka city. They will be interested to locate in the south west region of the country after the Padma Bridge goes into operation. Delays in completing the economic zones in these areas will delay the flow of investment and may even make some investors seek alternatives to Bangladesh.

The economic zones are not a panacea. Regulations on entry, operation and exit of businesses are onerous and not always predictable. Problems related to these issues have been identified. Several reform initiatives are also underway. The challenge is to take them to the finish line.

Skill availability is another problem. We will not be able to compete in the global marketplaces without changing the orientation of our education and training system towards science, technology, engineering, and mathematics from the extremely basic level.

Managing urbanisation to reduce congestion and messiness, digital development, mobilising savings locally and from abroad and channelling them towards productive investment will be key.

We also need to step up economic diplomacy at the bilateral, regional, and global levels to address a variety of threats to the sustainability of Bangladesh's development.

Achieving the upper middle-income aspiration is not impossible. Realising it in ways that leave no one behind requires major overhaul of the institutions of economic governance to leverage the state and markets.
Zahid Hossain is the Former Lead Economist at World Bank's Dhaka office
 

SpaceMan18

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Simultaneously, Bangladesh should focus on development in new technology intensive areas. Mere textile and other labor intensive works are good to some extent only. BD should focus on Film industries, IT, automobile etc. so that their growth remains sustainable.
Easier said then done , lets first fix our shitty education and then dream big.

It's like dreaming of buying a new car but you don't even have a job , exactly
 
Oct 27, 2014
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Simultaneously, Bangladesh should focus on development in new technology intensive areas. Mere textile and other labor intensive works are good to some extent only. BD should focus on Film industries, IT, automobile etc. so that their growth remains sustainable.
This is where india did mistake, you can’t invest on innovation based industry when you have a huge demographic of skilled workers that can contribute with value added goods, skipping the small scale bites you in the long run. Bangladesh so far has been following east Asia development model
 

SpaceMan18

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This is where india did mistake, you can’t invest on innovation based industry when you have a huge demographic of skilled workers that can contribute with value added goods, skipping the small scale bites you in the long run. Bangladesh so far has been following east Asia development model
But with no innovation everyone kicks your a$$ and you don't stand out , I would invest into innovation and at the same time create many jobs
 

bluesky

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Guys, please do not worry about this 8% growth. Our great BBS will finetune the national data to make it happen. We will keep on celebrating every fiscal yearend.
 
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Bilal9

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Per capita GNI will have to rise above $4,046 by 2031

ANALYSIS
Zahid Hussain
20 January, 2021, 10:50 pm
Last modified: 21 January, 2021, 10:51 am



This will require about 8.5% growth every year in nominal dollar GNI from now onwards


Per capita GNI will have to rise above $4,046 by 2031 from the current $2,000 in nominal dollar terms to attain the status of upper middle-income country (UMIC). This will require about 8.5% growth every year in nominal dollar GNI from now onwards. Shortfall each year will increase the growth required in subsequent years. Yes, the thresholds change, but the point is to get the economy on track to UMIC status.
A lot needs to happen on both the external and domestic fronts for this to be possible. The global economy must turn around from the ongoing crises. Exporters would be unable to diversify and expand without a sustained global recovery. Covid-19 related constraints on global connectivity are likely to ease by the end of this year and a new-normal will emerge. Whatever the new normal may be, be rest assured it will present both opportunities and challenges.

Taking advantage of the opportunities and coping with the challenges will require increase in the level of investment and improvement of productivity through technological advancement. The binding constraints on investment are well known – lack of land, availability of utilities, inefficient trade logistics, regulatory complexities, skills shortage, erosion of preferences in international market access and so on. The technical solutions are known as well. The government has taken several initiatives in line with the known solutions, but implementation progress is short of what is needed to get sustained 8 plus percent growth.

