Bangladesh has multiple areas of economic possibilities in 2020. For example, we have massive possibilities in the ICT sector. But we need to exploit these possibilities
Stepping into the year 2020 with the financial sector looking weaker than ever, there are many areas of business that still signal a sunny future. The Business Standard spoke with two economists, Dr Jamaluddin Ahmed FCA, chairman, Emerging Credit Rating Ltd (ECRL) and Dr Mohammad Abul Hossain, professor, Department of Economics, University of Chittagong, who zeroed in on several aspects of the Bangladesh's economic possibilities.
We need to diversify the export products: Dr Jamaluddin Ahmed FCA
At the macro level, Bangladesh has multiple areas of economic possibilities in 2020. For example, we have massive possibilities in the ICT sector. But we need to exploit these possibilities.
Our export is largely dependent on garments-led products. We need to diversify this market and there are potential areas of diversification. For example, let's think of our export of rawhide. If instead of exporting rawhide directly we process it, adding value to the product, the finished products would earn us six to seven times more. In this regard, we need to develop targeted industrialisation.
We need to focus on increasing our vegetables and fish exports. To do so, we need a standard packaging industry. Currently, the packaging industry we have simply doesn't measure up if standardisation is concerned. We often fail to earn standard prices only because the packaging is poor.
It has been years since garments-led products became the top earner in terms of export. Now, we need to develop high-value products in the garments sector.
For example, the product that costs five dollars in the international market, if we produce $10 worth of equivalent products and sell them in the international market, it is possible that our income value – compared to that of our export value – will sharply increase.
We need to develop our skills. If we can master skills, we could reduce the cost of manufacturing and ensure the delivery of the products efficiently. Consequently, production time will be reduced and more exports will ensue.
The target net for our export should be expanded. For example, if we export to 10 countries now, in 2020, we need to have a target to start exporting to 15 to 20 country. By doing so both our export volume and value will increase. The commercial attaché in our embassies could play a great role in business promotion and expanding our exports in more countries.
Around 60 percent of the population of Bangladesh still depend on "unbanked" transactions. If this huge number of people can be brought under the banking sector, the cumulative effect will impact the economy positively. As we know that one person's expenditure is another's income, the more people become financially active, the more the GDP grows.
Another important factor is the implementation of projects as proposed in the national budget. Implementation of the five-year plan and the single-year plan on time could contribute largely to the GDP of the country. Additionally, the collection of revenue should be increased. Different departments of the government who are in charge of collecting revenues should be more diligent in collecting revenues.
Moving towards capital-intensive businesses: Dr Mohammad Abul Hossain
For the sustainable economic development of Bangladesh, we need to start moving towards heavy industrialisation. Most of our businesses are a semi-capital intensive business and it heavily depends on the labour force. For example, our garments sector depends on the labour force and the value addition we get from here is not for the capital but for the labour.
If we continue this way, we will not see further economic development through this process. That is why we need to move more towards capital-intensive businesses.
For heavy industrialisation, we will need heavy investments and modern equipment. Initially, we will need to import the machinery, but for further development, we must find a way to manufacture the equipment all by ourselves. Technical education in this scenario will come in handy.
We also need to decentralise our current business institutions. For example, most of the industries of Bangladesh are currently located in either Dhaka or Chattogram. However, if we can relocate these and establish new industries into other parts of the country, then it will help those regions in terms of development. This will also decrease the traffic congestion of Dhaka and Chattogram. As a result, the working hours will become more efficient.
Infrastructural development is another aspect that will play a major role in future for the economic development of the country. Padma Bridge is in progress, and after its completion, communication with the southern region of Bangladesh will become much faster and easier.
Bangladesh government is currently investing a lot in the blue economy and technical education sector, which is a good sign. Technical education played a major role in the development of countries like China, Japan and the USA. Moreover, as we aspire to become a developed country there is no way but to put emphasis on this technical education.
However, from the technical sector, we will not see immediate development as has been the case with the RMG sector. But as the workforce with technical education is the driving force behind turning the inventions into reality, it will lead us to sustainable economic growth.