Time to invest in Bangladesh as economy is defined to grow faster
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Bangladesh includes a golden chance to strengthen its monetary ties with neighbouring countries and forge greater integration with regional and sub-regional blocs to boost exports and accelerate economic growth, according to a top banker.
"While Bangladesh's achievements so far are without doubt commendable, there always remains potential to accomplish more," said Enamul Huque, country head of corporate, commercial and institutional banking at Standard Chartered Bangladesh.
Analysis shows that Bangladesh can leverage only around 40 % of its trade potential using its South Asian neighbours, the banker said.
"Building sustainable and mutually-beneficial bridges with this neighbouring countries is essential if we are to attain our aspirations," he told The Daily Star within an interview recently.
Greater integration with regional and sub-regional blocs such as the South Asian Association for Regional Cooperation, the Association of Southeast Asian Nations, and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) can help accelerate the access of Bangladeshi products to their markets and facilitate regional cooperation on a new level, he said.
To be able to realise the full potential of regional trade and investment, Bangladesh has been prioritising infrastructure development because the fiscal year of 2011-2012 and has increased infrastructure investment significantly. A number of mega projects have already been undertaken to aid trade and investment.
"The government has done superbly in conditions of addressing the country's infrastructural deficit with an try to continually improve Bangladesh's competitiveness at the global level scale on a sustainable basis."
The completion of the Padma Bridge will generate a host of new investment opportunities, said Huque.
Standard Chartered Bangladesh is facilitating trade and investment across key trade corridors. Its dedicated desks are serving China, Japan, and Korea corridors, respectively.
The lender organised a Japan Road Show for investors in Tokyo in 2018 and 2019 and an identical event aimed at Korean investors in 2019.
It arranged the China-Bangladesh Investment Summit in association with the Bangladesh Investment Development Authority (BIDA), the embassy of China in Dhaka, and Bangladesh's embassy in China in January. The virtual event showcased the potential of partnership opportunities between Bangladesh and China and highlighted emerging strategic imperatives in a shifting global landscape.
"The response to the function was great, with an increase of than 400 delegates representing Chinese public and private sectors, policymakers, investors, along with prominent leaders from Bangladesh's private and public sector in attendance," Huque said.
Huque has been with the London-headquartered multinational lender since 2001. He served the lender mostly in Dhaka and had short stints in the UK and India.
He said Bangladesh and China have always enjoyed warm bilateral relations.
China isn't only the greatest trading partner but also among the key infrastructure development partners of Bangladesh. Chinese FDI is steadily flowing into Bangladesh, with investments entering critical sectors such as power, infrastructure, textiles, and electronics.
There is heavy reliance on imports from China. However, exports are also growing.
Bangladesh's exports are concentrated largely in two markets: Europe and the US. But China could be a major export destination for Bangladesh.
According to China's National Bureau of Statistics, per capita expenditure on clothes is just about 1,300 Chinese renminbi, which translates to aggregate consumption around $280 billion worth of apparel items.
Despite being the major apparel exporter, China still depends on imports to meet up almost 12 % of clothing demand.
"Hence, we can tap into the marketplace through international buyers with a occurrence in China as we have duty-free access, and it could be a significant market for all of us," said Huque.
As Chinese organizations seek new ports-of-calls to expand integration with global value chains, Bangladesh-China partnerships hold a distinctive promise. In order to fully leverage these opportunities, a close partnership between banks, investors and governments will be critical.
"The summit was our first step to establish the platform because of this collaboration," said Huque, adding that StanChart will probably organise similar events for other target markets.
In line with the banker, the economy has shown much resilience through the pandemic.
"Bangladesh has managed the pandemic very well. Our battle against Covid-19 once more showed the real mettle of the type of Bangladeshi people, businesses and the economy."
The federal government has ensured a faster rollout plan regarding key protocols for managing Covid-19 issues. Regardless of the pandemic, agricultural production has been resilient, ensuring food security for a nation of 170 million.
Remittances have soared lately. The foreign exchange reserve has reached the best level ever. Exports found towards the finish of the entire year. Macro-economic fundamentals remained stable.
Huque pointed out the lack of diversification of the export basket, citing that the garment industry continues to stay as the main element driver of export earnings.
The government is wanting to diversify exports in areas such as for example pharmaceuticals. But none of the products has crossed the billion-dollar mark. "That is an important area for all of us to check out."
Deeper engagement of the private sector is required to fund $300 billion by 2030 for infrastructure development, said Huque, who studied marketing at the University of Dhaka and holds an MBA from Mt. Eliza Business School in Australia.
Furthermore to financing from multilateral and developmental financial institutions, other resources of funding ought to be explored. Bonds could be a source of financing.
"In a sustained low-yield environment, infrastructure projects are a secured asset class with attractive long-term returns. Well-structured infrastructure assets can be attractive for foreign investors and continue steadily to drive Bangladesh's progress," Huque said.
As with all economies all over the world, FDI has been fairly muted for Bangladesh.
However the banker thinks with companies seeking to invest in different markets to build resilience and leverage available resources and prospects, Bangladesh includes a unique window of possibility to expand the FDI pool.
Standard Chartered recently interviewed a lot more than 300 chief financial officers and senior finance executives at internationally active companies located in Europe and the Americas.
The survey found that global expansion remains a significant driver of earnings growth, with companies seeking to gain market share, optimise costs, increase access to untapped resources of skill and talent, and manage risks.
"Bangladesh has all of this to provide and more," Huque said.
He said the BIDA had achieved laudable progress in the One-Stop Service, driving collaboration and automation across all relevant specialists. Coordinated policy reforms are underway to attract more FDI.
"We are making our way steadily up the Simple Doing Business Index and will expect to see further progress later on."
BIDA is also taking the story of a rising Bangladesh to investors around the world. Bangladesh, as a destination, must be continually showcased to international investors, according to Huque.
StanChart is dealing with the BIDA to collaborate on accelerating the efforts to market Bangladesh.
Policy consistency and tax clarity are important to attract foreign investors, according to Huque. The connectivity and land issues must be sorted out because they pose challenges to investors.
The banker also touched upon the economic recovery from the pandemic, digitalisation in the financial industry and challenges facing the banking industry.
Economic activities have risen significantly in recent months.
"Initially, we were concerned about the impact of the pandemic on our economy. I was in Sylhet on holiday recently. I saw the resilience of the economy buzzing with activity. The persons were active and actively taking part in moving the wheels of the economy. I think this can be a story in the united states."
The pandemic has pushed banks and their customers towards digitalisation in a faster way. The central bank has also develop regulations to drive the digitalisation agenda forward within the last several months.
StanChart's internet banking platform has grown four times regarding transactions.
"People's acceptability of digitalisation has truly gone up significantly aswell. Clients understand how digitalisation might help them," Huque said.
"Going forward, the bank would be more centered on digitalisation and providing faster service to clients. Digitalisation would be the key enabler to aid clients later on."
Source: https://www.thedailystar.net
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