Bangladesh To Have a Higher GDP Trajectory
March 28, 2008 – 12:00 am HIGHER ECONOMIC TRAJECTORY
Bangladesh ready to rival Asia’s mighty manufacturing hubs
By ERIC PRIDEAUX
Sure, the shipping distance from Japan to this sprawling industrial park might be great, and his trucks must sometimes compete with rickshaws and livestock on the crowded roads outside its walls.
But overall, Yasufumi Matsuo, executive director at Japanese electronic parts maker Op-Seed Co.’s factory in Chittagong, is happy with conditions at the Export Processing Zone here in Bangladesh’s main port town, where local workers at his plant manufacture buttons and light-emitting diode displays used in vending machines assembled back in Japan.
“They make good products,” said Matsuo, who has run the plant for a decade. While he wants improvements in water supply and, to reduce downtime, electricity generation, his 1,200 workers get the job done well, he said. “They hold their own against workers in China and Thailand.”
Despite years of corruption that hindered growth by, for example, snarling maritime traffic at Chittagong, Bangladeshi business conditions are improving. Bangladeshi leaders want Japan to invest more in their domestic businesses and consume more exports, saying Bangladesh now has a competitive edge over China as a key economic partner.
In a country with per capita gross domestic product of $1,400 (¥151,000), compared to $33,800 (¥3.7 million), in Japan, building those ties is a priority.
Not that this country of 150.4 million mostly Muslims has been languishing. Annual growth has averaged 5.6 percent over the past 10 years, with last year’s rate of 6.7 the highest-ever. A top government official believes that despite November’s catastrophic cyclone Sidr, growth this year will hover around a respectable 6.0 percent — above the world average.
“What frustrates me is that we could have touched 8, 8.5 percent (growth) easily” had there been cleaner politics in the land, remarked well-known leather-goods and pharmaceuticals businessman Syed Manzur Elahi, who serves as administrator at the Federation of Bangladesh Chambers of Commerce and Industry.
Elahi is not alone in issuing bold claims. According to a 2000 report for the World Bank titled “Estimating the Effects of Corruption Implications for Bangladesh,” if the country had reduced corruption “to levels existing in transition economies like Poland,” growth in 1990-97 could have risen by more than half.
Real growth of 8.5 percent would put Bangladesh on the same economic trajectory as India, with which it shares a long border, and well on the way to China’s 10.5 percent. But as long as it was business as usual at Chittagong in Bangladesh’s southeast, near the border with Myanmar, Bangladeshi manufacturers could not hope to be competitive on a global scale.
Port authorities demanded “speed money,” or bribes, before letting goods pass. And even when officials’ palms had been duly greased, other miscellaneous port delays made it difficult for Bangladeshi companies to complete overseas orders in fewer than 90 days — twice the time needed in No. 1 competitor China, Elahi said.
This began to change after leaders responded to an outbreak of political unrest by imposing a state of emergency on Jan. 11, 2007. An interim government assumed power, arresting scores of politicians and businessmen suspected of shady dealings.
Some Bangladeshis have grumbled about the state of emergency because elections have been suspended until this December. But by slashing red tape the political deep freeze has allowed the caretaker government to cut ships’ waiting time at Chittagong by some 70 percent to four days, giving domestic manufacturers a new edge on such big competitors as China, Elahi said.
Foreign manufacturers still worry about Bangladesh’s underdeveloped infrastructure, but the Bangladesh Export Processing Zone Authority is trying to put their concerns to rest.
For example, at the processing zone in South Halishahar, Chittagong, where Japan’s Op-Seed has its plant, there are plans to put 50 megawatts of new power generation online in September, expand treatment of water waste and beef up high-speed communications networks to enable video conferencing between the eight Export Processing Zones and overseas offices.
Meanwhile, officials said monthly worker wages of some $30 make Bangladesh more competitive than their counterparts in Vietnam, where they said wages were $80, or China, where wages reach $100. The comfortable business environment has attracted manufacturers supplying parts to such blue-chip Japanese companies as Minolta, Sony and Nissan, according to BEPZA.
