Bangladesh can become an export powerhouse at the level of its East Asian neighbours by improving its business competitiveness and trade regime, which will help firms compete globally.
‘Four policy levers — improving the business environment, connecting firms to Global Value Chain, maximising agglomeration benefits, and strengthening firm capabilities — can help Bangladesh enable its firms to boost productivity and become more globally competitive,’ said a new World Bank report.
The WB launched the report ‘South Asia’s Turn: Policies to Boost Competitiveness and Create the Next Export Powerhouse’ jointly with the Policy Research Institute in the city on Monday.
Finance minister AMA Muhith, Bangladesh Investment Development Authority executive chairman Kazi M Aminul Islam, WB’s country director Qimiao Fan, Policy Research Institute executive director Ahsan Mansur, Prof SR Osmani of University Ulster, UK, Wendy Werner of IFC, Rubana Huq of Mohammadi Group and Arif Dowla of ACI Limited spoke at the programme.
Muhith said Bangladesh faced a deficit in food production ranging from 10 to 20 per cent about 30 years ago. But there is no food deficit as the country is growing on an average 35 million tonnes annually, he added.
Mentioning the country’s success in reducing the poverty, he said it was unimaginable that Bangladesh will be able to bring down the rate of poverty to 22 per cent.
‘With rising labour costs in East Asian countries, investors and buyers are now turning to South Asia, including Bangladesh,’ said Vincent Palmade, lead economist, trade and competitiveness global practice of the WB.
‘With over two million youths entering the labour market every year, Bangladesh needs to act now to seize the opportunity and create more jobs,’ said Vincent Palmade, one of the authors of the report.
To boost its export, Bangladesh needs to continue to grow its apparel export as well as diversify in new labour and skill intensive industries, such as leather and footwear, bicycle manufacturing, shipbuilding, and electronics, the WB report said.
Bangladesh’s export increased by 13 per cent per year in the last decade. However, 80 per cent of its exports remained concentrated in apparels, mostly low value products, the report said.
‘Bangladesh needs to continue to grow its export by improving the mix and quality of its apparel products as well as to diversify into new labour- and skill-intensive industries such as footwear, light engineering, and electronics,’ it added.
While nearly 80 per cent of the firms in Bangladesh practice technological innovation, well above the average in Eastern Europe and Africa, most are limited to imitating existing products and processes, the report said.
To better connect and expose South Asian firms to international good practices, Bangladesh, and other South Asian countries should deepen reforms to improve the capabilities of firms to participate in global value chains, which will require making it much easier for exporters to import what they need, gradually reducing tariffs, while improving trade logistics, the report suggested.
‘To realise Bangladesh’s competitiveness potential, the country needs to start by focusing on improving its trade policy regime and the business environment, and address the acute shortage of industrial land,’ said Qimiao Fan, World Bank country director for Bangladesh, Bhutan and Nepal.
‘With the right set of policies and enabling environment, there is no reason why Bangladesh cannot become the next Asian export powerhouse,’ he added.
Bangladesh needs to provide firms access to serviced land and required infrastructure — the current well located zones are full resulting in large foreign investors not being able to invest in Bangladesh.
‘Increasing private investment is key to creation of more and better jobs, an important development objective for Bangladesh. Critical for private sector growth will be enhanced competiveness that requires policy support to improve the investment climate and to increase integration with global and regional markets,’ said Wendy Jo Werner, country manager of International Finance Corporation for Bangladesh, Nepal, and Bhutan.
With support from governments, firms can improve their productivity and competitiveness by investing more in training their workers and managers, innovating to introduce new products and processes, as well as making greater use of the Internet to buy, sell, market, or manage their inventory.
‘Together, these proposed reforms and investments will help Bangladesh and other South Asian countries take a turn toward realising their great competitiveness potential,’ the report observed.