Locating opportunities amidst challenges
Finding opportunities in challenges is always difficult, but it is important to keep at it and envision the big picture. Only through embracing change can Bangladesh strategically position itself well for future growth and development
Bangladesh has faced several economic challenges in the past few years, including the economic slowdown caused by the Covid-19 pandemic, sanctions resulting from the Russia-Ukraine war, pressure on forex reserves and supply chain disruptions. These changes in global economic dynamics have had a negative impact on businesses and industries in Bangladesh, ultimately leading to higher levels of poverty.
Navigating amidst turmoil and finding opportunities in challenges is always difficult, but it is important to keep long-term visibility. Whether such adversities are here for the short term or if they continue to pinch us in the long term, certain changes and actions will be required for Bangladesh, especially considering its upcoming LDC graduation (which presents both opportunities and challenges for the country).
As the government continues to focus on signing preferential trade agreements (PTAs) and free trade agreements (FTAs) with potential partners, the country also needs reinforced emphasis on diversifying its export basket.
New market development in the Southeast Asia and Africa region along with product diversification, can pave the way for new revenue sources and, in turn, new growth opportunities. Additionally, income inequality will continue to pose a significant impediment to true development even in the long run.
Addressing progressive taxation regulations, labour market policies and encouraging entrepreneurship and innovation can promote greater income equality. However, it is likely to require a combined effort of authorities, the private sector, and academia.
Climate change also poses a major threat to Bangladesh since it is ranked 7th in the Global Climate Risk Index 2021, and this will also have a long-run impact on infrastructure and population. Focusing on climate-resilient development, green infrastructure and community-based management of natural resources can help address such risks and make the economy less vulnerable to climate change.
For Bangladesh, there is a significant opportunity for substantial improvement, especially in Foreign Direct Investment (FDI) – which has been very low compared to what could be achieved if the right reforms are made to encourage higher FDI. In fact, considering the economic and population size of Bangladesh, especially the rise in disposable income, inducing a much greater FDI to GDP ratio should be a priority.
By working on infrastructural development, removing bureaucratic obstacles, and enhancing the ease of doing business Bangladesh can garner valuable interest from foreign investors.
Despite the roadblocks, Bangladesh still boasts a growing middle-income population and a continued high overall GDP growth rate. As mentioned earlier, a growing middle-income population with higher purchasing power also provides the potential for foreign businesses.
This, combined with almost half of the population deemed as "young" and technologically adaptable, provides room for massive expansion and growth in the information technology sector of the country, like how our neighbour India has been so successful by reaping all the benefits from its own ongoing IT boom which started a long time ago.
As a result of rapidly evolving technology and automation, a concern is that many kinds of jobs which are currently done by manual labour, may soon become obsolete or at least highly inefficient and uncompetitive. It is a complex issue that requires thoughtful consideration and planning to ensure that workers are not left behind as the economy and job market evolves.
Hence, the only strategic option for Bangladesh is to be ahead of the technological disruptions by constantly focusing on upskilling and educating its workforce in the latest innovations because almost everything starting from industrial processes, data management, energy consumption, financial services, and even agricultural techniques, are changing rapidly.
The agility and willingness to take risks can lead to new and improved products and services as well as business models that disrupt established industries; case in point: startups. We need to be much more agile and adaptable as a nation because now it is well-accepted that startups will continue to challenge existing norms and the only way to combat it is by being flexible and open to new innovations.
While there are certainly many opportunities for Bangladesh, certain aspects need to be considered and a well-planned out approach must be taken. Reforms in the regulatory framework and financial sector, political stability, intelligent management of the geopolitical map and improved business environment appear to require the highest attention for contending with the existing complexities.
Furthermore, overall sustainable progress and development rarely happen singularly or separately but rather require systematic and synergetic cooperation, coordination, and partnerships between the public and private sectors. A fully collaborative approach is the most practical way because, for example, public policy and regulations cannot be contradictory to economic and business growth aspirations.
Not just Bangladesh but the entire world is also navigating through a challenging time and therefore when we envisage our combined future, we cannot just look at our own growth, but we should also try to have an inclusive mindset. We should embrace equitable growth that considers not just economics but also the positive outcomes of our shared society and environment.
Having sustainability at the core of all future business, regulatory policy and growth endeavours while also reducing costs will not only lead to even greater revenues and profits but will also create a better image of Bangladesh to the world. ESG, impact investment, sustainable finance, catalytic capital, blended finance and Gender Lens Investing (GLI) are concepts which are already getting a great deal of emphasis across the globe and will continue to do so for a long time.
Sustainable energy, coupled with regulatory reforms, can play a key role in promoting inclusive growth and reducing the environmental impact of economic activity. Bangladesh must quickly embrace them to remain coherently and symbiotically connected to the rest of the world. Only through embracing change and being open to new opportunities can Bangladesh navigate the current economic challenges and position itself well for future growth and development.
Mamun Rashid is an economic analyst working for an accounting firm.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.