What hartal means for the economy

Hartal politics has become pervasive in Bangladesh. It has become part of our life. Frequent hartal programmes and work stoppages are being viewed from different angles. This is Bangladesh, a country where normalcy seems a distant dream, and where hartal has become a way of life. People are so accustomed to hartal that they come out on the road on any sundry issue.
Both the major political parties - the ruling Awami league (AL) and the opposition Bangladesh Nationalist Party (BNP) - have used hartal as a major political weapon to create an unstable situation in the country since 1991. If the BNP is in power, the AL goes on to call hartal after hartal, and if the AL is in power, the BNP gets busy throwing such programmes. The party in power does not consider the demands of the opposition while the same party in opposition does not consider the policies of the ruling party as genuine. Then the programmes like hartal become inevitable.
Who pays the price? The people and, in a broader sense, the nation are the losers. They are killed or injured or face financial losses.
The big question is: how can a country of 160 million people with a density of 1,000 people per square kilometre, and with more than 40 per cent of the population still below the national poverty line, afford to undergo so many days without economic activities? How can a poor economy like Bangladesh go without production in factories, and closure of schools and colleges and postponement of exams due to hartal? And how long will the people suffer when hartal cripples life in every sphere? Do the AL and BNP ever think about the violence and killing of innocent people because of hartal?
The country's economy is facing a catastrophe because of hartal, blockade and political instability. Production in industrial units, big and small, is stagnating. There is no momentum in financial transactions. Economy is being affected adversely by programmes like hartal and blockade.
Right now if we do a survey on what the most irritating and dreadful word is to the common people of Bangladesh, the majority will probably say 'hartal'. This democratic right to extreme demonstration has become such a common phenomenon in our country that common people have become afraid of it.
Bangladesh has had a history of political trouble since the Independence in 1971 and is also beleaguered by poverty and natural disasters. Add to them corruption which is also blighting its prospects for economic growth, undermining the rule of law and the political process. Resultantly, violent programmes like hartal are inevitable.
Hartal has many implications as follows:
* It slows down investment and economic growth.
* Consecutive and longer 'hartal' periods slow down future economic growth.
* The clothing sector lags behind and misses the export opportunities.
* In the global perspective, Bangladesh is losing the country and brand images in the arena of garment manufacturing.
* Garment buyers are searching for alternative sources. Being unable to come to Bangladesh during 'hartal' programmes several buyers already shifted their orders to other destinations.
* Hartal leaves its effect on the socio-economic condition of the people.
* The country becomes more vulnerable to internal and external shocks
SHOOTING ITSELF IN THE FOOT: Hartal is a form of protest in Bangladesh and other South Asian countries. Mahatma Gandhi popularised it as a way to register his civil disobedience to colonial rulers. But many analysts say that today Bangladesh may be shooting itself in the foot by the way of hartal.
In a globalised economy, with a fierce competition for investments and jobs, no country can afford to witness continuous shutdowns. The hartal is a double-edged political weapon, there is no doubt about that.
Apart from the direct fiscal loss, there are a lot of other problems that result from hartals. It is very common in Bangladesh that on a hartal day there are casualties. Vehicles are vandalised, educational institutions remain closed, factories remain closed and bank transactions take place on a smaller scale. Industry owners force workers on other days to cover the losses. Students have to go to school during weekends and they go through a very hard time trying to finish their syllabuses within time. Service holders risk their lives trying to get to their offices during hartal. Factory owners fail to meet the deadlines for orders. As a result, a lot of buyers cancel their contracts.
DETRIMENTAL IMPACTS ON ECONOMY: Political conflicts can have significant detrimental impacts on an economy. Indeed, domestic conflicts could push a country towards the path of a fragile state. Fragile and conflict-ridden countries do not have the ability to develop mutually rewarding and constructive relationship within their societies and often suffer from a weak capacity to undertake governance functions (OECD, 2012). These countries are more vulnerable to internal and external shocks, and in turn face instability.
The culture of frequent hartal programmes is damaging for the economy and the country's image, and a disincentive for foreign investments. The country has experienced serious economic losses due to the hartal programmes for the last few weeks in a row impacting adversely on the country's economy. The country's exports and imports are being hampered as transportation is facing disruption and consignments remain stuck up at the port.
Strikes send a negative signal to the apparel buyers abroad who are compelled to shift their orders from Bangladesh to India, Cambodia, Sri Lanka and Vietnam as happened with Pakistan over the political instability there - the buyers had moved to Bangladesh. But now a reputed brand 'Disney' is reportedly leaving Bangladesh. If the current turmoil does not stop, orders for the upcoming spring season may fall.
In the last fiscal year the key export-oriented sector had to count additional losses to the tune of USD 500 million due to strikes, shutdown and vandalism. A one day of hartal causes an estimated loss of USD 20 million, while consecutive hartal programmes just multiply it. After the strike, every department involved in clothing business faces problems with production, transportation, loading and unloading of containers etc. Industry experts have termed the political strike 'suicidal' for our industrial sector.
The clothing sector in Bangladesh is trying to grab non-traditional markets in Latin America, Africa and East-Europe and diversify markets to Australia, Brazil, Chile, China, India, Korea, Mexico, Russia, South Africa and Turkey, but such a negative image of the country with so much political violence, may frustrate all our efforts.
The economy of the country depends on the readymade garment (RMG) sector to a great extent. If this sector is affected, the whole economy will feel the pressure.
INDIRECT COSTS OF HARTAL: There are three significant indirect costs of hartal. One, political instability marked by violence seriously discourages foreign direct investment (FDI), as recurrent strikes may seriously tarnish the country's image as an investment destination. Two, political violence hurts the poor more than the rich. The day-labourers as well as self-employed folks can never recoup the hartal-induced losses. Most importantly, shutdowns create political instability, which leads to uncertainty. It also undermines democratic institutions.
Analysts agree that the gross domestic product (GDP) growth rate in the fiscal year (FY) 2014 will not meet the target of 7.2 percent. The Finance Minister, however, is hopeful that it will be around 6.4 per cent. In every election year since 1990 the GDP growth rate has declined.     
Alongside the likes of China and Vietnam, the "Made in Bangladesh" has also become a known and dependable brand for readymade garments all over Europe and North America, in big-name departmental stores from Blumingdale to WalMart to Marks & Spencer, and a variety of smaller outlets across the continents. Korea, Taiwan and Hong Kong all created beachheads in developed markets starting with textiles and then moved on to more technologically-sophisticated products. Now, the world of export opportunities has opened up for Bangladesh. Is Bangladesh ready?
The garment market of the world is worth 400 billion USD. China is the highest exporter. Political stability is very essential to stay in the race, but it seems a far cry. In view of the political crisis, the foreign buyers have said if the situation improves in future, only then they can consider the case of Bangladesh. But they are anticipating the tension to rise further. As a result, the negative publicity will have a negative effect in long term.
At present, China, Japan, Australia, Brazil and India are the new RMG markets. The imports of these countries are dominated by Cambodia and Vietnam. We were almost there. But because of the political turmoil, the buyers have started losing interest. If this does not stop, the RMG sector will be left in a big crisis. The government and the opposition should come forward to solve the crisis for the sake of the economy.
It is time for the major political parties to think about alternatives to hartal. Obviously, there are other options available. There are examples of non-violent demonstrations all around the globe. And in a democratic polity, the most effective way of resolving a problem should be taking the issue to parliament.
The writer is an instructor at the Fire Safety Cell of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
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