Maintaining over 6pc GDP growth a big challenge

Maintaining the robust growth over 6 per cent per annum in coming years might be a big challenge for Bangladesh, observed an international chamber leader in view of the overall global economic trends and domestic ground realities.
Despite many difficulties, Bangladesh has continued its impressive growth and development over the last few years. But big challenges lie ahead, said International Chamber of Commerce (ICC) Secretary-General John Danilovich.
The ICC leader, here in connection with an international business conclave on 'Global Economic Recovery: Asian Perspective' that concluded Sunday, made the observations while talking to The Financial Express.
The ICC-Bangladesh organised the two-day conference marking its 20 years of presence in the country.
Mr John Danilovich talked to the financial daily about the country's overall economic situation and its challenges as well as present trend of global economy on the sidelines of the conference.
He said, "The country has to strive hard to sustain the robust growth, especially at a time when the world economy is passing through turmoil."
He appreciated the growth over 6 percent at a stretch in Bangladesh as "incredibly impressive" particularly because of the overall economic climate since 2008 which has been "very weak, fragile, tentative and uncertain".
Bangladesh's economy has achieved an average growth of over 6 percent over the past five years primarily due to a healthy inflow of remittances and rising exports.
Both exports and remittance flow from expatriate Bangladeshis have doubled over the last five years despite many hurdles.
The earnings from these two major external sources have pushed up foreign currency reserves two and a half times to over $22 billion.
According to the ICC secretary-general, Bangladesh merchandise has already carved a niche on the world market and kept continuing to show robust performances.
But the challenge for the country's merchandise business might come from its competitors.
"Your challenge is your competitors in the business," said John, apprehending that the rising trend of the country's export business might be disturbed with improvement of the global economic situation.
"As the world economy improves, Bangladesh must be serious to maintain its relationships with clients, customers accordingly and be ahead in the competition," said the visiting ICC secretary.
"Besides maintaining resilience, you have to go fast and forward even in the years 2015-17 and be responsive as well as aggressive," said John, also a diplomat who served in Brazil and Costa Rica as an ambassador of the USA.
"You have to be sure that your clients are kept on good side," he said, and assured that the ICC would support all such business initiatives.
Emphasizing the need for expansion of trade by addressing all hurdles in the way, the international business dignitary noted trade generates growth and growth generates jobs.
And the primary objective of the ICC is to create economic growth to create employment, increase productivity, promote free trade and reduce protectionist barriers.
The ICC, he said, had played a significant role since the first ministerial conference of the WTO in 1996 in Singapore to put trade on the WTO agenda and then to negotiate a multilateral agreement on trade facilitation.
In December 2013, WTO members concluded negotiations on Trade Facilitation Agreement (TFA) at the Bali Ministerial Conference, as part of a wider "Bali Package".
This agreement will enter into force once two-thirds of members have completed their domestic ratification process, he said, elaborating on the rules of the game in global trade.
But business enthusiasm over the trade-facilitation agreement turned to dismay this summer when India - over concerns for its national food-security programme and supported by a handful of other countries - refused to ratify the implementation protocol of the agreement before a 31 July deadline.
The ICC hopes that Indian Prime Minister Narendra Modi will adhere to India's commitment to the December 2013 Bali agreement, return to the negotiating table and sign the implementation protocol of the TFA.
"Despite the TFA procedural impasse, we are still seeing many WTO member-countries pressing ahead with plans to implement the agreement," said the ICC secretary.
He is also hopeful about Bangladesh participation.
Stressing the need for signing the TFA, he said the world economy could grow by $400 billion to $1 trillion through cutbacks on costs of trade by 10 per cent to 15per cent. He pointed out other benefits due to the Bali Package which was supposed to be adopted by July 31, 2014.
Good governance, according to him, is considered an imperative for ensuring economic development.
Asked about lack of good governance hindering inflows of investment, he said, "It is not unique for Bangladesh.
"All countries-poor or rich-need good governance. It is vital for economic growth, vital for your export."  
Terming it an ongoing process and ingredient part of economic development, he said very often it changes with change of government, but need to improve the situation.
The government has drawn up a plan to become a middle-income country by 2021. To achieve the target, according to the ICC secretary, it needs to increase growth, accelerate export and attract more investments as well as improve overall infrastructure.
An efficient transportation system is essential to facilitate the country's economic growth, he said about one of the vital prerequisites for expansion of trade and investment geared towards higher growth.
To achieve this growth, the country needs to improve its road and rail infrastructure, develop port facilities, increase its power production and remove other infrastructure bottlenecks.
"Infrastructure is critical for export market and also for domestic market, so you have to improve the basic infrastructure," said the top ICC executive.
He noted that about 80 per cent of global trade occurs in global value chains coordinated by transnational corporations. Almost 50 per cent of added value is contributed by local SME suppliers within these chains.
The participation of SMEs in global value chains is especially important in the developing world, where smaller firms can represent as much as 80-90 percent of total employment.
He observed that the SMEs in Bangladesh are already well-developed and is diversifying.
He recommended less government and more governance, enabling environment for business to flourish, improving infrastructure and good governance to get to the goal.  
Political cooperation, regional integration and robust fiscal measures are the keys to taking the Asian countries forward, he added.
"Efficient economic and political systems are essential for better economic growth," said the leader of the international business body.   

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