As a teenager , Prasenjit Pal saw trucks loaded with foodstuff drive into Bangladesh every night from the roof of his border home in Agartala, capital of India’s northeastern state of Tripura.
“ The smugglers would carry almost everything Bangladeshis needed,” said Pal.
The trucks still move but in the other direction — driving into Agartala loaded with garments , electronic goods and foodstuff like fish from the border. “ My town totally depends on supplies from Bangladesh and when border guards get tough, we suffer,” says Pal, 50.
The Bangladesh Pal knew when in school was Henry Kissinger’s “ basket case” . 50 years after its birth, Bangladesh is now called ‘South Asia’s economic bull case’ with some even comparing its export-driven growth to South Korea or Vietnam.
Its hard-fought independence from Pakistan in 1971 cost 3 million lives and a devastated infrastructure , leaving it at the bottom of the list of poor nations in the 1970s.
But now, Bangladesh’s estimated 2020 GDP per capita of $1,888 places the country far above many of the desperately poor African countries it was once compared with.
Real economic growth exceeded 8 percent in 2019, and although the coronavirus crisis has slowed the pace, growth is expected to continue at a more modest pace of around 4 percent in both 2020-21.
That puts Bangladesh exactly one spot above giant neighbour India in the latest International Monetary Fund (IMF) table.
The World Bank said in its 2020 Outlook that while India’s GDP is set to reduce by 10% post-Covid pandemic, Bangladesh’s was expected to grow by almost 4% — a bright spot against a case of failure.
“Isn’t that cause for celebration ! Once a byword for disasters, the country is now an example of resilient turnaround,” says Bangladesh-watcher Sukhoranjan Dasgupta.
The World Bank says India and Bangladesh are destined to grow together if they resolve contentious issues like river water sharing and border firings.
“If India and Bangladesh signed an FTA and improved their transport connectivity, Bangladesh’s exports to India could rise by 297 percent and Indian exports to Bangladesh by 172 percent,” says a World Bank report titled ” Connecting to Thrive : Challenges and Opportunities of Transport Integration in Eastern South Asia.”
The report recommended lowering of ‘unusually high tariffs’ to boost bilateral trade and manufacturing between the two neighbours, whose relations are said to be at an all-time high.
Much credit for that , and also the economic turnaround, goes to PM Hasina.
Bangladesh’s newspaper editor Mahfuz Anam credits her for leading the country’s ‘Golden Decade of Development’ (2010-2020) . “She gave the country an infectious self-belief, the confidence that we can do it.”
Starvation to Food Security
From mass starvation in 1974, the country has achieved near self-sufficiency in food production for its 166 million-plus population. Per capita income has risen nearly threefold since 2009, reaching $ 2064 in 2019-20. And the number of people living in extreme poverty — classified as under $1.25 per day — has shrunk from about 19% of the population to less than 9% over the same period, according to the World Bank.
Bangladesh at 50 is now celebrating a pivotal moment as the United Nations has announced its elevation to the status of a ‘Developing Country’ from the ‘Least Developed Country’.
“ That is a huge boost to our self-image. In 1970s, nobody gave us a chance, many predicted we will fail as a state. Today Pakistan that we broke away from is a failed state and we feel vindicated for leaving a sinking ship,” says Tarana Halim, an actress-lawyer-politician who served as Bangladesh’s junior information and telecom minister until a year ago.
Prime Minister Sheikh Hasina said recently that “exiting LDC status gives us some kind of strength and confidence.” Her predictions of Bangladesh touching a 10% GDP growth rate in 2021 may not materialize because of the adverse impact of Covid pandemic, but on many fronts, Bangladesh’s economic performance has indeed exceeded even government targets.
With a national strategy focused on manufacturing — dominated by the garment industry that provides 5 million jobs and accounts for 80 percent of the country’s merchandise exports — the country has seen exports soar by an average annual rate of 15-17% in recent years . It slumped 14.6 per cent year-on-year to $33.6 billion in 2020 on Covid impact but Hasina’s team is confident of regaining the growth path soon.
Garments and Remittances the Key
Garment experts posted a 17 per cent drop in receipts to $27.5 billion in 2020 but migrant Bangladeshi workers abroad belied Doomsday forecasts to send home $ 21.9 billion , 10 percent of that in December’2020 alone.
