One of Bangladesh's greatest development challenges is to provide gainful employment to the 21 million new hands entering the job market over the next decade. If properly used, the foreign direct investment (FDI) could complement domestic investment and thus help address this challenge. It can provide not only more jobs but also quality jobs in terms of pay and benefits as well as safety and other working conditions. Both domestic investment and FDI can help resolve infrastructural constraints, particularly in energy and trade facilitation and access to land. Improvement of the business environment will facilitate investments by reducing the cost of transactions and risk taking, leading to a more dynamic private sector.
It is vital to help the economy be more competitive internationally. We cannot afford to sit idle. Therefore, different stakeholders should be more focused on performance-based targets to boost jobs. We need to make our growing workforce more skilled and productive in as many sectors as possible. Improving training and enhancing skills of young workers are very important for making the economy more competitive internationally and seizing our whole demographic dividend.
We should aim to equip our two million young people with employable skills by 2021. We need to focus on skills training in many priority sectors and can start with garments and textiles, leather, construction, light engineering, information technology and shipbuilding. Innovation and competitiveness are key areas where Bangladesh has enough room for making improvement and leaving the economy more competitive internationally and productive. As the economy grows, we have to continually invest in skill development so that the exporters can enhance the value chain in order to stay competitive and create jobs for millions.
We need to focus more on skill development: skills are emerging as a major constraint even in the garments sector, let alone other more skill-intensive areas. While the access to education has increased significantly over the last decade, particularly at the lower level of education and especially for women, currently 96 per cent of the labour force have less than secondary education and two-thirds have less than primary education. Of the labour force, the percentage of people having professional education such as engineering and medicine is very small (only 0.17 per cent). A World Bank survey of 1,000 garment factories in 2011 found that skills were the major disadvantage for the firms located outside Dhaka. The high rejection rates as in a 2010 UNIDO survey, also point to the low average skills of garment workers. Concerted efforts are needed to change the situation through some institutional and regulatory measures.
When it comes to the FDI for creating the required number of jobs, the Board of Investment (BoI) can play a rather minimal role in it. The laws on investment should be made more transparent. Also, the dispersed administration of public land makes it difficult for the country to adequately manage its holdings. While it is vital for the local authorities to be involved in land management, a higher degree of coordination should be achieved at the national level to allocate public land for most productive and essential use. This could be achieved through a coordination institution or body and establishment of a public land database detailing location, size and other features of all plots available for development.
The economy is forecast to grow by 6.2 per cent in the fiscal year (FY) 2014/15 against an estimated 6.1 per cent growth in the past fiscal year. Remittances are expected to spur higher domestic consumption while investments for infrastructure development will lead to strong aggregate demand. However, political turmoil and non-sustainable fiscal policies could undermine stability and investor confidence, whereas sound macroeconomic policies and economic reforms could entail faster growth.
We should adopt a more proactive stance on potential foreign investments with the BoI playing a key role in overcoming Bangladesh's rather ambiguous attitude towards FDI. Foreign investors should be lent more administrative support when they desire to invest in Bangladesh and also the hurdles they may face in a new environment be dismantled. The BoI should arrange more high-level investment promotion missions in big emerging economies, especially in countries like Japan, China and India in Asia. These missions should be preceded by preparatory missions to identify short-term FDI opportunities and requirements.
To conclude, the cost of not wooing investors may be high, as other competing countries such as Vietnam and Cambodia are aggressively pursuing Chinese and other Asian FDI. Bangladesh should ease the decision-making process and strictly enforce compliance standards for foreign firms. In the event of efforts to attract FDI the local players may not be always supportive. To push the FDI agenda is a big challenge and addressing it requires a vision of growth and recognition of the major role that FDI can play. It remains to be seen how the authorities handle the issue.
The writer, Assistant Secretary, currently working at the
Green Industry Development
Cell of BKMEA. rajon.itcitaly@gmail.com