Removing obstacles to exports at home is one thing, but another important challenge for Bangladesh is to diversify its overseas markets for woven garments and knitwear, which together account for about three-fourths of exports, and other products such as frozen shrimp, leather and goods made of the vegetable fiber jute. Just over half go to the European Union, while about a third travel to the Americas.
On the other hand, Bangladeshi trade officials say Japan, the world’s second-largest economy, absorbs only about 2 percent of exports partly because of stringent requirements to document that goods originated in Bangladesh.
Also, Bangladeshi officials say Japan sets higher quality standards than large Western buyers, making it uneconomical to build relationships with Japan until larger demand emerges.
“Why should I take the extra botheration of having a fully air-conditioned factory for exporting to Japan and the amount of the export order is only $10,000? It’s not feasible,” said Faridul Hassan, director general at the Ministry of Commerce’s Export Promotion Bureau, speaking as a hypothetical exporter slapped with higher requirements to refrigerate export goods.
Conditions are beginning to change, however, as rising labor costs in China, Japan’s largest trading partner, will compel China to up its export prices, Bangladeshi trade officials say.
“Our price is quite competitive in comparison to China and the rest of the world,” said Shahab Ullah, vice chairman of the Export Promotion Bureau. “There is a growing realization among Japanese policymakers that there has to be China, plus one country. They’re looking for it.”
An encouraging sign came during a Bangladeshi trade fair in Japan one year ago. On display were a dozen or so products, including ceramics, ready-made garments, textiles, leather products and jute goods.
Japanese visitors were impressed by the quality, Ullah said. For one, there were immediate “spot” orders worth about $1 million and potential orders twice that value, he said, adding that many of the relationships forged that day have taken root.
“Our commodities are coming up,” Ullah said. “A serious market is in the process of being opened.”
Source: The Japan Times, Pakistan Defence
Tags: bangladesh, Economy, GDP, investments, Japan
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5 Responses to “Bangladesh To Have a Higher GDP Trajectory”
I think Bangladesh is neglecting Pakistan when it comes to trade. Pakistan is a very big market and we are also automobiles manufacturer so it means that we both can get benefits from bilateral trade. I think we should include China for a trade route since a road from Myanmar to China has been developed and this could link Pakistan and Bangladesh.
By Muhammad Salman Khaliq on Apr 1, 2008
It will be very hard for Pakistan/Bangladesh to get up top. This is because of India and China. These countries are filled with various industries that are veterans when it comes to business. Over the past decade or so, India has surpassed both countries. So in other words, india china basically end up stealing businesses that could help Pakistan and BD (Foreign investments). Not to mention political issues facing Pakistan hinders its progress. Starting from terrorism and US getting involved in its business.
By Taimur ali on Apr 2, 2008
@Taimur:Since I belong to IT industry hence I can sat that IT industry in Pakistan is growing at a rapid pace despite Indian dominance in IT. According to Gartner (the world’s leading information technology research and advisory company) “Pakistan among top countries for offshore outsourcing” means that Business is there.
Never forget that a bigger population forms a bigger economy and Pakistan and Bangladesh are big countries where the labor cost is lot lower than many countries. Both the countries are complementary and we both can form a big economy which will attract more foreign direct investment.
By Muhammad Salman Khaliq on Apr 3, 2008
SEEKING HELP & SUPPORT FOR CHANGE OPPRESSIVE LAWS
Dear Sir
Immediately after independence 1972 many of the Bangladeshi Citizens started to establish small & medium size INDUSTRIES investing family resources as self earner
And Government started to help these rapidly growing PRIVATE SECTORE INDUSTRIES having fund from International Loan giving Agencies, etc. through different Bank.
But unfortunately the Bank Official & Policy Maker started harassing the Entrepreneur extending non-co-operation, negligence’s throwing these Industries out of production and became interested to occupy the Mortgage Properties & Co-Lateral Securities of Industrial Owner of Private Sector
Due to Such Non Banking Activities of Bank Official and Policy Maker, The individual owners of these Industries have lost their Cash Capital, Expatriate Capabilities, and became helpless victims of deep rooted conspiracy having similarity to the
HISTORY WHICH REMIND US THAT THE HANDS OF THE TECHNICIAN OF MUSLIN FABRICS “ ,THE FINEST QUALITY FABRICS WHICH WERE EVER MADE IN BENGAL ONLY “ WERE CUT DOWN BY THE THEN COLONIAL RULER OF UNDIVIDED INDIA.
