Famous for its resilience, the country is still an underperformer given the people’s potential and aspirations. The recent political developments have drawn disturbing criticisms here and there despite no fault of the Bangladeshis. Defying all odds, however, Bangladesh remains a land of promises for business.
By Khawaza Main Uddin
Bangladesh, which entered 2014 amid escalating political violence, has been ranked by Foreign Policy journal as one of the five countries that may threaten international stability. This is an outsiders’ view that falls short of clarity in understanding changes that are taking place in the business landscape of the country. Once the blockade and hartals were over in January, millions of people rushed to their workplaces causing traffic congestion in Dhaka and elsewhere.
This is the country which was called one of the Next-11. Disrespectfully dubbed as the international basket case, Bangladesh has also overcome the ‘test case of development’ barrier, by surprising the whole world with amazing social progress. This is the country, a poor country by conventional definitions, which defeated economic superpower Japan to become a Member of the United Nations Security Council for 1978-79. This country has one of the highest shares in the UN peacekeeping forces deployed worldwide. Bangladesh is also the birthplace of globally acclaimed microcredit, a surprise innovation for modern capitalism, and the banker to the poor, Professor Muhammad Yunus, brought a Nobel Peace Prize for the country for the first time.
Contrarily, how do we feel when Dhaka is ranked the worst city on earth to live in? Bangladesh had earlier been branded in the international media as the country of floods and cyclones as well as illiteracy and malnutrition. We have come out of the shadow of famine and raised national nutritional status. Criss-crossed by rivers flowing from the Himalayan range into the Bay of Bengal, the unique and largest delta of the world is at the heart of climate change debate. In the event of climate catastrophe, Bangladesh is feared to be losing its southern region to the sea-level rise.
More unfortunately, most of the global literatures of conventional wisdom have reckoned Bangladesh to be a small state and perhaps inadvertently we ourselves have acknowledged it too. We often succumb to the views of the outsiders or get too euphoric about their appreciation, rightly or wrongly. We still take pride of being in the list of Next-11 whereas those who coined BRICS (Brazil, Russia, India, China and South Africa) in view of development potential have shifted their focus to MINT (Mexico, Indonesia, Nigeria and Turkey).
Bangladesh is viewed as a development puzzle to many. It proves its critics wrong by showing resilience to natural and man-made disasters and also by attaining various development goals. This country’s leaders also make our friends and well- wishers disappointed, by not performing up to the potential and rather by allowing that some opportunities are missed.
The Transition: From aid dependency to trading partnership
In and outside Bangladesh, one of the most disgraceful coinages for the country was the international basket case, no matter if Henry Kissinger himself really termed so or echoed his USAID colleague in the 1970s. The country and its people had to face a bad image coupled with inferiority complex for implicating Bangladesh as an aid-dependent country. A famine visited the country in 1974 when it was entitled to food aid under America’s Public Law (PL)-480. In the dark era for Bangladesh’s development in the 1980s, the development budget was mostly financed by the money coming from bilateral donors and multilateral lenders.
Since independence, the country has more than tripled its food production, attaining near self-sufficiency and of course self-reliance in feeding its population that too doubled in the meantime. And Bangladesh’s budget is increasingly being funded with the local resources and foreign aid accounts for a maximum of 2% of gross domestic product (GDP) in recent years.
More interestingly, Bangladesh has not received much ‘aid for trade’ but its trade has grown manifold, largely banking on its competitive advantage in making apparel products. This country is one of the initial signatories to the World Trade Organisation (WTO) after its inception despite the risks of trade liberalisation that posed challenges for local industries. However, the figure of the country’s exports rose to $27.027 billion in the 2012-2013 fiscal year compared to that of imports at $33.969 billion during the year. The country earned remittances amounting to US$14.46 billion the same year.
The two main sources of foreign exchange earning – garment-led exports and remittances –have to be attributed to a common factor, almost unskilled labour, which was once unthinkable to pundits at home and abroad. Bangladesh’s poor women and young unskilled workers have contributed to both economic and social advancement as well as creation of business opportunities. Bangladesh has emerged as a major source of outsourced jobs by global players. Comparative and competitive advantage of Bangladesh in pharmaceuticals, leather, shipbuilding, a variety of SMEs (small and medium enterprises) and assembling industry shows the country’s promises to continue as a trading partner at the global level.
The Tangible Bangladesh
This is the 8th largest country among 238 nation states around the world if we take into consideration the size of population at 160 million. ‘Who says this is a small country?’ says Professor Imtiaz Ahmed of International Relations at Dhaka University, dismissing the concept of branding Bangladesh as a small state. Bangladesh is only geographically a smaller country and 95th in its size in the world.