Investors are interested in the economic zones in Chattagram, Narayanganj and areas around Dhaka city. They will be interested to locate in the south west region of the country after the Padma Bridge goes into operation. Delays in completing the economic zones in these areas will delay the flow of investment and may even make some investors seek alternatives to Bangladesh.

The economic zones are not a panacea. Regulations on entry, operation and exit of businesses are onerous and not always predictable. Problems related to these issues have been identified. Several reform initiatives are also underway. The challenge is to take them to the finish line.

Skill availability is another problem. We will not be able to compete in the global marketplaces without changing the orientation of our education and training system towards science, technology, engineering, and mathematics from the extremely basic level.

Managing urbanisation to reduce congestion and messiness, digital development, mobilising savings locally and from abroad and channelling them towards productive investment will be key.

We also need to step up economic diplomacy at the bilateral, regional, and global levels to address a variety of threats to the sustainability of Bangladesh's development.

Achieving the upper middle-income aspiration is not impossible. Realising it in ways that leave no one behind requires major overhaul of the institutions of economic governance to leverage the state and markets.
Zahid Hossain is the Former Lead Economist at World Bank's Dhaka office
I love anything that comes out of this man's keyboard.

An understated, soft-spoken, self-effacing human being. Salaam!
 

Bilal9

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Did india focus on low skill industry?
did they focus on value addition?
All I see is they went straight to heavy industry like automobiles when they lacked the foundation to support such industry.
After 1948, Nehru acknowledged that India was ancient, but he also sought to align it to the modern world and the era he was a part of.

To that end he used the State as an instrument to modernize, by taxing the population to fund heavy industry. Nehru based his strategy on two things: Heavy industry and higher education. India had limited resources but these two would get priority.

Whether the strategy was good, bad or indifferent he did execute what he sought out to do.

Having determined that he was going to modernize this civilizational entity, he set about doing it because Nehru was not only a man of vision but also a man of action.

He began building institutions, including some that are called today the Navaratnas but were then nothing and needed to be built.

Bharat Heavy Electricals Ltd (1964),
Oil and National Gas Corporation (1956),
Steel Authority of India (1954),
Hindustan Aeronautics Ltd (1964),
Indian Oil Corporation (1959),
ISRO (formerly INCOSPAR) 1962,
Department of Atomic Energy (1954),
Bhabha Atomic Research Centre (1954).

The list goes on.

Why were all these set up? They were set up because they are the means through which Nehru determined India would be modernized.

He inherited a pre-modern economy, where the vast majority of production lay in agriculture and that agriculture was being managed by a farmer whose means of farming had changed little over 1000 years.

Nehru did not inherit a trillion Dollar economy: He had to figure out how to get India there.

The problem was that these State-controlled entities would need to be divested at some point in two decades when they outgrew their usefulness as incubators of private industry and assisting their growth. But they never were and hung around bleeding money forever, until Manmohan Singh the brilliant economist finally liberalized the Indian economy.

In fact although shrunk to much smaller dimensions, these Indian state institutions are still largely inefficient, serving as safe places to have Baboos park their fat rears and careers, with full Baboo benefits.

But what Nehru did not realize that most Asian economies at that time were already following Japanese footsteps (Taiwan and S. Korea) and that they had started taking over labor intensive industry from the Japanese (like Shoes, apparel, handicrafts, plastics, ceramics), where Japan labor was already getting expensive.

This labor intensive export-based industrial bandwagon was totally missed in Indian industrial arena.

Auto Industry in India exists mainly to supply substandard models to local market ("Indianized" technology which is back-dated to save money). Indian automotive products cannot compete in the larger market.

Auto Industry is not successful anywhere unless the back-end component industry is not set up properly. This is the same for India too. I'd say Malaysia suffered in this as well. If you don't have timely supply of reasonably priced auto parts, auto industry will not take off on imported parts.

For example, Hyundai was a supplier for many components to Mitsubishi for three decades until they decided to come up with their first small sedan, which interestingly was a copy of a Mitsubishi model itself, built under license. Many years later they started to develop their own designs, and also started to export overseas.
 
