Diversify exports, ensure policy to attract FDI

Bangladesh needs to diversify its export basket and ensure an investment-friendly policy to attract foreign direct investment (FDI) and address the future challenges that might emerge with the country's 'miraculous' development successes, a top British economist has said.
The UK Foreign, Commonwealth and Development Office's (FCDO) Chief Economist, Professor Adnan Qadir Khan, also stressed on increasing Bangladesh's domestic resource mobilisation, quality education and healthcare services to sustain the growth.
He was talking to a group of journalists at the residence of the British High Commissioner in Dhaka on Wednesday, before ending his weeklong visit to Bangladesh.
Terming Bangladesh's success "unsung development one with miraculous growth", he said, "Its story is often not told to the world."
He, however, claimed that he has been telling the story of the miraculous growth wherever he has been in his career.
Future growth will require a highly-skilled population, not just educated ones, identifying a targeted social protection programme that efficiently identifies who is in poverty and who needs what kind of support, he noted. "To efficiently deliver this is the next stage of the challenge."
Lauding the success of the readymade garment industry, Prof Khan said there are still potentials to make further progress with scaling up the value chain.
He, however, opined that RMG, which is protected by a number of economic policies, will not always be competitive.
IT, pharmaceuticals, agricultural products, leather and frozen fish have huge export potentials, he said, responding to the FE question.
Bangladesh can attract investment by providing technical support and right policy support in the right institutions.
He noted that a diversified export basket and pouring in FDI will enhance resilience to global shocks, promote the adoption of technology and boost productivity while providing an additional source of foreign currency earnings.
Speaking over domestic revenue mobilisation, he termed it one of the major challenges. "It is also about spending that money on the right type of public projects, what we call public investment."
The average tax-GDP ratio of developing countries around the world is 10 per cent to 15 per cent while for developed countries it is 30 per cent to 35 per cent.
However, the tax-GDP ratio in Bangladesh is about 7.6 per cent - below the aveFCDO chief economist suggests Bangladeshrage 10.7 per cent of middle-income countries, he noted.
Countries that do well on domestic revenue mobilisation, do not face fiscal deficit, or budgetary deficits, he said. Bangladesh has huge potential right now though it is also hit by global shocks.
Responding to a question on development partners' role, the FCDO chief economist said the scenario is changing as the needs of Bangladesh are also changing.
Talking about Bangladesh's progress, he said that from extremely challenging circumstances, Bangladesh has grown to be a miracle story.
"And the miracle is not just in terms of economic growth, we all know the story, but also reflected in other dimensions - human development, access to education and women participation in the labour force," he said.

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