Challenges facing Bangladesh economy

FE Team | Published: August 30, 2023 19:42:31

Abdoulaye Sec, the World Bank's country director for Bangladesh and Bhutan in his speech at the third quarterly luncheon meeting of the Metropolitan Chamber of Commerce and Industry in the capital reminded Bangladesh of the overriding need for adapting itself to the paradigm shift in technology, global trade and economic regime, geopolitics and climate. The WB country director has been appreciative of the country's graduation from the least developed country (LDC), apparel sector's green status and attainment to second position after China but quite rightly points out the challenges and unpredictability it will have to navigate after 2029, three years after completion of the graduation process in 2026. That is the time when LDC trade preferences will cease to be, predictably causing a 14 per cent decline in Bangladesh's export competitiveness accompanied with 9.0 per cent increase in export tariff.
How is Bangladesh prepared for meeting all these challenges? That its financial sector management has been dismal is more than evident from the fact that classified and non-performing loans have piled up to more than half the country's national budget. To make the matter worse its forex reserve has been on a tailspin to drop to $ 23374.3 million in July last from quite a satisfactory level of $48060.00 million in August, 2021-22 fiscal year. The July figure is according to the Balance of Payment and International Investment Position Manual (BPM) 6th edition issued by the International Monetary Fund (IMF). The August, 2021-22 fiscal figure would in fact be much lower if the BPM6 was followed to make the estimate. Although the WB country chief has suggested trade negotiations and partnerships for a transition from protective tariffs to an open, externally orientated and competitive economic model, the primary task ought to be freeing the country's economy from crony capitalism so that no scope is left for willing and intriguing defaulters to go away with non-payment of fabulous amounts of loans. Even a shift to 'business ready' projects from 'doing business' initiatives; and income and consumption taxes under the new National Tariff Policy from trade tariff will not be enough to offset the resource crisis if the loopholes for drainage of money in the form of bad loans cannot be plugged.
Such outright loot of public funds has given rise to socio-economic discrimination and distributive injustice. Even in the apparel sector accounting for about 85 per cent of the country's export earnings, workers are at a greater disadvantage than they were before because of the market volatility triggered mostly by colluding business cartels. Low wages, adverse terms of employment and even gender discrimination including sexual abuses have by now forced women workers to leave their jobs to the extent that their majority in the sector has by now fallen to roughly 47 per cent.
At a time when the challenges from climate change, technological shift to the likes of artificial intelligence (AI), rearrangement of global trade and economic fora and blocs are proving daunting before the country, the need is to focus more on education with special emphasis on technical and technological types. This is to bring the productive human resources including those of educated and skilled women into the formal sector for ensuring socio-economic justice. But this is not possible without diversifying the production base. The policymakers have miserably failed to exploit the potential of leather, footwear, pharmaceutical, light engineering, jute, processed food industries and IT – all of which together could ensure an export income greater than that of apparel. Along with generation of employment, the country's economic base would have been far stronger in the process.