A turning of the tide

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Mahmudur Rahman
The garments industry brought in some of the biggest private sector investments this country has seen for decades. Along with it were increased job opportunities and subsequently support and back-up businesses. And in the hey-days entrepreneurs, doubling back to improve production efficiency were thinking big in terms of actually investing in plants abroad. That was before the great crash in the world economy.
Faced with the triple whammy of ever declining prices, increased cost of inputs and infrastructural nightmares of power and energy shortage, the forward looking entrepreneur is now thinking laterally. The news that Santa Garments is actually close to finalising a deal to sell a significant percentage of its shares to a foreign company could well be the beginning of a new trend. The globalised economy promotes transfer of capital and the free market economy is a phenomenon that Bangladeshi businessmen have long been arguing isn't free enough in the wake of protectionist barriers that obviously exist.
From one perspective it is surprising that investors haven't been attracted prior to this to the industry-especially in the days when everything was so robust. But with 'fingers burnt' investment firms looking at innovative approaches to invest funds in fairly "safe" businesses, perhaps it isn't that surprising after all. What it will do is take a percentage of the value addition profits back out of the country-thereby reducing the foreign exchange component that is currently at record levels. As a short-term measure, the concept provides for much needed finances being made available. In the long term there is a concern of a different sort.
Stand alone medium range businesses have not as of yet taken off the way the country required it to. Small businesses have, but the supply-chain link is somewhat weak partly due to quality concerns and partly due to the lack of sustained demand.
From another perspective, there are also examples of companies such as Pran getting significant dosage of foreign fund injection to expand their operations particularly in the area of exports. They must be facing similar issues when it comes to infrastructural problems but they haven't been as vociferous in their complaints. Some Indian companies have also been active in relocating production facilities closer to the market with at least one with a target of exporting product back in to India.
Is it a question of planning (or the lack of it) for the future? Or is it the knee-jerk reaction of counting losses early enough? The answer lies in the future and the speed and efficiency with which the energy problem is addressed. The failures of the past should spur zealous action so that there is no repetition of the vicious cycle.
{The writer is a former Head of Corporate & Regulatory Affairs of British American Tobacco Bangladesh, former Chief Executive Officer (CEO) of Bangladesh Cricket Board and specialises in corporate affairs, communications and corporate social responsibility. He can be reached at e-mail : mahmudrahman@gmail.com}