In today’s world, population, especially an abundance of younger people like that in Bangladesh, is considered as an advantage called demographic dividend. The country is also very much a part of the new centre of gravity of economic activities centring China and India for their high population and their productive and purchasing capacity. Bangladesh has been blessed as one of the most homogeneous nations in the world.
Bangladesh’s GDP amounting to around US$116 billion is 58th out of 190 countries and its growth and other prospects suggest it would surpass many countries in future. It is the 44th largest trading nation with remarkable growth over the years and the 7th remittance earner at present.
Life expectancy rose to more than 69 years in Bangladesh, a surprise achievement to many around the world. Its attainments in the UN Millennium Development Goals (MDGs) have outpaced most of the countries of its similar economic status. Almost 60% of the Bangladesh economy has been integrated into the global system and it is now an externally oriented country otherwise too. It is the second largest contributor to the UN peacekeeping missions.
Looking around the business world
How is the world we are living in, at the moment? When others look at us and say how we look like, we probably get too much obsessed with our weaknesses and start judging ourselves with the eyes of the outsiders. Also at a time when we have been overwhelmed by the prolonged political unrest, we can hardly judge fairly the realities outside of Bangladesh and its foreign policy implications. We, again, set our ‘Weltanschauung’ (world view) in the light of how the dominant global discourses dictate us to. Thus we often forget our responsibility and compulsion to see and judge the world from our own perspective and often maintain a more inward-looking view than having a proper external orientation.
In an inter-dependent world today, a nation must keep its eyes open and show flexibility to the dynamics of globalisation, at the same time judging the reality critically. As far as business is concerned, it should be remembered that the international system is not free from risk and technology that revolutionised business landscape there can pose threats as well. So, even according to conventional knowledge, there are some dominant political risks foreseen for 2014 and technology-induced challenges that would one way or the other affect trade and investment decisions.
‘In 2014, big-picture economics are relatively more stable. But geopolitics are very much in play,’ Ian Bremmer wrote in an article on ‘2014’s top 10 political risks’ indicating an increasing lack of global leadership and coordination that have implications for businesses around the world. In Brazil, Colombia, India, Indonesia, South Africa and Turkey — six of the largest emerging markets where elections matter voters will go to the polls this year facing new political challenges. So, a shift in international orientation of many countries is likely, given America’s troubled alliances and dysfunction at home. Emerging market investors would be more anxious about local political risks, as even the case of Bangladesh.
The world of technology is also full of contradictions and conflicting developments. Living in a digitally globalised world, businessmen and entrepreneurs are blessed with potential for growth, employment and new business models and at the same time facing challenges in terms of regulatory atmosphere and industrial competitiveness. This may result in the increase in cost of doing business.
When IBM explored the idea that everything will learn – driven by a new era of cognitive systems where machines will learn, reason and engage with us in a more natural and personalised way, US retailer Target reported that at least 70 million customers were affected by a cyber-attack over the holiday shopping season. The moment India’s e-commerce market has grown at 88% in 2013 to $ 16 billion and mobile banking services marked a rise of 217%, Facebook has lost millions of users per month in its biggest markets. US cable and satellite television operators are squaring off over the mobile apps that viewers are increasingly using to watch TV. But in Japan, Panasonic, like peers Fujifilm Holdings and Olympus Corp, has been losing money on its cameras since mobile phones that take high-quality photos ate into the compact camera business.
In such circumstances, the need for designing the corporation is being felt. Pavan Sukhdev, who initiated UNEP’s green economy, observed that corporate leaders are demonstrating new pathways and solutions but they account for only 5% of the world economy. ‘In 2014, what we need is not more sustainability leadership but more sustainability followership. In order to ensure the leaders have followers, we need urgent reforms in performance reporting, advertising, leverage, and taxation, with entire business sectors moving in unison. They will have to overcome many challenges on the way: the primacy of profits, cut-throat competition, first-mover disadvantage, and corporate egos,’ he noted in a recent article.
Development – attainments so far, the national pursuit of goals and the potential – is arguably the biggest strength of Bangladesh as this country is well known to the world today. The country is dubbed development puzzle or development paradox – a coinage which proves the resilience of the nation, if not a good reputation, and development amidst anarchic policy regime. However, it makes it difficult for others to ignore Bangladesh. Another strong aspect, the hospitality of our culture, has not been properly highlighted to foreigners unless they have individual experience of visiting Bangladesh or mingling with good Bangladeshi souls.
‘We are a social nation and this strength of us is equally important for social innovation and bringing a global reputation for us,’ former Ambassador Humayun Kabir told ICE Business Times. He feels that social innovation brought Bangladesh its lone Nobel Peace Prize. ‘Bangladesh people deserve opportunity at home and abroad to prove their enterprising skills.’ The central bank Governor, Dr Atiur Rahman, also a development economist, often terms Bangladesh a social laboratory, given the varieties of social issues and innovations that could be replicated elsewhere as models.
