Keeping faith in our potential
THE last few weeks have seen a series of reports expressing apprehension that the slowdown of global growth may affect our country's export performance. It has also been underlined that we might be unable to achieve the anticipated GDP growth over the next three years. It is being stressed that several challenges will also cast a shadow on the overall performance of the country's economy in the near and medium term. They include rising inflationary pressures, infrastructure constraints, adverse impact of global slowdown on aid flow and workers remittance, comparatively weak financial capacity of manufacturers and relative absence of design and product development capability. These are serious weaknesses. Nevertheless, I believe that Bangladesh's potential to compete in the foreign market exists and that we do not need to be pessimistic. I agree that the international economic situation has made us more vulnerable. However, the global financial turmoil should not result in a major credit crunch for us. This is consistent with the World Bank's view that the country's resilience to the global economic woes lies in a large part on its relative insulation from international capital markets and a comparatively low exposure to foreign portfolio investment. We also have a low level of external debt and a reasonably strong international reserve. In other words we have benefited from limited exposure to the securities markets of the United States and the European Union nations. This will enable us to ward off any major disaster for the country's financial sector. This will also be assisted by the fact that the country has a largely closed capital account and capital flows are in the form of soft loans and foreign direct investment. It is true that we have had some negative reports about the export of some items within the non-traditional export sector. It appears that our vegetable exports have slipped by almost 25 percent in the July-November period of the current fiscal against the same period of last fiscal. Analysts have stated that this has been due to currency fluctuations (the gradual rise of Taka against Pound Sterling) as well as enhanced phytosanitary requirements. Similarly global recession has hurt our bicycle exports. There has been a sharp drop in recent months in orders from the European Union countries (the main importers). It has declined from Taka 59.93 crore in September 2008 to Taka 23.65 crore in November due to shortfall in demand from consumer destinations in Holland, Germany and Belgium. News has been mixed in the leather sector. Exports of finished leather and leather goods other than footwear have declined (due to a fall in international demand) by about 18 percent in the July-November period of 2008. Buyers are staying away because of their already existing stock and inventory that were not exhausted during the winter season. It has also been noted that the demand for finished leather (for automobile and luggage sectors) in the international market has been greatly replaced by a growing demand for rawhide and rexin, which we do not export. Consequently, there is anxiety in this regard within the 195 tanneries in our country. The saving grace in this sector has however been provided by our gradual growth in export of footwear to countries like Canada, Saudi Arabia, UAE, Iraq, Jordan, India and Nepal. It has not been gloom and doom everywhere. Yes, exports have sputtered in handicrafts, electronics, ceramic products, cut flowers and iron chains. On the other hand, terry towel, textile fabrics, home textile, chemical fertilizer, tobacco and agro-processed food have registered positive gains. A classic positive has been the growth in the pharmaceutical sector. It has shown consistency -- growing year on year -- for the past few years at 50 percent on an average. This has been facilitated because Bangladesh has been able to take advantage of the WTO-TRIPS mechanism. This has opened a window of opportunity that will continue till 2016. This has opened new markets in the Middle East and in Africa. One hopes that the government will play a more inter-active role within this industry and expand its potential by establishing a government operated central testing laboratory for export-oriented pharmaceutical industrial units. For now, we have to look beyond 2016. We also have to take suitable steps to overcome the constraints of financial capital (that will be required for technology, research and development) and meeting the regulatory requirements. Those in this industry will also need to build strategic global alliances to expand their market opportunities. Latest figures have indicated that export earnings went down by 10.7 percent in December 2008 compared to the same month in 2007. This is the second time this has happened this financial year. The other month was October. However, despite this, the overall exports in the first half of the current fiscal year have posted a 19.37 percent growth, earning $7,852 million compared to $6,495 million for the same period of last fiscal. This has been possible because exports of woven garments grew by 20.99 percent and knitwear by 27.07 percent. Our economy has also been fortunate with regard to remittance received from our migrant workers. A total of $ 5.369 billion was remitted to Bangladesh in the first seven months of the current fiscal, a whopping 29 percent increase from the corresponding period of last fiscal. We have clouds in the horizon, but I do not think that there is reason to panic. Yes, there has been an overall decline in foreign direct investment. This will however pick up if we have political stability, uninterrupted supply of gas and electricity, more efficient port facilities and revamped communication and transport services. I firmly believe that there are many positives within our economic matrix which should enable us to move forward and succeed. We have a reasonably qualified cheap workforce that is vital for the textile and garments sector. This will enable us to compete with China. This has already persuaded Multiline, a German company, to initiate investment in the setting up of a textile factory at a cost of $ 200 million. There is also the emerging ship manufacturing industry. In addition, there is also the future prospect of 'digital Bangladesh' carving out a share for itself from within the international ICT market. Such a progression will require improving and development of infrastructural facilities (including creation of more skilled manpower), assured power supply and internet service. These are doables. Yes, we have economic challenges. Our trade gap has widened to $ 3.08 billion in the July-November 2008. Yet, we do not need to despair. We need to focus on solutions in an integrated manner and not politicise the process. The way forward lies in tackling emerging issues with a bi-partisan spirit, having well-defined regulatory provisions, through a constructive private-public partnership and through the containment of corruption and mismanagement in the mechanics of accessing to capital.
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