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Oct 27, 2014
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After 1948, Nehru acknowledged that India was ancient, but he also sought to align it to the modern world and the era he was a part of.

To that end he used the State as an instrument to modernize, by taxing the population to fund heavy industry. Nehru based his strategy on two things: Heavy industry and higher education. India had limited resources but these two would get priority.

Whether the strategy was good, bad or indifferent he did execute what he sought out to do.

Having determined that he was going to modernize this civilizational entity, he set about doing it because Nehru was not only a man of vision but also a man of action.

He began building institutions, including some that are called today the Navaratnas but were then nothing and needed to be built.

Bharat Heavy Electricals Ltd (1964),
Oil and National Gas Corporation (1956),
Steel Authority of India (1954),
Hindustan Aeronautics Ltd (1964),
Indian Oil Corporation (1959),
ISRO (formerly INCOSPAR) 1962,
Department of Atomic Energy (1954),
Bhabha Atomic Research Centre (1954).

The list goes on.

Why were all these set up? They were set up because they are the means through which Nehru determined India would be modernized.

He inherited a pre-modern economy, where the vast majority of production lay in agriculture and that agriculture was being managed by a farmer whose means of farming had changed little over 1000 years.

Nehru did not inherit a trillion Dollar economy: He had to figure out how to get India there.

The problem was that these State-controlled entities would need to be divested at some point in two decades when they outgrew their usefulness as incubators of private industry and assisting their growth. But they never were and hung around bleeding money forever, until Manmohan Singh the brilliant economist finally liberalized the Indian economy.

In fact although shrunk to much smaller dimensions, these Indian state institutions are still largely inefficient, serving as safe places to have Baboos park their fat rears and careers, with full Baboo benefits.

But what Nehru did not realize that most Asian economies at that time were already following Japanese footsteps (Taiwan and S. Korea) and that they had started taking over labor intensive industry from the Japanese (like Shoes, apparel, handicrafts, plastics, ceramics), where Japan labor was already getting expensive.

This labor intensive export-based industrial bandwagon was totally missed in Indian industrial arena.

Auto Industry in India exists mainly to supply substandard models to local market ("Indianized" technology which is back-dated to save money). Indian automotive products cannot compete in the larger market.

Auto Industry is not successful anywhere unless the back-end component industry is not set up properly. This is the same for India too. I'd say Malaysia suffered in this as well. If you don't have timely supply of reasonably priced auto parts, auto industry will not take off on imported parts.

For example, Hyundai was a supplier for many components to Mitsubishi for three decades until they decided to come up with their first small sedan, which interestingly was a copy of a Mitsubishi model itself, built under license. Many years later they started to develop their own designs, and also started to export overseas.
Bro I couldn’t have said it better. Exceptional job. Completely agree.
nehru went against the grain in almost everything, I would go so far to say he contributed to dividing india, just so Hindus are in power
 

Bilal9

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These are some of the most key components in automotive industry that has to be sourced locally before an automotive industry is successful. Most of these are hot-forged using ten/twenty thousands of pounds of impact pressure on soft metal, then machined using CNC machining centers.

Steering knuckle and hubs (two separate parts that go together)




Front/Rear Axle assembly


Universal joints


Engine Crankshafts


Piston arms
 

SpaceMan18

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These are some of the most key components in automotive industry that has to be sourced locally before an automotive industry is successful. Most of these are hot-forged using ten/twenty thousands of pounds of impact pressure on soft metal, then machined using CNC machining centers.

Steering knuckle and hubs (two separate parts that go together)




Front/Rear Axle assembly


Universal joints


Engine Crankshafts


Piston arms

We better get going then , Bangladesh is a small nation it needs heavy industries to even stand out and actually grow the economy.


We can't be making clothes and exporting fish forever , we need better high tech consumer goods that will change our image for the better.

Lets be honest AL isn't serious for developing Bangladesh
 

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