“Remittances have played a vital role in boosting the foreign exchange reserves amid the ongoing Covid-19 pandemic,” said former Bangladesh Bank governor Atiur Rahman.
Hasina , with her US-educated son Sajeeb Joy as her adviser, launched “Digital Bangladesh” immediately after coming to power in 2009 . In the last 3 years, Bangladesh’s IT industry has experienced a six fold growth from $ 800 million to $ 5 billion. Gung-ho young executives in capital Dhaka predict “leapfrogging” India in both infotech and pharmaceuticals.
“IT and Pharma, ship-building and ship-breaking industries have shown promise. We need to transition from a classic working class economy to one that prioritizes innovations and diversification,” said technocrat-politician Sufi Farooq.
Christopher Wood of the Hongkong-based brokerage CLSA believes that Bangladesh’s reliance on the garment sector has to go. “This sector on a 10-year view faces the risk of cheap wage alternatives such as Africa, automation and the loss of duty-free market access if Bangladesh transitions from LDC status [as scheduled for 2024],” he said.
“For now the challenge is to develop other sectors, with pharmaceuticals and business process outsourcing being two areas of promise. But this will require much more foreign investment,” he said.
The government is now implementing an ambitious scheme to build a network of 100 Special Economic Zones to get over Bangladesh’s rather poor record of Foreign Direct Investments (FDI) – from $ 961 million in 2008 before Hasina took charge to $ 3.8 billion in 2019.
Partly to blame is Bangladesh’s persistent low rankings in the World Bank’s annual “Ease of Doing Business” survey, which they deters foreign investors. The latest survey put Bangladesh at 168th of 190 countries, a jump from 176th a year ago. The 2020 report projected a better-than-before scenario : “ Bangladesh carried out three business reforms during the past year, the most in a decade, and would need to accelerate the reform pace to further improve its regional and global competitiveness.”
The government has moved to streamline the investment process with the creation of a “one-stop” investor service, BIDA, intended to replicate similar services in Singapore and Vietnam.
Bangladesh Bank’s chief economist Faisal Ahmed credits the country’s ‘density dividend’ for the phenomenal economic turnaround. “The proximity of our population helped us design and spread social and economic ideas such as microfinance and low-cost health care. But we need to better manage our scarce land resources by developing industrial parks and SEZs,” he said.
Challenge of Corruption
Former central bank governor Atiur Rahman identifies three top priorities if Bangladesh has to do better — plugging leakages like fund siphoning through endemic corruption , curbing money laundering and bank defaults which are a huge drain on national resources. “ We could add one percent to our GDP if we tackled these effectively. We need a war on economic crimes,” says Rahman.
Apprehensions of difficulties ahead as Bangladesh graduates to ‘Developing Country’ status notwithstanding, the country has so much to celebrate now — 50 years of independence , birth centenary of ‘Founding Father’ Sheikh Mujibur Rahman , completion of the 6.15 kms railroad bridge on mighty river Padma ( linking 21 southern district to capital Dhaka ) with its own resources that may add one percent to the country’s GDP when operational.
“ We have thrown out the brutal Pakistan army , we have tamed the mighty Padma , we will go a long way,” says Tarana Halim .
She argues that Bangladesh’s economic turnaround would never have happened without social modernisation and human development , especially in key areas like gender empowerment.
Former World Bank economist Kaushik Basu agrees . ” Bangladesh’s growth model is inclusive, focussed on trickle-down and driven by grassroots-level human development in areas like education, health, women empowerment.”
34 percent of Bangladesh’s population is 15 years or below and nearly half are women.
” The rising women workforce and our liberal Bengali traditions are our best bet against Islamist radicalism that has ruined Pakistan. We can exploit the demographic dividend by tapping our youth power because they have not gone astray despite some stray cases of terrorism,” says garment trade unionist Lovely Yasmin.
Hasina’s ‘zero-tolerance’ of Islamist radicalism and tough policing may attract criticism over human rights violations but it has prevented a Pakistan-style breakdown of law and order.
( Courtesy : The Diplomat )