And there are about 35 (Thirty Five) millions unemployed person in Bangladesh. In 1992 & 1996 these Industries were Identified and Registered by the Government through the process of examination as SICK INDUSTRIES / DISTRESSED INDUSTRIES who were victims of Violation of Contract, Negligence, Fraudulent Activities, ,Malpractices including Abuse of Power of Bank Officials including Policy Maker / Law Maker due to absence of accountability in any form .
Industrial Entrepreneur were deprived of LEGAL RIGHT due to enactment of BANK RUPTCY ACT in 1997 and ARTHA RIN ACT of 1989 – 1990 period and as amended on 2003 and on 2007 treating the INDUSTRIAL ENTRPRENEURS OF PRIVATE SECTOR as like as SLAVE of Primitive Age.
Surprisingly these Laws are not applicable for NATIONALIZED / GOVERNMENT SECTOR WHERE much of the Bank Money are lying & Millions of US Dollar received from INTERNATIONAL AGENCIES OR OTHER SOURCES ARE INVESTED TILL DATE WITH OF NO RESULT
THERE ARE NO PROVISION FOR APPLICATION OF LAW OF TORT which are most common law even in neighboring countries not to speak of USA , EUROPE or AUSTRALIA DUE TO WHICH BANGLADESH HAS BECOME A HEAVEN FOR REPRESSION / EXPLOITATION BY OFFENDERS / WRONG DOERS INCREASING the number of poor people in multiple ration .
OWNER OF INDUSTRIES OF PRIVATE SECTOR CAN NOT CLAIM ANY SET OFF or COMPENSATION FOR VIOLATION OF CONTRACT, NEGLEGIENCES, MALPRACTICES, FRADULENT ACTIVITIES, ABUSE OF POWER BY BANK OFFICIAL or any other type of Loan Giving Agencies or POLICY MAKER . ON THE SUIT FILED BY BANKS/ Loan Giving Agencies for realization of Bank Loan till date. Of Bangladesh.
And are not permitted for simultaneously hearing of Compensation Suit in ARTHA RIN COURT of Bangladesh , Although THESE ARE WIDELY APPLICABLE IN EVERY COUNTRY INCLUDING NEGHBOURING COUNTRY.
Industrial Entrepreneur of Private Sector can only file a separate suit for compensation in separate court under common civil law spoiling valuable time of the Judges of the Court, creating more complicacy for life long litigation WITH OF NO RESULT due to restriction to obstruct or resist any order / decree of ARTHA RIN ACT / COURT by any other DECREE OR ORDER OF CIVIL COURT or even of HIGHER COURT misguiding / or misleading the vast majority of Bangladesh citizen due to the ignorance and illiteracy about industrial process and of technological complicacy which exist in Industrial system.
The Expert Person are in opinions that such Laws have been enacted TO HIDE OUT EXISTING HIGH PROFILE CORRUPTION, FRADULANT ACTIVITIES,NEGLEGIENCIES WHICH EXIST IN BANKING SECTOR OR OF POLICY MAKER OF BANGLADESH like all other sector .
THE RIGHT OF EQUITY OF LAW HAVE COMPLETELY BEEN DENIED TO THE INDUSTRIAL ENTREPRENEUR of Private Sector as per Section 12, 12 ( khan ) 18, 19, 20, 21, 34,40, 41, 42, 44, 47 and 50 of ARTHA RIN ACT. WHICH ARE COMMONLY KNOWN AS OPPRESSIVE LAW and direct violation of ARTICLE No: 8, 15, 26 and 27 of BANGLADESH CONSTITUTION
( ******* Details of above sections of ARTHA RIN ACT in short have been given as below including SECTION 29 of Banking Company Act, )And similarly the Door of Higher Court have also been closed to the Industries Owner imposing terms for 50 % amount of as claimed amount in advance which are not applicable upon any Bank or Loan Giving Agencies.
