Bangladesh’s hidden story: A booming economy – Diplomatic Courier
A significant piece of news emerged from Bangladesh recently that received little notice outside the country. Last year for the first time, foreign direct investment from other countries into Bangladesh surpassed $2 billion, a 44 percent increase from the year before.
In other words, investors increasingly see Bangladesh as a smart place to put their money. And they aren’t alone.
According to a March poll by the U.S.-based International Republican Institute, 83 percent of Bangladeshis surveyed said the security situation in Bangladesh is very good or somewhat good and 77 percent believe the country is politically stable. In addition, 72 percent are optimistic that their personal economic situation will improve.
Top sectors for direct investment last year in Bangladesh included the ready-made garment industry, of course. But investors also poured money into oil and gas, banking, telecommunication and power generation. One reason is, unlike many of its neighbors, Bangladesh has a liberal investment regime that allows 100 percent foreign investment in many sectors and an unrestricted exit policy.
In recent years, Bangladesh’s economy has grown at a consistent, blistering rate of more than 6 percent, making it one of the fastest growing economies in the world. Over the past nine months, that pace accelerated to 7 percent. Today, the Bangladeshi economy stands at about $180 billion. According to the World Bank, that will rise to $322 billion by 2021, creating many more scalable investment opportunities.
Growth is driven by the already-well-known ready-made garment industry. But it’s a more dynamic industry than most people know. In fact, it’s a mistake to continue to think of Bangladesh as t-shirt maker to the world. Bangladesh garment manufacturers produce high-end clothing that sells in Europe’s best boutiques.
The garment industry has fostered more than pure economic gains. Demography has also been a winner. Garment factories have become the great gender leveler in society. Most employees and managers are women, which has led to their economic empowerment and rise in stature in society.
At the same time, the Bangladesh garment industry is developing an international reputation for being smart and nimble. “Bangladesh offers ease of doing business, importing-exporting is faster. R&D on new styles is faster as you can import fabrics in three days. In India, it would take 10 days,” Vijay Mathur, an official with the Indian Apparel Export Promotion Council, recently told the Business Standard.
As a result, Bangladesh garment exports are likely to hit $27 billion this year, up 10 percent from 2015.
The economic success story of Bangladesh has also improved the health of its citizens.
Twenty-five years ago the average Bangladeshi could hope to live only to age 56. Today, that figure is over 70, which is among the most notable improvements in modern history, according to the Asia Foundation. In fact, expected longevity in Bangladesh is more than four years longer than in neighboring India and Pakistan.
Between 2000 and 2010, the number of poor in Bangladesh dropped 26 percent from 63 million to 47 million. Today, the overall rate of poverty in the country is 22 percent, down from 40 percent a decade ago.
The World Bank reports that labor income has risen while birth rates have dropped, leading to lower dependency ratios and higher per capita income. The World Bank recently ranked Bangladesh as a lower middle-income nation for the first time.
The economic surge started after the Awami League, the nation’s ruling party, won in a 2008 landslide. The impressive growth has been nurtured and sustained by smart government programs, savvy foreign investment and the entrepreneurial spirit of Bangladeshis, especially its young people who are increasingly English speaking and digitally savvy.
The bottom line is that Bangladesh is a legitimate – if underreported – economic success story, and one that is only in its beginning.
Sajeeb Wazed is the chief information technology adviser to the government of Bangladesh and the son of Prime Minister Sheikh Hasina.