Sheikh Hasina at World Economic Forum in India
Published : Thursday, 10 October, 2019 at 12:00 AM Count : 244
Is Bangladesh moving fast towards a high value and knowledge intensive society, otherwise crossing the boundaries of the export oriented RMG sector? That is, are we going beyond apparel manufacturing? Are we having a paradigm shift in our investment pattern according to changes? That was called out loud to the world, and particularly targeting Indian entrepreneurs by our Prime Minister Sheikh Hasina in her speech as chief guest at the Country Strategy Dialogue (CSD) on Bangladesh at the recently held India Economic Summit 2019.
She pointed to the changing dynamism of the structure of Bangladesh economy. She urged them to invest in non-conventional potential areas of Bangladesh economy. She said, it is the time for global investors, particularly the Indian entrepreneurs to invest in Bangladesh in areas like education, light-engineering, electronics, automotive industry, Artificial Intelligence beyond the conventional menu. She reminded, last year Bangladesh exported 12 industrial robots to Korea, while four ships made in Bangladesh have come to India. Recently Reliance purchased a large quantity of refrigerators made in Bangladesh and Bangladesh also has 0.6 million IT freelancers- the largest freelancing community.
She informed, now Bangladesh offers the most liberal investment regime in South Asia--in terms of legal protection of foreign investment, generous fiscal incentives, concession on machinery import, unrestricted exit policy, full repatriation of dividend and capital on exit etc. In addition Bangladesh is establishing 100 Special Economic Zones with one stop service across the country. 12 such zones are already functioning while two are reserved for Indian investors. A number of high-tech parks are also ready for technology and innovative enterprises.
In between Eastern and North-East India and South-East Asia, Bangladesh deserves the attention of global and Indian business as a seamless economic space. In line with that, PM thinks, Bangladesh can serve as the economic hub for the sub-region. Beyond our own 162 million people, Bangladesh can be the connecting landmass to a combined market of nearly 3 billion people. Last year, HSBC predicted that Bangladesh will be the 26th largest economy in the World by 2030. To her which is possible for two reasons. One to her we are open society having religious harmony, liberal values, secular culture and the other is that two- thirds of its homogenous population is young-mostly under 25. They are fast skill-able, adaptive too technologies, ready to engage in competitive wages.
For long economists are viewing that growth sustainability could not rest saved relying on mainly one sector manufacturing and exporting and its dynamism could not be defined only in terms of inefficient so called cheap labour. We are telling about our apparel manufacturing. Already growing necessity of introducing new technology, change in World market demand, failure of getting benefitted from trade war between china and USA and rising of strong competitors in South- East Asia are started giving signal to our apparel manufacturing to be of victim of non-viability in the days to come.
Cost effectiveness concept with nearly no know-how manpower will prove to be a myth before the rapid changing World and particularly within the advent of fourth Industrial revolution. Hence in this backdrop PM's call to World entrepreneurs to our about to blooming non-conventional sectors again proves her far reaching foresight and time tested prudence. Our stride towards a higher path of growth trajectory would be ensured only when external economy would be turned into a diversified one.
So it presupposes the efforts of market exploration abroad, creation of value addition in the economy, upliftment of human resource development including bureaucracy and skills in line with market demand home and abroad, making doing business easy and for this making institutional and non- institutional governance functional and above all efficiency of capital invested and capital output ratio are to be kept high and it needs harnessing infrastructure up to the mark. On the top of all, governance issue of both institutional and social are to be framed and guaranteed.
We are with PM's vision of bringing forth and emphasized upon the non-conventional economy to be the exit from external economy's dependence on single sectoral dominance. So it needs urgency of having articulation and evaluation of all the gamut of our investment scenario of both public, private and FDI (foreign direct investment) in this regard.
Sheikh Hasina urged World particularly Indian entrepreneurs to invest our dynamically growing non-conventional sectors which she gave are noted earlier. But foreign direct investment or FDI get eased and ensured depending on a viable and dynamically internal private sectors' existence. Here we are of dismay. For nearly more than one decade, private investment has been shying away from its target due to much pronounced causes those do not stand a test or trial. Even our robust public investment could not assuage the shyness of private investment. Encouraging them to non-conventional sectors means a new story of piling up of another non-performing bank loan would be coming to scene.
Between 2009 and 2018, private investment in real terms has increased from BDT1259 billion (21.9 per cent of GDP) to BDT 2378 billion (23.2 per cent of GDP). The moderate level of growth of private investment is 9 per cent reined in the growth of total investment that is 11 per cent. However, public investment failed to crowd in private investment, and had a crowding out effect instead. GDP growth appears not to have had a significant impact on the private sector investment during the same period.
Now despite various attempts to attract FDI, the overall FDI inflow has increased only at a modest pace. From US$700 million in FY 2009 to US$ 1.58 billion in FY2018. As a result, FDI share in total investment has declined over time from 3.36 per cent in FY2009 to 2.82 per cent in FY2018.Domestic market oriented FDI accounts for the major share of FDI in Bangladesh. Its share has been on the rise (over 80 per cent of total FDI at present). Export oriented FDI is invested primarily in the EPZ, its share in total FDI inflowhas been rather modest and has been declining mainly because of limited availability of land and other infrastructural facilities within the existing EPZs.
As a result, FDI composition in recent years experienced changes in share of reinvestment earnings and lower share of equity capital in the inflow of FDI.As the economy experienced growing opportunities for investment, the sectoral composition of FDI has also been undergoing changes. In other words, the recent inflow of FDI is likely to target more labour-intensive, domestic and export market-oriented manufacturing and service industries. Economists argue, this is likely to be reflected in the future trends of FDI inflow in the country.
So PM's call to Indian investors could not be discouraging. Since very trends of FDI inflow to our manufacturing is not clouded. But shift from energy, minerals and communication sector oriented FDI towards a more manufacturing sector oriented one to be made balanced within a macro framework.
We are hopeful, Sheikh Hasina's this time visit to New Delhi would be marked with a noted dimension since she unveiled the non-conventional potentiality of our economy to World investors and assuaged even microscopic intent of uncertainty if they have any about us. Dynamic changes in the economy with a paradigm shifting definitely could not avert the sense of priority determination of World investors which Sheikh Hasina inflamed.
Now it is the task of the authorities concerned to pave the way for implementing PM's policy on FDI to non-conventional economy by winding up all hurdles coming out of limbo.
Writer is a freelance contributor