The Financial Express

Keeping  growth sustainable  

Keeping  growth sustainable   

Everyone will accept that increased agricultural yields, the surge of migrants' remittances and development of the garments industry have triggered growth of our economy in recent times. But most importantly behind the scene, it is the present government that has been relentlessly pursuing a proactive development agenda since 2009. Agricultural strategy of the government on using of shallow tube wells and low-lift power pumps instead of deep tube-wells, making fertilizer, pesticides and high yield variety of seeds available in open markets at affordable prices have been the real drivers to increase agricultural yields.  Pro-agricultural government policy has given tremendous productivity in agriculture sector since 2010. With more than 160 million of inhabitants, averaging more than 1200 inhabitants per square kilometre, Bangladesh has made remarkable progress in agriculture, poverty reduction, supported by sustained economic growth. As a result, Bangladesh reached lower-middle-income status in 2015 and graduated as a developing country from the UN's Least Developed Countries (LDC) list in 2021.

The development of the ready-made garments (RMG) industry can probably be considered the greatest success of the Bangladesh's economy. ''Made in Bangladesh" labels have indeed become familiar to many western consumers. Now Bangladesh is the world's second largest exporter of garments after China.

The foundation of RMG was established by Desh Garments, a local textile company which paved the way of garments business since 1980. At that time, Bangladesh lacked the specific technical know-how and adequately trained workforce needed for production of apparels to be able to meet  international demand.  In recognition of these inadequacies, the government had taken all-out effort to facilitate the RMG industry and trained management staff from outside as human capital that constituted the seed from which, in a few years, the RMG industry thrived. Some of trained personnel started textile facories on their own, others entered the brokerage business of textile products, connecting between the demand of international clothing brands and the growing supply of local producers. The development of Bangladesh's garment industry can be seen as an unintended side effect of the MFA quota system, which opened up an opportunity that the country has been able to seize. Despite quotas, exports continued to grow because of European Union which decided to not impose import restrictions on garment products of Bangladesh.

It is observed that the end of Multi Fibre Arrangement (MFA) in 1994, Mexico in the U.S. market and Turkey in the EU market lost their market share despite having preferential access and geographical proximity. In addition, all major apparel exporters except Bangladesh, Vietnam, and China lost their market share since 2008 due to the global recession in their export destinations. But Bangladesh not only upheld its past gains, but also improved its performance considerably during both post-MFA and recession periods. In fact, since 2011 the RMG industry of Bangladesh has managed to almost double its world market share, increasing it from 2.54 per cent in 2007 to 4.40 per cent in 2011, and 6.8 per cent in 2020 to become the second largest exporter of RMG.  As regards workers remittance, the present government has created diverse opportunities for the migrant workers.  International migration has become a popular livelihood strategy for an increasing number of young people. According to the Bangladesh's Bureau of Manpower, Employment and Training (BMET, 2019) more than nine million Bangladeshi workers expatriated to more than 140 destinations over the period 1976-2017. 

Bangladesh joined the OIC as a member country in 1974 under the guidance of visionary leadership of the father of the nation Bangabandhu Sheikh Mujibur Rahman.  Since then, those oil exporting  gulf countries have been welcoming Bangladeshi workforce and our expatriates  have  also chosen the Muslim countries of Middle-East as their principal destinations.   In particular, hundred thousand of migrants found employment as construction workers in the Middle-East countries which alone absorbed almost three quarters of the Bangladeshi migrants.

More remittances and more export of manpower are prime target of our policy options. The Bangladesh Bank defined workers' remittances as ''the life blood of Bangladesh economy" and acknowledged their role in poverty alleviation and the improvement of others socio-economic indicators.

Remittances helped Bangladesh to increase foreign exchange reserves which has been contributing to increase financial stability. Indeed, since the country adopted a floating exchange rate regime in recent past following IMF prescriptions, the exchange rate of Bangladeshi Taka has been characterised by a relatively low level of volatility.

Moreover, the government funded training programmes helped migrant workers to acquire skills demanded by foreign countries' labour markets. The government's intervention is aimed to foster and encourage inflows of remittances in formal channel. Thus, efforts have been continued in order to increase competitiveness and to reduce money-transfer fees and exchange rate margins. The Government encouraged the commercial banks to open branches in countries of expatriation such as United Kingdom, United States, Australia, Singapore, Malaysia, United Arab Emirates so that they can transfer money easily. In 2010, the government established the Probashi Kallyan Bank to provide subsidised financial services to migrants. Bangladesh Bank has taken all out measures with some incentives package to bring remittances through formal channels with cheap transaction costs and less transfer time.

Economic growth of Bangladesh increased significantly because of the rapid expansion of the RMG sector, flourishing of remittances and the contributions of agriculture sector under prudent policy options of the government.

Keeping growth sustainable cannot be the responsibility of the government alone. Indeed, we understand that continuing economic growth, graduation from LDC's list and the situation of Covid 19 pandemic have increased a higher level of responsibility amongst political parties, bureaucrats, professionals, academics, businesses, private sector, journalists and faith-based groups for maintaining its growth sustainability.

Dr Md Shamsul Arefin is a former senior secretary, Government of Bangladesh.

[email protected]

Share if you like