Digitisation to cut costs and enhance efficiency of businesses

FE REPORT

Digitisation will significantly cut costs and enhance efficiency of businesses, which is a requisite for Bangladesh's graduation from the LDC status.

Bangladesh has so far made good progress but will lose some benefits when graduating from its LDC (least-developed country) status in 2026.

Syed Ershad Ahmed, president of American Chamber of Commerce in Bangladesh (AmCham), made the observations at a monthly luncheon meeting on Tuesday.

To overcome challenges, he suggested that RMG and all other exports focus more on reducing management as well as running costs and increasing efficiency.

"We believe digitisation will cut costs and make international trade more efficient, reliable, secure, sustainable, and less susceptible to illegal activity or fraud in Bangladesh's international trade."

He was addressing the luncheon meeting styled 'Driving Financial Inclusion for Smart Bangladesh' of the chamber at a city hotel.

AmCham is a strong believer of 'cashless and digital economy', he says, suggesting that Bangladesh 'disincentivise cash payments' and introduce digital payments in every sector.

"We see metro, toll and rapid bus in Bangladesh are all running at a close loop, these need to be open loop. American companies like MasterCard and Visa can support the government to establish an open loop ecosystem."

According to Mr Ershad, they have experience in different economics and want to transfer the same technology to Bangladesh.

He said MasterCard and Visa were closely involved in Bangladesh Bank's "Cashless Bangladesh" initiative from day one and launched cashless payments at many places.

Every year, 2.0-million graduates further aggravate the persistent employable skill shortages amid AI (artificial intelligence) and automation threats.

"To create more jobs, we need to diversify our exports and facilitate more local and foreign investment."

Citing inflation as one of the major challenges in Bangladesh, the AmCham chief said inflation management in fiscal year 2024-25 would be crucial for achieving a 'Smart Bangladesh'.

For lacking in adequate logistical infrastructure and policy, higher logistic costs and longer lead time, the country is lagging behind other competitor countries.

"To be competitive in the global market, new logistics policy needs to be implemented immediately and practically," observed Mr Ershad.

Policy implementation gaps are a very common phenomenon, he says, adding: "Delays in government regulatory decisions need to overcome."

He said introducing the 'Crawling Peg System' was a good initiative to stabilise the exchange rate.

"Given the prevailing economic landscape, we need more effective policy decisions to address the declining foreign-exchange reserves, a deficit in the balance of payments and the struggling banking sector to sustain the promising GDP growth."

Speaking as the chief guest, state minister for finance Waseqa Ayesha Khan said the government would focus on economic stability and promoting education in science, scientific research and innovation to transform Bangladesh into a smart nation by 2041.

Emphasising the use of technology at all levels, she said the government planned to digitise all public services, optimise the use of marine resources, ensure discipline in the financial sector and create an environment conducive for business and investment.

In the 'Smart Bangladesh', she says per-capita income is expected to reach at least $12,500, with less than 3.0 per cent of the population below the poverty line and extreme poverty eradicated.

"Inflation will be maintained between 4.0-5.0 per cent, the budget deficit will stay below 5.0 per cent of the GDP, the revenue-GDP ratio will exceed 20 per cent and investment will account for 40 per cent of the GDP."

According to Ms Waseqa, the government aims for 100 per cent digital economy, and science and technology-based literacy.

Financial inclusion and easy access to financial services are crucial for poverty alleviation and boosting e-commerce.

The government and financial institutions have implemented various plans to encourage digital payments.

"By 2025, 30 per cent of transactions are targeted to be cashless, with a goal of reaching 100 per cent by 2031, as discussed in the first Smart Bangladesh Taskforce Meeting in August 2023," she added.

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