Bangladesh can become an export powerhouse at the level of its East Asian neighbours by improving its business competitiveness and trade regime, which will help firms compete globally.
“Four policy levers-improving the business environment, connecting firms to Global Value Chain, maximizing agglomeration benefits, and strengthening firm capabilities-can help Bangladesh enable its firms to boost productivity and become more globally competitive,” said a new World Bank (WB) report.
The WB launched the report ‘South Asia’s Turn: Policies to Boost Competitiveness and Create the Next Export Powerhouse’ jointly with the Policy Research Institute yesterday here.
Finance minister AMA Muhith, executive chairman of Bangladesh Investment Development Authority (BIDA) Kazi M Aminul Islam, WB’s country director Qimiao Fan, executive director of Policy Research Institute Ahsan Mansur, Prof SR Osmani of University Ulster, UK, country director of International Finance Corporation, Wendy Werner, managing director of Mohammadi Group, Rubana Huq and managing director of ACI Limited Dr Arif Dowla spoke at the programme.
Muhith said Bangladesh faced a deficit in food production ranging from 10 to 20 per cent about 30 years ago. But there is no food deficit as the country is growing on an average 35 million metric tons annually, he added.
He also said despite 10 per cent drop in cultivable land during this period, the production of food increased overall.
Mentioning the country success in reducing the poverty, he said it was unimaginable that Bangladesh will be able to bring down the rate of poverty to 22 per cent. He also said South Asia showed stunt in growth over the years. “The 21st century is for the Asia.”
“With rising labor costs in East Asian countries, investors and buyers are now turning to South Asia, including Bangladesh,” said Vincent Palmade, lead economist, Trade and Competitiveness Global Practice of the WB.
“With over two million youths entering the labor market every year, Bangladesh needs to act now to seize the opportunity and create more jobs,” said Vincent Palmade, one of the authors of the report.
Rubana Haque said if the RMG sector could reduce 10 per cent manufacturing cost, 20 per cent export will increase in this sector.
About export diversification she said 40 million employment of RMG sector should be kept in mind to diversify export products. To boost its export, Bangladesh needs to continue to grow its apparel export as well as diversify in new labor and skill intensive industries, such as leather and footwear, bi-cycle manufacturing, ship building, and electronics, the WB report said.
Bangladesh’s export increased by 13 per cent per year in the last decade. However, 80 per cent of its exports remained concentrated in apparels, mostly low value products, the report said.
“Bangladesh needs to continue to grow its export by improving the mix and quality of its apparel products as well as to diversify into new labor and skill intensive industries such as footwear, light engineering, and electronics,” it added.
While nearly 80 per cent of the firms in Bangladesh practice technological innovation, well above the average in Eastern Europe and Africa, most are limited to imitating existing products and processes, the report said.
To better connect and expose South Asian firms to international good practices, Bangladesh, and other South Asian countries should deepen reforms to improve the capabilities of firms to participate in global value chains, which will require making it much easier for exporters to import
what they need, gradually reducing tariffs, while improving trade logistics, the report suggested.