These few example of oppressive laws how the citizen are repressed and depriving legal right by the policy maker / miss - guiding the innocent or ignorant vast majority of the country very cleverly
Now there are no other option, but to draw the kind attention of Concerned Authority Including All International Community / Organizations seeking help to save and protect the OWNER OF SICK OR DISTRESSED INDUSTRIES OF Bangladesh of Private Sector, including their properties from such oppressive laws as well to protect the interest of large number of workers, staffs of the Private Sector and also for CHANGE of such oppressive laws
Our humble appeal before the Government of Bangladesh to kindly allow Industrial Entrepreneur to claim Set off or run Compensation Suit Simultaneously with suits file by Bank Officials under ARTHA RIN ACT -2003 with equal opportunity and equal right between Banks / Loan Giving Agencies and of Industrial Entrepreneurs keeping space with on going process of ECONOMIC ,Administrative ,REFORMS PROGRAMME OF GOVERNMENT. And to remove the existing system of MORTGAGE OF
LAND & PROPERTIES TO BANK for any type of Industrial or Agricultural Loan.
And also the above mention SECTIONS OF ARTHA RIN ACTS should be abolish immediately including Section 28 ( Ka ) of BANKING COMPANY ACT AS AMMENDED on 2001 by the VESTED CIRCLE And similarly the system of keeping mortgage of land & Properties should also be abolished to established accountability or to check malpractices or corruption of bank officials.
It would be highly appreciated if your good self also kindly collect the PRINTED COPIES OF THE ABOVE MENTIONED LAWS for confirmation of facts.& to help the suffering groups by circulating this appeal among Honorable Member of your Organization and Partner’s Organizations and Publish in the WEBSITES or News Bulletin or News Media, Electronic Media of your territory to bring to the knowledge of Concern Authority including International COMMUNITY / ORGANIZATION working for HUMAN RIGHT & FUNDAMENTAL / Democratic Right of people for immediate help and support to protect the Owner of the Sick Industries of Bangladesh and their properties from such OPPRESSIVE LAWS for which they all would be ever grateful as well for change
*** N.B. the Summery of above mentioned Section of Arthatha Rin Act at a Galance:
!- In section 18 Defendant or Owner of Industries will not be able to claim any set – off or to make counter claim against the Bank or Bank Official nor will be allowed to claim any Compensation by submitting any Suit against Bank ( Plaintiff ) analogously or simultaneously in Artha Rin Court due to violation of contract, fraudulence activities including negligence, malpractices of Bank officials.
11. - Section 21: Settlement Conference between Borrower and Bank is a misnomer of Law of arbitration or just to divert the attention of common people in the name arbitration.
111- - -As Per Section 19 (6) of Artha Rin Act of 2003 no suits can be declared to be dismissed or discharged for default or above mentioned fault of Bank Official.
As per Section 20 regarding any order or proceedings of Artha Rin Act can not be raised to Higher Court or to any Other Superior Authority without paying 50 % of claimed or Decretal Amount if the order is totally misleading or against any law or illegal one even .
1V- As per Section 34 Defendant or the Owner of Industries in Artha Rin Adalat Case can be put to the Jail for compelling or forcing him to pay the Bank Money without considering the fault or negligence’s of Bank Official without allowing him to proof the matter of violation of contract, fraudulence activities , negligence, malpractices of Bank officials.
V- As per section 41 and 42 - The Owner of Industries are not allowed to file any appeal or revision to High Court or Superior Court against any order of Artha Rin Court of 2003 without paying 50 % of the claimed amount or Decretal amount in advance , But the Bank Official are not require to pay any amount in advance in the Higher Court, allowing A Great Disparity of Law and Justice.
V! - Under section 47 and 50 , The learned Court under Artha Rin Act of 2003 have been bared to make any exemption of principal loan amount for Violation of Contract , Negligence’s Malpractices, including fraudulent activities or any fault of the bank official uni laterally
V11- Section 12 ( Kha ) Imposed a bar for filling write petition to Higher Court which are direct violation of human right and constitutional right of the citizen and reflects the negative attitude of the law maker
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