A single holistic culture coupled with stable governments and the inclusion of the private sector in nation-building activities are the main reasons behind Bangladesh's economic and social growth on its 50th anniversary as a country, say experts.
"If you look at the Bangladesh consensus about development policies, the role of the private sector, linking to the global world in all ways, building your infrastructure, improving your human development situation and also look for a social safety net for all your citizens (is the reason behind its growth)," Dr Debapriya Bhattacharya, Distinguished Fellow at the Centre for Policy Dialogue and a member of the UN committee for Development Policy told BOOM.
Concurring with Dr Bhattacharya, Abdul Matlub Ahmed, chairman of the Nitol-Nilay Group and the President of the India Bangladesh Chamber of Commerce said that Bangladesh's friendly relationships with many nations also helps their image of being an investor-friendly nation.
"We are friends of all, enemies of none. And we are fortunately benefited by the Indo-China business and economic war that may be there and we will also get benefit from the US-China economic war. So, we are a small nation and our stability is there for a pretty long time. And most of the world now thinks of Bangladesh as one of the best destinations for investments," Ahmed told BOOM.
Full transcript of the interview follows
Govindraj Ethiraj: Dr Bhattacharya when you look at the social and economic landscape today, in the context of what has been achieved in the last fifty years what lies behind and what lies ahead?
Dr Debapriya Bhattacharya: Well, thank you very much for having me on your show, and I also appreciate the question that you have put forward. But in order to understand how it has been achieved during the last fifty years and what we have achieved and what lies ahead, I think is important to go back to the point of departure. That is immediately after Independence. If you go through all the literature, you will see that there was an initial pessimism about the robustness and viability of Bangladesh as a nation state.
We started off with 10 million refugees returning from India, as you can understand and I had been one of them. Then we had all the demolished bridges across the country, which was done during the liberation movement. We had no foreign exchange reserves; the Pakistanis took away all the planes even. We had all the factories demolished and abandoned and there was a huge issue of feeding this 75 million people
There were people who said that Bangladesh does not have any geo-strategic value, it does not have any revealed source of energy and obviously they are going to eat themselves?
And now you look back 50 years, all that initial pessimism has been proven wrong. Bangladesh has not only developed but also become a robust country and has been upheld as a development model by many.
Now if you see the success, we are now feeding more than double the population and we have tripled our production, food production...and you have just mentioned about the maternal and the neonatal mortality rate, and all these issues are very much there.
Our exports -- jute products were the main; now jute products are a very distant 3rd or 4th and every second tee shirt in the world is now sourced from Bangladesh. So, it is a spectacular success and the remittance income and everything else...we are doing that and the infrastructure progress, which is all there.
So, if you ask me what exactly went behind it, I think, there had been overtime, the emergence of a Dhaka consensus about what the development should be. I think not withstanding all the various ups and downs, including the tragic event of killing of the Father of the Nation, I think a consensus has emerged that the private sector should play a dominant role in the whole thing. No wonder you have Motlub Bhai, our eminent entrepreneur and business leader Mr Motlub Bhai Ahmed with us today, to talk about it much more possibly.
So apart from the role of the private sector, I think that the other things that have come through is that Bangladesh will not be developing as a closed economy. So, we have opened up to the whole world, we went for liberalization, deregulation, within the country and also outside along with privatization and other things.
I think the other thing, the 3rd point that is there, there is an overall consensus...without building the physical infrastructure, that is, connectivity, getting access to energy-- we will not be able to go very far.
And the fourth issue or fifth issue would be that emphasis on human development. That health and education are critical. And the last point, which over the last ten years which we have pursued is that robust growth will not raise all the boats. There will be some left behind. So, the social protection issue also has become important.
So, if you summarise, and if you look at Bangladesh consensus, about development policies--the role of the private sector, linking to the global world in all ways, building your infrastructure, improving your human development situation and also look for a social safety net for all your citizens. And I would sum it up that way.
GE: Thanks for that. Mr Ahmed let me come to you. You are a large business conglomerate in Bangladesh. Your key enterprise is in automotive and you also partner with Indian companies like Tata Motors and Hero Honda. So, tell us about what are the challenges you see, even as a country as a whole, not just for you. As you may be partially transitioned from being a largely readymade garments dependant export industry with a competitive edge in that?
Abdul Matlub Ahmed: Thank you very much. It is a very important topic especially when Modiji is in Dhaka and when both the Prime Ministers are travelling together and we are discussing this issue today.
Basically, if you look at Bangladesh, as Dr Debapriya elegantly explained to you the meteoric rise of Bangladesh from nothing to wherever we are now. Basically, what I feel is that, we have certain advantages in Bangladesh. Unlike India where you have so many states and one centre and some of the states could be not the ruling party, so there creates a lot of issues and then some issues like foreign and other things are lying with the centre--all the domestic and other tax issues, some here some there. So it is a very complicated way of ruling a country. But Bangladesh, fortunately, is a one solid space now and we have primarily one language and a majority is one religion, and also mostly I would say one culture.
