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Bangladesh -- the best kept secret of Asia
Bangladesh -- the best kept secret of Asia
Ferdaus Ara Begum
In a conference held recently in Dhaka policy planners have made a projection that the country will reach MIC (middle income country) status by 2021 and even earlier and can become the 30th largest economy in the world by 2030. It is possible for the country to become a powerful economy of US$1.0 trillion GDP at PPP basis by this time if all its potentials indicated by different international organizations are utilized effectively. Dhaka Chamber of Commerce of Industry (DCCI) organized the conference and presented the concept with some specific strategies.
The strategies prepared by DCCI have opened up a new process of consultation with the goal of progressing further in harmony with the "Vision 2021" presented by the government. In order to build the positive image of the country the outcome of the deliberations in the conference will act as a supporting element and help to consolidate implementable strategies as has been viewed by all concerned. The different sessions of the conference tried to project the potentials of Bangladesh and to search prescriptions on how best these can be translated into reality.
The Prime Minister has already elaborated some strategies taken by her government and emphasized on the need for innovative home-grown technologies so that we can utilize our limited resources in the most effective manner. She emphasized the need for Branding Bangladesh and advocated the use of IT as a tool in all spheres of life to make access to services easy. In this respect she said that 8,500 post offices in Bangladesh are furnished with e-centres now which are capable to provide services to the rural people. This will help reduce the urban-rural gap and enhance connectivity within the country and eventually move further to integrate the rural population with the world.
RnD Bangladesh, a private public partnership initiative to create a suitable platform to discuss policies and strategies, has been endorsed as one of the vehicles to reduce dependence on foreign technologies and thus help enhance adaptation capacities to ensure technology transfer.
DCCI has introduced Young Visionaries Competition for the first time in the country. The Prime Minister appreciated the role of DCCI in this respect and encouraged their involvement. In the concluding session of the conference, the Commerce Minister said that the participants of the YVA will get a chance to share their ideas with the PM through their presentation which may give some direction to redesign strategies suitable for the next generation.
The Finance Minister in his message termed the conference of DCCI as a landmark. He said that Bangladesh is the 8th largest country in the world as far as population is concerned, and in terms of PPP in US dollar, it is the 44th largest country in the world. Its international trade accounts for 40% of its national wealth. It is at the same time a land of impossible attainment. Everybody, including the Finance Minister, said that the secret of Bangladesh's growth lies in human resources development, employment generation and release of creative energies of the people.
Dr Gus Papanek in his speech said that every year about two million people are joining the job market but only one million get jobs, including jobs abroad. The remaining one million people are disguisedly employed. Echoing the Finance Minister, he said if all the resources available can be put together, Bangladesh can go much faster. Referring to the Chinese economy and rising wage structure in their country, he said Bangladesh has got an opportunity of a life time to make to attract investment. In case Bangladesh missed the train, he warned, others will take the opportunity. He gave examples of the labour wages of other countries which are: Cambodia (US $ 61/month), China ( $150-250/month), India (US$ 87), Indonesia (140-155), Vietnam ($63-90/month) etc. He said, even though wages in Bangladesh has also been increasing but still it is much lower than comparative countries. Giving an example of China, he said, China is producing about one-third of textile and electronic products of the country. China's export of garments and textiles were US $185 billion in 2008, capturing just 10% of the market would more than double all Bangladesh exports. In short, the declining competitiveness of China for labour-intensive manufactures is opening up a huge market for other countries. If increase is made at 35% a year, a rate that other countries have achieved, then it would add one million jobs a year directly in these countries and two million jobs a year once indirect effects are taken into account, Dr Papanek said. Bangladesh would need to be quick and make all-out efforts to exploit these emerging opportunities.
This is, of course, not an easy task as Bangladesh has been facing some challenges. Strategies should be drawn in such a way so that it can face these challenges. The national budget for 2009-10 predicted a lower capital productivity i.e., relatively more capital is required for output. Incremental capital output ratio (ICOR) has been shown at 4.4 for fiscal 2009-10, compared to 4.1 in 2008-09 and 3.9 in 2007-08 respectively. The average ICOR for the last five years was 3.9. It indicates that capital productivity has decreased in 2009-10.
ICOR is matrices that assesses the marginal amount of investment capital necessary for an entity to generate the next unit of production. Overall, a higher ICOR value is not preferred because it indicates that the entity's production is inefficient. Lower productivity of capital investment caused by lack of governance and confidence in the business and industry and inadequate infrastructure (both hard and soft). The government is concerned about the issue and several steps to reduce cost of doing business have been suggested. One of them is to automate business services as much as possible. A number of PPP initiatives have also been proposed by the government as one of the immediate prescriptions.