Professor Imtiaz Ahmed, too, emphasised that the human factor is a major strength of Bangladesh. ‘Our garment industry has grown banking on cheap labour and the entire NGO sector is based on the people’s urge for development. In both the sectors, the women of Bangladesh have played the most important role,’ he added. Asked about what Bangladesh could market abroad, he mentioned that it is culture that attracts foreigners and ‘this country is extremely rich’ in this particular areas. ‘What would a visitor buy from here if s/he does only one? It is painting based on rich tradition,’ Professor Imtiaz cited an example.
In the present-day world, Bangladesh has emerged as major sourcing country for global retailers, especially of apparel products, and it is showing its comparative advantages in sectors such as pharmaceuticals, leather, ICT, shipbuilding and a number of service industries. It will continue to remain a part of global supply chain of labour force for another 25 years or so, if the demographic advantage can be exploited through proper education, training and skills. Also, global manufacturers and brand companies are set to increasingly look at Bangladesh as a promising market in view of the growth of the middle class consumers inside a compact territory.
The country’s development also involves contradictions within itself as the case of development paradox. Some of the recent developments as well, such as image crisis with political turmoil, criticism about election of many public officials without the ballot and international concerns about human rights situation have created new contradictions that might deal a blow to the business unless that could be addressed properly and immediately.
A delegation of businessmen met new Commerce Minister Tofail Ahmed and called for taking steps to revive the global image and restore investors’ confidence. The Finance Minister’s most recent announcement that the government would not seek foreign funds for building Padma Bridge shows certain amount of frustration about the outsiders’ views of our handling of big infrastructure projects following the World Bank’s withdrawal from the project.
Professor Imtiaz correlated the situation with the crisis of governance and blamed a nexus of a section of politicians and bureaucrats with their beneficiaries. ‘This has created corrupt money and damaged the atmosphere for doing business ethically,’ he said. He also explained that although some of Bangladeshi industries thrived on cheap labour, it is now cheap unskilled labour that might drive out the capital from the country. ‘Those who earned money cashing in on cheap labour may not find business profitable any longer while utilising the same unskilled labour. So, there is every chance of capital flight,’ he said underlining the urgent need for attaining sophistication in skills of workforce including migrant workers. Bangladesh’s comparative advantage of cheap labour in garment manufacturing and sending workers abroad is also criticised even as slavery as the country is yet to ensure the dignity of the service providers at the global level.
Ambassador Humayun Kabir linked education, particularly quality education, with the paradox of development. ‘Of course, we have the strength of 160 million population and we are something on the global scene. But this alone will not give us expected fruits unless we can convert the people into human resources and capital,’ he said. Optimistic about demographic dividend, he suggested that learning of a number of foreign languages such as Spanish, Arabic and Japanese apart from English and technical knowledge must be included into the education curricula targeting the next few decades. ‘We cannot survive without knowledge and in Bangladesh education is a major weakness.’
Let’s look at what some important people around the world spoke of Bangladesh from time to time:
‘If development could be made successful in Bangladesh, there can be little doubt that it could be made to succeed anywhere else. It is in this sense that Bangladesh is the test case for development.’– Just Faaland and Parkinson wrote in 1976
‘You have come together to build a nation that has won the respect of the world, ‘–Former US President William Jefferson Clinton said during his 2000 visit to Bangladesh
‘On a range of development indicators such as life expectancy, child immunisation and child mortality, Bangladesh has pulled ahead of India despite being poorer.’ –Amartya Sen, the 1998 winner of Nobel Memorial Prize in Economic Sciences
‘Even though the United States government does not recognise you, the people of the world do recognise you.’– Late US Senator Edward Kennedy said of Bangladesh in 1972, predicting the country’s future prosperity like that of America
‘Students of France know that your teachers and friends embraced death for liberty, and that they know that nowhere else ever before students and teachers paid such a heavy price for liberty… Your dead have rendezvous with the fate of Bangladesh, but now it is up to you to make the nation.’– French scholar Malraux told a reception at Dhaka University’s TSC in 1973
‘Today there is a modern school in that place [in Motijheel slum] with over 5000 children in it.’–A 1986 book Mother Teresa quoted as saying of need for building schools in slums
‘I want to go there and be with them and promote their cause. ‘I want people to be reminded,’– Audrey Hepburn, late actress and UNICEF goodwill ambassador said showing interest to visit Bangladesh in 1989
In Dhaka, attractive, overwhelming or intimidating (paraphrasing by the author) is the ‘cheerfulness of these poverty-stricken people and their unconquerable charm… misery has a terrifying charm.’– Taken from ‘My broken love’ by Günter Grass
‘I am grateful for Bangladesh’s support for the Palestinian Cause.’– Late Palestinian President Yasser Arafat said during his 1997 visit to Bangladesh
‘Both political leaders, including Sheikh Hasina, Prime Minister and Khaleda Zia agreed to renounce the use of hartals, violence and intimidation.’– Former US President Jimmy Carter stated in 2001
‘I can even solve the issue between Palestinians and Israelis but I cannot solve this problem between the two leaders of Bangladesh.’– Late South African President Nelson Mandela, as quoted by Professor Wahiduddin Mahmud recently, told his aides about the dynamics of Bangladesh politics
‘A headline that really struck me on the day of the tragedy in Bangladesh was ‘Living on 38 Euros a month’. That is what the people who died were being paid. This is called slave labour.’– Pope Francis was quoted as saying at a private mass after the Rana Plaza tragedy in 2013
‘…pulling out of Bangladesh is the wrong call. The right response of the Western retailers who source from Bangladesh is not to walk away from the country but to work with officials and owners to make the situation better. And consumers who claim to care about people in developing countries should shop at retailers who make that choice.’–Charles Kenney in BusinessWeek
Cursed or blessed?
