The United States is seriously considering granting Vietnam the Generalised System of Preferences (GSP) facilities that would be applicable to the RMG products of the latter together with other items of export. In 2013, the EU granted Pakistan the same trade benefit, which basically means duty-free access of Pakistani goods to EU market. The favour granted to Pakistan was ignored in the Bangladesh media. The case of the same favour being granted by the US to Vietnam now is also likely to be ignored by the national media for reasons best known to them.
Vietnam is an aggressive RMG exporter. Pakistan has the potential to compete with any other country in the RMG sector and has the same advantages as Bangladesh in terms of abundance of cheap labour. Bangladesh, unlike Pakistan, has been under serious pressure from the importers in the US and Europe because of the labour conditions in the RMG sector following major incidents such the Rana Plaza mishap. In addition, the political disturbances in the country also have had a toll on the RMG sector.
The Bangladesh government and the garment producers' organization the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) are in denial of these developments in the RMG market in the country and abroad. Instead, the message they are giving is that the RMG sector is well on way to exporting US$ 50 billion yearly by 2021 that would take Bangladesh to the cherished goal of becoming a middle income country by the same year. In 2014, Bangladesh had exported US$ 24 billion worth of RMG.
Both are also in denial over the fast progress of the RMG sector in India. In the last few years, the Indians have quietly but steadily made a major presence in Bangladesh with an eye on the RMG market. According to statistics released by the Reserve Bank of India, Indian expatriates in Bangladesh have sent home in 2103 US$ 4.96 billion that made Bangladesh a major Indian remittance destination. In fact, unconfirmed sources suggest that over the last couple of years, nearly 30% of Bangladesh RMG orders have gone to India.
Land transit between the seven northeastern states of India and its mainland through Bangladesh is indispensable for the economic development of these states. Had New Delhi handed the Teesta deal during the visit of Indian Prime Minister Manmohon Singh to Dhaka in September 2011, Bangladesh would have had already given India land transit and with it the use of Chittagong and Mongla ports to India.
However, during the visit of Mr. Narendra Modi, without a Teesta deal, Bangladesh has agreed on all forms of Transit in the name of connectivity. Unfortunately no one in Bangladesh is considering the economic impact Bangladesh would have following the land route connectivity between the northeastern states and the rest of India.
For one, the Seven Sisters could offer labour cheaper than Bangladesh. There is therefore no reason why the RMG industries would not flourish there. If it does, it is competition for Bangladesh. And if the perception that 30% of the RMG business has already gone to India, then the talk of Bangladesh exporting US$ 50 billion in RMG products by 2021could be just a misplaced dream. In fact, the truth is unless Bangladesh wakes up to reality, the country could be going in the opposite direction from becoming a middle-income country riding on the success of the RMG sector.
With the RMG sector, Bangladesh's desire to become a middle-income country by 2021 is based upon its hitherto equally successful manpower export sector. The latter brings to the economy US$ 14 billion annually. Unfortunately, in this sector too, those dishing out the middle-income country dream are in denial of reality. Since the Awami League came to power in January 2009, the export of Bangladeshi manpower to the Middle East where the overwhelming majority of its expatriates work has slowed down significantly. The reasons for such decline have remained unexplained. However, some people tend to trace political reasons.
The Ministry of Expatriate Affairs had made a major breakthrough into the Malaysian market about two years ago, a major market for Bangladeshi manpower. Malaysia agreed to take 200,000 experts and at much lesser cost than what was charged by the manpower agents. The Ministry however decided to handle this agreement and left the manpower agents out of the loop. Lacking the experience, the Ministry messed up things and could send only 6000 in the last 2 years. The result of closing of the ME market and botching the Malaysian agreement led many Bangladeshis falling into the trap of international human trafficking gangs. These gangs based in Thailand having links in Malaysia and Bangladesh have been luring Bangladeshis with promise of jobs in Malaysia through the sea route.
The authorities in Bangladesh went into denial when last year there were early warnings of this human trafficking where the victims were also the Burmese Rohingyas. In recent times, this human trafficking exploded in the media as thousands of Bangladeshis and Rohingyas were apprehended in the high seas enroute to Thailand and Malaysia. In Malaysia, mass graves of Bangladeshis were unearthed. In Thailand, Bangladeshis in large numbers were rescued in the last one-year. These poor job seekers were made to work as slaves in southern Thailand's rubber plantations.
The Bangladeshis/Rohingyas rescued in the high seas became international news and a major concern of the UN. These were not just desperate men seeking jobs abroad; these were men, women and children setting aside their fear of death to leave the country. The Washington Post nailed the reason for such desperation. In a report, it stated that the Rohingyas were driven to such desperation because of the atrocities of the Burmese military junta and the Bangladeshis for reasons of poverty. The Los Angeles Times in a report on the Bangladeshis/Rohingyas rescued in the high seas stated that many villages of Bangladesh were deserted of men.
Thus the signs from the two major pillars of Bangladesh's economic successes upon which the dream of becoming a middle-income country rests are to say the least, very disconcerting. These signs raise questions such as why would even women and children in such numbers take to the high seas if the country was showing signs of economic prosperity? Overwhelming majority of Bangladesh's expatriates is from the country's villages. Over 90% of the US$ 14 billion they send home go directly into the economy as consumption needs that has been a major reason for giving the sense to many that the country is moving towards better economic future. The message that reached the villages in the last few years has been that the Middle East manpower market was closing that forced many to fall victims to human traffickers and take to the high seas to find work in Malaysia.
Political uncertainty in Bangladesh has dampened FDI flow. The news of "boat people" hitting the international media is more than likely to affect that adverse flow even more. Therefore Vietnam's possibility of receiving GSP from the USA, Pakistan having been granted GSP to the EU, flight of RMG industries to neighbouring India with more likely to be established in the Seven Sisters and the political instability at home could seriously affect the growth of Bangladesh's RMG sector. The situation in the manpower sector is not bright either. Thus, it is time for Bangladesh to pause and deal with these developments and dangers. Otherwise, instead of becoming a middle-income country, Bangladesh may face a different predicament.
The writer is a retired career Ambassador. His email is ambserajulislam@gmail.com
The journey towards a middle-income country status
M. Serajul Islam | Published: June 10, 2015 00:00:00 | Updated: November 30, 2024 06:01:00
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