Better implementation of ADP was another challenge. Poverty eradication through enhancement of employment, supported by rural-based industrial development, were one of the priorities. Over the years ADP implementation failed to meet the target for leaving local projects to local bodies to build roads and other infrastructure.
Among other challenges, quality of education, low tax-GDP ratio, natural calamities and disaster-prone agriculture, declining productive of land (around 1% per year), slow implementation of governance management projects, bureaucratic complexities etc. are identified as perceived risks which needs to be overcome.
The year 2021 will mark the golden jubilee of Bangladesh's independence. The government envisions a Bangladesh which by 2021 will be a Middle Income Country (MIC) where poverty will be drastically reduced and citizens of the country will be able to meet basic needs. Development of Bangladesh will take place on fast track with ever-increasing rates of growth. By 2021, the structure of economy of the country will be changed. The share of agriculture in the GDP will come down to around 8-10 per cent and industry sector will have to account for a larger share of the GDP around 40 per cent. This structural transformation in the economy will be needed to graduate from LDC status to a Middle Income Country which means reaching per capita GDP level of US $ 2000 based on an average GDP growth rate of 10 per cent. The economy will be supported by introduction of pro-industrialization and investment-friendly economic policies which will create additional employment opportunities in the country.
The private sector believes that "Vision 2021" objectives of strong economic fundamentals may set the foundations for Bangladesh to become the 30th largest economy in the world by 2030. By this time the population of Bangladesh will be more than 185 million. The GDP growth rate is assumed to be at 10 per cent and per capita GDP at about US $ 5230 or close to $ US 6000.
The keynote paper in the plenary mentioned about several growth drivers which have led Bangladesh to a new growth trajectory. The keynote paper has further mentioned that there are some unknown growth drivers which have already emerged but needs to be nurtured in a right manner to achieve the targeted growth rate of two-digit level. The keynote paper suggested some priorities. Seven strategic priorities suggested by the keynote speaker are: overcoming infrastructure deficit, new sectors, new markets, engaging skills, repositioning agriculture for growth, urban strategy, strategizing on regional connectivity, sustainable adaptation to climate change. These are the outcome of discussion of several brain-storming sessions organized by DCCI to suggest strategic priorities.
The writer is Acting Secretary of DCCI. She can be reached at e-mail: nothing_man2000@yahoo.com
Bangladesh -- the best kept secret of Asia
Ferdaus Ara Begum
In a conference held recently in Dhaka policy planners have made a projection that the country will reach MIC (middle income country) status by 2021 and even earlier and can become the 30th largest economy in the world by 2030. It is possible for the country to become a powerful economy of US$1.0 trillion GDP at PPP basis by this time if all its potentials indicated by different international organizations are utilized effectively. Dhaka Chamber of Commerce of Industry (DCCI) organized the conference and presented the concept with some specific strategies.
The strategies prepared by DCCI have opened up a new process of consultation with the goal of progressing further in harmony with the "Vision 2021" presented by the government. In order to build the positive image of the country the outcome of the deliberations in the conference will act as a supporting element and help to consolidate implementable strategies as has been viewed by all concerned. The different sessions of the conference tried to project the potentials of Bangladesh and to search prescriptions on how best these can be translated into reality.
The Prime Minister has already elaborated some strategies taken by her government and emphasized on the need for innovative home-grown technologies so that we can utilize our limited resources in the most effective manner. She emphasized the need for Branding Bangladesh and advocated the use of IT as a tool in all spheres of life to make access to services easy. In this respect she said that 8,500 post offices in Bangladesh are furnished with e-centres now which are capable to provide services to the rural people. This will help reduce the urban-rural gap and enhance connectivity within the country and eventually move further to integrate the rural population with the world.
RnD Bangladesh, a private public partnership initiative to create a suitable platform to discuss policies and strategies, has been endorsed as one of the vehicles to reduce dependence on foreign technologies and thus help enhance adaptation capacities to ensure technology transfer.
DCCI has introduced Young Visionaries Competition for the first time in the country. The Prime Minister appreciated the role of DCCI in this respect and encouraged their involvement. In the concluding session of the conference, the Commerce Minister said that the participants of the YVA will get a chance to share their ideas with the PM through their presentation which may give some direction to redesign strategies suitable for the next generation.
The Finance Minister in his message termed the conference of DCCI as a landmark. He said that Bangladesh is the 8th largest country in the world as far as population is concerned, and in terms of PPP in US dollar, it is the 44th largest country in the world. Its international trade accounts for 40% of its national wealth. It is at the same time a land of impossible attainment. Everybody, including the Finance Minister, said that the secret of Bangladesh's growth lies in human resources development, employment generation and release of creative energies of the people.