Bangladesh has a sea outlet, which many countries in the world do not have, and its geo-strategic location at the crossroad between South Asia and Southeast Asia has placed her in a unique position. The country has also been widely integrated into the global system – international organisations, financial institutions and supply chain. Bangladesh is being considered as potentially a key player in the much-talked about economic corridor, regional trading hub or transport corridor but confusions surrounding the risks and benefits of such initiatives remain. In recent times, the incidents and happenings inside Bangladesh have drawn attention of the global media, not for good reasons, obviously. Global powers have been in the centre-stage of debates on Bangladesh.
WHY? Is the country then blessed with location and global positions or cursed for it instead?
Apparently, big powers look at Bangladesh to secure their strategic and business interests, interest that sometimes turns into interference into the internal affairs of the country. The lone superpower of the world, the United States, its new rival Russia, Asian economic powerhouse China, regional great power India, economically important the European Union (EU) and Japan and the Middle East – all have some stakes in Bangladesh. ‘They talk about Bangladesh to express their concerns and they can do more because leaders here in Bangladesh give them the space to do so,’ said Professor Imtiaz rejecting the idea of being cursed with geographic location. Ambassador Humayu Kabir added that the friendly countries are also concerned about Bangladesh people being part of the global system today.
However, the occasional embarrassment is created not only abroad but also at home due to weakness in governance and poor leadership. International actors sometimes react to what happens in Bangladesh. An international media report said the political unrest is viewed with grave concern by donors, which fear this instability could render development programmes ineffective and are slowly reducing funds — the World Bank data recently revealed a significant drop in foreign aid commitments, an almost 28% slip from $1.6 billion in 2013 to $1.2 billion in 2014.
Sovereign image with moderation
‘Friendship to all and malice towards none’ is the fundamental principle of Bangladesh’s foreign policy. It is though, almost impossible to have a world without conflict of interests, such a principle remains the cornerstone of the country’s foreign relations so that it does not deliberately invite any enmity in the international arena. Yet practically, other countries talk about Bangladesh and at the age of globalisation they have various kinds of interests in this country. In that context, there are concerns over sovereignty, a concept which is asserted, enjoyed or perceived by a state (including its political actors), simultaneously maintaining its international engagements.
‘In a globalised world, the concept of sovereignty should be revisited. Nowadays everyone talks about everyone and we are living in an inter-dependent world,’ said Professor Imtiaz Ahmed. He explained that it is important to see if a man is sovereign or in other words citizens of a nation are sovereign. ‘The concept of sovereignty is based on territorially biased old ideas, but we must talk about human-centric sovereignty,’ the analyst noted, adding that the country’s international engagement itself is the manifestation of sovereignty.
Ambassador Humayun Kabir defined sovereignty by the national capacity and opportunity to share resources beyond the boundary with other countries. ‘To me, it is about sharing common resources and today sovereignty is not an isolated concept; it is a concept of sharing, not showing arrogance by any country while pursuing foreign policy goals,’ he pointed out.
The biggest strength of Bangladesh’s foreign policy is the moderation and such policy, not hostility or parochialism, is appreciated by the international community. In fact, Dhaka’s diplomatic pursuit is historically focused on multilateralism and Bangladesh is considered one of the most active members of the United Nations. That policy of moderation demands a high level of sophistication in the operational pursuits. The biggest human flag, formed in Dhaka in 2013, is recognised by Guinness World Records but for attaining a good image of the country, what is important is good work done at home. The dictum that ‘foreign policy is the extension of the domestic policy’ is true to every member in the world.