So, having said that it is much easier to grow in such a nation where everybody works together. If you look at the clarion call of the Founder of our Nation, Bangabandhu' Sheikh Mujibur Rahman, on his call the whole country went into war with Pakistan. So, this is the advantage of Bangladesh, where we could see the development that is being done, especially by the current Government. Where we have now electric power more than we need.
So, in the business and industries, we basically need three basic things: the power, which is gas and electricity. Then we have the land. So, if you see the power you have electricity and gas; we are now getting the L&G connections, so the gas is again back in line. And if you look at the land, we have 100 Special Economic Zones, where India also has two SEZ where they can fill it up with industries.
It shows that all the requirements that we needed for fast industrialisation of the country is now in place. And today, being the 50th anniversary of our country's Independence, I can safely say that the next fifty years would be a tremendous growth for the nation. Because we are just right now on a take-off position and I believe that if we look towards the private sector and the alliance with the Government in trying to grow the nation with the private sector assistance. And with think-tanks like CPT and others supporting the knowledge base that we need, honest guidance to the nation and the business people that helps us. So, I believe that the future is extremely bright for Bangladesh.
GE: Can you touch upon the specific composition of the industry? Bangladesh's comparative advantage is largely in ready-made garments; that advantage will go as soon as you lose the tariff advantages. But how do you see the transition, if at all from a ready-made garment dependent country to other industries may be including automotive or electric vehicles and other areas, I understand you are looking at?
MA: Well, first of all I must say that all the countries have faced such situations. We have to move on. You cannot be dependent only on one industry and one sector. The Government has also been looking around to change other industries in exports and develop the domestic industries.
COVID-19 has actually taught us that domestic industry is vital for a nation. Agriculture is vital for the nation and these are two areas on which the Government is working on. Agriculture processing industry, agriculture investment and machinery etc. One I can tell you that dependence on garments does not mean moving away from garments. Of course, we are going to raise garment exports to 60 billion dollars.
So, we are going to grow there, but we are going to grow in other areas parallelly. And that includes tanneries, pharmaceuticals, glass industries, plastic industries. There are numerous industries that are growing parallel with the garments. And even for the garments there is backward linkage and forward linkage industries, which is supporting the garments industries as such. It is not only sewing. Sewing has now become a very small part. We are producing many things now.
When we started garments in the 79-80s, we had produced nothing. Even the buttons we had to import. But now, if you look at the backward linkages it's huge and these are all local industries. So, what I am saying is...we are not going to discourage growth of garments. No, the garments will increase, but parallelly we are moving into so many items including steel. So that is what we are looking for.
GE: Dr Bhatacharya you have been writing and speaking on the LDC transition or LDC graduation as Bangladesh will lose some of its benefits ...the numbers that I remember seeing is that you will lose 8-10% of your gross export gains as Bangladesh loses some of those tariff advantages. What is your sense-in the context of garments of course-what is your sense from your vantage point in this transition and how Bangladesh will grow its garment industry and overcome this challenge it will face, most probably in 2026?
DB: I think, Mr Motlub Ahmed has already given some perspective on the issue of diversification. So, if Bangladesh loses some of its LDC specific references and please remember, that we are not going to lose it immediately, it will be there till the end of this decade when it will come by, so we have preparatory time for that. And if we do that the most important thing is how much of the international support measures that market access continues beyond that time because you are non-LDC but that does not mean that all your problems are gone. They still remain and you may need international support measures for that.
But what is more important is what type of domestic reforms you do in order to sustain that shock. For example, as Motlub Bhai has just mentioned that garments will grow...of course garments will grow and then there is the market access issue in the European markets where the GSP plus is being negotiated. It will demand a stronger/deeper reform within the country. Whether it is labour rights, whether it is the green economic issue or the more regulatory transparency--so all these issues will be very much there. But we will also have to support other items that are coming up-pharmaceuticals, electronics, IT related, ceramics, leather, and other goods are there.
The other point that has come out very strongly in order to sustain this you have to remain competitive in the market. So, in order to remain competitive in the market, what we need to do is to improve our labour productivity. And technological innovation is very important, deepening technological innovations. Because we have seen that Bangladesh is a labour-abundant country but still we are going for a more capital-intensive growth. Because technology demands more capital investments.
So how do you really put these people back into, the 2 million people coming into the labour market, that itself is very capital-intensive important. And the third point I would like to say is that there is no escape from the fact that we need to improve our tax collection. I think this is an issue in all our neighbouring countries, elsewhere but Bangladesh has been particularly an outlier, having such a robust growth rate but a dismal performance on tax collection.