Dr Gus Papanek in his speech said that every year about two million people are joining the job market but only one million get jobs, including jobs abroad. The remaining one million people are disguisedly employed. Echoing the Finance Minister, he said if all the resources available can be put together, Bangladesh can go much faster. Referring to the Chinese economy and rising wage structure in their country, he said Bangladesh has got an opportunity of a life time to make to attract investment. In case Bangladesh missed the train, he warned, others will take the opportunity. He gave examples of the labour wages of other countries which are: Cambodia (US $ 61/month), China ( $150-250/month), India (US$ 87), Indonesia (140-155), Vietnam ($63-90/month) etc. He said, even though wages in Bangladesh has also been increasing but still it is much lower than comparative countries. Giving an example of China, he said, China is producing about one-third of textile and electronic products of the country. China's export of garments and textiles were US $185 billion in 2008, capturing just 10% of the market would more than double all Bangladesh exports. In short, the declining competitiveness of China for labour-intensive manufactures is opening up a huge market for other countries. If increase is made at 35% a year, a rate that other countries have achieved, then it would add one million jobs a year directly in these countries and two million jobs a year once indirect effects are taken into account, Dr Papanek said. Bangladesh would need to be quick and make all-out efforts to exploit these emerging opportunities.
This is, of course, not an easy task as Bangladesh has been facing some challenges. Strategies should be drawn in such a way so that it can face these challenges. The national budget for 2009-10 predicted a lower capital productivity i.e., relatively more capital is required for output. Incremental capital output ratio (ICOR) has been shown at 4.4 for fiscal 2009-10, compared to 4.1 in 2008-09 and 3.9 in 2007-08 respectively. The average ICOR for the last five years was 3.9. It indicates that capital productivity has decreased in 2009-10.
ICOR is matrices that assesses the marginal amount of investment capital necessary for an entity to generate the next unit of production. Overall, a higher ICOR value is not preferred because it indicates that the entity's production is inefficient. Lower productivity of capital investment caused by lack of governance and confidence in the business and industry and inadequate infrastructure (both hard and soft). The government is concerned about the issue and several steps to reduce cost of doing business have been suggested. One of them is to automate business services as much as possible. A number of PPP initiatives have also been proposed by the government as one of the immediate prescriptions.
Better implementation of ADP was another challenge. Poverty eradication through enhancement of employment, supported by rural-based industrial development, were one of the priorities. Over the years ADP implementation failed to meet the target for leaving local projects to local bodies to build roads and other infrastructure.
Among other challenges, quality of education, low tax-GDP ratio, natural calamities and disaster-prone agriculture, declining productive of land (around 1% per year), slow implementation of governance management projects, bureaucratic complexities etc. are identified as perceived risks which needs to be overcome.
The year 2021 will mark the golden jubilee of Bangladesh's independence. The government envisions a Bangladesh which by 2021 will be a Middle Income Country (MIC) where poverty will be drastically reduced and citizens of the country will be able to meet basic needs. Development of Bangladesh will take place on fast track with ever-increasing rates of growth. By 2021, the structure of economy of the country will be changed. The share of agriculture in the GDP will come down to around 8-10 per cent and industry sector will have to account for a larger share of the GDP around 40 per cent. This structural transformation in the economy will be needed to graduate from LDC status to a Middle Income Country which means reaching per capita GDP level of US $ 2000 based on an average GDP growth rate of 10 per cent. The economy will be supported by introduction of pro-industrialization and investment-friendly economic policies which will create additional employment opportunities in the country.
The private sector believes that "Vision 2021" objectives of strong economic fundamentals may set the foundations for Bangladesh to become the 30th largest economy in the world by 2030. By this time the population of Bangladesh will be more than 185 million. The GDP growth rate is assumed to be at 10 per cent and per capita GDP at about US $ 5230 or close to $ US 6000.
The keynote paper in the plenary mentioned about several growth drivers which have led Bangladesh to a new growth trajectory. The keynote paper has further mentioned that there are some unknown growth drivers which have already emerged but needs to be nurtured in a right manner to achieve the targeted growth rate of two-digit level. The keynote paper suggested some priorities. Seven strategic priorities suggested by the keynote speaker are: overcoming infrastructure deficit, new sectors, new markets, engaging skills, repositioning agriculture for growth, urban strategy, strategizing on regional connectivity, sustainable adaptation to climate change. These are the outcome of discussion of several brain-storming sessions organized by DCCI to suggest strategic priorities.
The writer is Acting Secretary of DCCI. She can be reached at e-mail: nothing_man2000@yahoo.com
