The greatest challenge that Bangladesh faces to attracting FDI is policy consistency
Salahuddin Kasem Khan is the President of Japan Bangladesh Chamber of Commerce & Industries and Bangladesh Employer’s Federation. He graduated from the University of Punjab in 1968 and his did Post Graduate in Legal Studies in London (1969–1972). Mr. Khan is also the Chairman of CEAT-AK Khan a J.V with RPG Group, India, the Vice Chairman of A. K. Khan Penfabric Company Ltd., A JV with Penfabric Malaysia of Malaysia and subsidiary of Toray, Japan; Director of Bengal Fisheries Ltd., joint ventures with Nichiro & Maruha of Japan, Former Chairman of AKTEL, Bangladesh; former Chairman of Bangladesh Textile Mills Association. He serves as the Chairman of Chittagong Skills Development Centre (CSDC), Co-Chairman of the EC National Skills Development Council (NSDC), Member NSDC headed by the Prime Minister. He was awarded with Medal of Honors of FICAC, and the Tax Card Honor presented by Govt. of Bangladesh, Minister of Finance. He was Member Board of Trustee, Asian University for Women, Chittagong, the Chairman of UCEP, Bangladesh, Trustee-Secretary A. K. KHAN FOUNDATION, Member, IAP, World Islamic Economic Forum (WIEF), whose patron is the Prime Minister of Malaysia and appointed as Hon. Consul General of Turkey by the President of Turkey in 1984.
You are extensively involved in the development of the industrial sector. What has inspired you to take on this venture?
I believe that we can learn greatly from our past history regarding the potential of Bengal. The English came to Bengal in the 18th Century as it was the richest part of India, and were keenly interested in the Bay of Bengal, trade in muslins, indigo etc. thus the development of the East India Company created some of the richest English merchants of that time like Robert Clive. 200 years of colonial rule left us in poverty. We witnessed in the Pakistani period that the Japanese financed many industries in what was then East Pakistan in Textile Mills, Steel Mills under the 1st Yen Credit in 1960. The Japanese International Cooperation Agency (JICA) published a report in 1995 for BOI in which it cites the Bay of Bengal Industrial Triangle as an integral part of the Asian trade triangles like ASEAN+3. Additionally they highlighted the potential in our numerous industries such as jute & textiles. Matarbari Energy Hub will be a mega power project with deep sea port facilities and special economic zone will bring significant breakthrough for Bangladesh. We must realize the geo strategic potential of our country and utilize the BIG B and the One Belt-One Road, Maritime Silk Route, to enter the Global Supply Chains for Trade & Investment.
There has been a great deal of growth in the private sectors of Bangladesh. What impact do you think that this has on the overall economic growth of Bangladesh?
In the sixties, the East Pakistan Industrial Development Corporation (EPIDC) led the initiative of Public and Private Partnerships (PPP) in the Industrial sectors; we continued this idea following the models of Japanese and Korean industries given their commendable degree of success. This led to the growth of jute and textile sectors by first generation Bengali Entrepreneurs directly demonstrating an immediate impact on economic growth. If public and private sectors work in partnership, there will be real growth towards Bangladesh becoming a developed nation – as such we should try to create “Bangladesh Inc.”, much like Malaysia Inc. and Japan Inc. However, increasing FDI inflow is big challenge for us and special focus is needed.
There are conflicting opinions regarding the degree of development in Bangladesh. Do you feel that Bangladesh is on the right path or do you see the potential to do better?
I believe that Bangladesh is on the right economic track given the fact that we are a fairly young nation. Following its independence, we followed a command economy model. Bangladesh has survived a devastating liberation war and political upheaval to bring forth an effective Government structure which is supporting both public and private sectors in industrial development in a PPP Structure. We commend the proactive role of the PMO, BEZA, BEPZA, BOI and PPP under PMO Office which will now be under an Umbrella Organization Bangladesh Industrial Development Authority (BIDA), much like Malaysia Industrial Development Authority (MIDA) in Malaysia.
You have emphasized the ideas of the “Big-B” model and the role of the Chittagong port. Could you elaborate upon your reasoning behind this conclusion?
If you look at the coastal belt development strategy of China, it started with the “Schezen SEZ” which covered the entire region and reached a CAGR of 38%, the highest rate of growth in human history. The present policy of the Government to create a hundred economic zones should create ten million jobs all over the country by 2020. This will occur particularly in the coastal zones from proposed Deep Sea Port of Matarbari to Khulna, which will create a similar success story for Bangladesh. The ever-growing young population, if properly upskilled will be able to obtain jobs in these SEZs. Additionally, numerous Japanese investors are looking for regions that are accessible and have lower labor cost than China, I believe that Bangladesh can benefit from this relocation. Danny Quah, Professor of Economics and International Development, and Director of the Saw Swee Hock Southeast Asia Centre at the London School of Economics, has inferred that a paradigm shift to the East, from the Persian Gulf to the Bay of Bengal, to be the new centre of world economic growth by 2050. Thus leading to Asia’s mega growth triangle in the Bay of Bengal – this is the vision we need to Brand Bangladesh with.
In this context, how does Chittagong need to develop to maintain these economic zones?
The primary development needs to occur in transportation; energy and infrastructure. We must improve the logistical modes and develop high speed connectivity between Dhaka and Chittagong with electric trains. Riverine transportation is very important for transferring large number of containers from Chittagong Port to internal regions. The government is currently working on developing these river ways by capital dredging.
We have to focus on developing Government institutions regionally so that they can give decisions locally, particularly in Chittagong. The so called “Commercial Capital” of Bangladesh can be an engine of economic growth for the whole country. The Chinese and Japanese are focusing their large investments in this region. For example; Matarbari, Anowara and Mirershorai SEZ coupled with large energy investments.
What are the challenges that Bangladesh faces in this regard?
The greatest challenge that Bangladesh faces to attracting FDI is policy consistency. We need continuous dialogue between the private sector and the government. In this context, we can look to Malaysia, as an economic model. Former Prime Minister, Dr. Mahathir Mohamad conducted monthly meetings with business leaders and foreign investors. Moreover, MIDA is a significant organization that acts as an efficient “One Stop Service” institute. Secondly, our country has become too heavily centralized around Dhaka. We must come out from our Dhaka centric model to developing other area of great economic potential like the Chittagong region.
Thirdly, quality education must be emphasized. The National Skill Development Council (NSDC) requires further degree of development because if we fully utilize the potential, skill and manpower of our nation we can double our remittances from the skilled work force to $30 billion.
What tools are required in the economic development of Bangladesh?
We need to implement ethical business practices and inclusive economic growth strategies for all regions of Bangladesh. There is a huge deficiency in the management and technical education, leading us to rely heavily on foreign managers for these high paying jobs. We have to collaborate with prominent business schools to bring the curriculum of the Bangladesh Institute of Management (BIM) up to International standards as China has done in joint collaboration with EU-BS’s. Bangladesh needs to create its own managers of international standard. Recently at the 2nd PPP Dialogue in Tokyo with the Japanese government and private sector, we have proposed setting up “Kaizen Institutes” in Dhaka & Chittagong to complement the 100 SEZ Policy being supported by JICA .