So, if we do not improve our tax-GDP ratio, when the foreign aid is gone, and if FDI doesn't flow adequately, we will be in a difficult situation. So, I see one of the major tasks in the future is of course diversification, labour productivity growth, and of course domestic resource collections. All of these things will allow us to go through this challenge.
GE: Mr Ahmed do you see more hope for manufacturing and you did mention steel, if so, where do you see Bangladesh having a competitive advantage in manufacturing, assuming as you said that Bangladesh is going to remain a more open country economically for both inflows and export of products?
MA: Well, let me explain to you our position. Look at our foreign policy. We are friends of all, enemies of none. And we are fortunately benefited by the Indo-China business and economic war that may be there and we will also get benefit from the US-China economic war. So, we are a small nation and our stability is there for a pretty long time. And most of the world now thinks of Bangladesh as one of the best destinations for investments. That is why now we are getting huge offers, in our SEZs from Korea, Japan, even China. And of course, India.
So what is happening is because of our foreign policies and the advantages given to the foreign investors, we are seeing a large amount of foreign investments flowing into Bangladesh.
Earlier there was no power, no land to do all that, no gas and all that has been solved and it is now coming to a situation where these foreign investments will come into the situations...so what I can see...one simple example, while tee shirts used to come from China now Bangladesh is exporting tee shirts to China. So, we have become, or we can become so competitive that even China cannot defeat us in the cost prices. And that is happening in many things.
Very soon we will become one of the largest plastic producers of the world. And supply plastic products all round, although we do not still have the basic plastic pellets to produce the plastic materials. So, having said that, Bangladesh is a small nation and very strongly determined Government to promote business and to sell the country to the world as an investment place. To express to the world that yes, come here, you will surely make money.
Tatas are with us for the last 30 plus years, Hero are with us for the last seven years. They have made money every year, even though they may not have made money in their own country. This is the advantage of Bangladesh which we are explaining to the world, come here, definitely you will win. There is no way you will go back not smiling.
GE: Dr Bhattacharya, you know Mr Ahmed referred to this a being one culture, language, predominantly, one religion. Now that can be an advantage but could that also be a disadvantage, I mean in some ways.
DB: Having agreed with Motlub Bhai, we are definitely one nation, definitely, but we need to also recognise that nations are composed of multicultural, multi-ethnic and multi religious ….as well one does not exclude the other. So, we do have the Chittagong hill tract tribal people, we have a plain land tribal people, in that way. Adivasis for that matter, we have our own Dalits as well and along with that you have at least 10% religious minorities in this country where Hindus constitute 9% of them. We are a Bengali nation in holistic and linguistic terms and everything else, but at the same time, we have our multiculturalism and multi religion approach as well. And we have carried forward and consolidated the nation building along with that.
So, one of my parting thoughts would be, if you allow me, if you look at Bangladesh in the next fifty years, will India be part of that future more than it was in the past. That is the question that I would leave to your audience. If you look at Indo Bangladesh relationship at this moment, and with the Honourable Indian Prime Minister on our soil till now, I would like to say that India has been part of our birth from 71.
Since then, with various political ups and downs both in your country and my country, we have traversed quite an eventful journey. During the last decade, our relationship has stabilized and experienced an upswing/uptake. The issue is whether in order to take it forward, what do we do with the old agenda, unsettle agenda and how do we take advantage of the emerging second-generation agenda.
Our unsettled first-generation agenda is not allowing us to get up to the speed with the second-generation agenda. What do we essentially mean? It is as you know politics and people, what happens in the country is not about statistics. It does not depend on people like me who give numbers, it is about perception which matters much more. So, there is a perception within the country in Bangladesh that Bangladesh has never received its rightful share from India across the decades in particular in the last decade.
The Teesta Water is of course a sticking point. The border killing is a sticking point. The non-tariff barriers for our exports in the Indian markets is a sticking point. I call them traditional old agendas, but unfortunately these remain unsettled, unresolved. And the next step what we want to go forward to. Just to conclude, with the connectivity that we have provided India, and Bangladesh wants to have to Bhutan and Nepal, we will not be able to really capitalise on them without the investment, trade and connectivity together take it to newer heights and go for a comprehensive economic partnership over there. My appeal, to your colleagues, through the audience that we need to settle our old dues, so that we can move forward in the next fifty years.
GE: Mr Ahmed last word to you, you also talked about greater integration, multi modal transport integration particularly North East of India and Bangladesh. Now tell us about the one or two things you would like to see for greater economic integration and also that it ties in with Bangladesh's own ambitions for the next few decades…
MA: If you look at the trading part, river connectivity to be utilised more, train connectivity to be utilised more, and we would like to also ensure that Bangladesh can also freely invest into India for at least 10% of what we export to India and that should be freely available for us to reap the benefits of the Indian economy. And lastly, what I would like to tell you is that the BBIN and the other regional blocs that we are trying to create should come into being as soon as possible so that the business and the industry can take advantage of the political closeness between India and Bangladesh.