Bangladesh 2012: A snap scorecard
As 2012 winds down, it may be appropriate to assess how the country performed over the year. Detailed assessment later will be backed by reliable statistics. But it may be interesting to present a broad brush for experts to later follow up. At the end of the year one can say that Bangladesh is at a political crossroad. On the one hand, the hope of any political reforms is temporarily crushed. The present government has been marked by poor governance indicators: corruption, partisan political institutions, worsening human rights violation and deteriorating law and order. By restricting democratic space it has prevented constitutional changes. State organs are still in the hands of party sympathisers.
Mainstream opposition, therefore, remains frustrated. It has resorted to widespread non-cooperation. It has also used its surging strength to intimidate in order to disrupt normal life whenever there is an excuse. Its object is to bring an elected government to its knees. The law-abiding, tax-paying citizens who are in the middle of all this are in a terrible fix. They feel that they are merely pawns in the chess game of politics. Powerless and often brutalised they have become pessimistic about the future of the country.
But is this the real picture of Bangladesh today? If it is so then why are the economic indicators telling a different story?
Last week, Moody's, the prestigious global country rating agency, reported that "Bangladesh's credit stability has been shored up by the momentum in reforms agenda." It gave the country a respectable score of Ba3 putting it on par with the Philippines and Egypt among the 130 countries rated. This score is ahead of Pakistan (B3), Sri Lanka (B1) and Vietnam (B1). It is just behind Indonesia (Ba1) and India (Baa3/Ba1) the two major economies of Asia. Moody's states that "the recent passing of a new value added tax law and reforms connected to fuel prices and the financial sector are the reasons" behind continuing to grade Bangladesh high. The credit rating agency thinks that in spite of the contentious political landscape, which has in fact dented investors' confidence, event risks in Bangladesh are remote. Translated, it means that future political developments would not result in any sudden shifts in the policy framework.
Moody's further reports that there has been improvement in the country's macro-economic stability during 2012. It is increasingly getting proficient in handling current and future challenges. In specific terms this could mean a spurt in Bangladesh's foreign exchange reserves, which in the last fiscal was just $10.3 billion. By the end of the next fiscal it could shoot up to $13 billion.
A quick check of the economy is therefore in order. In 2012, analysts noted that domestic demand for consumption goods had grown significantly. The main drivers behind this surge in demand were growth in agriculture sector, huge exports of readymade garments and increase in foreign remittances. Agricultural growth has fundamentally changed the character of the economy. With more than 30 million + tons of rice production, food imports have dwindled. This has allowed the government to divert some of this money for providing a social net and giving protection to the economically vulnerable. With surplus accrued from agriculture there is now more money in the hand of the farmers. They have mutated to be a major consumer group in the country.
Secondly, the readymade garment sector has continued to employ more women and semi-skilled workers. More and more international buyers are sourcing their readymade garments from Bangladesh. This is in spite of complications with regard to meeting international compliance standards on wages, safety and right to strike by garment workers. Total export earnings from this sector now is over $18 billion and the net earnings after deducting costs of imports to fabricate ready made products would now be touching $9 billion. This has provided money in the pocket of millions of garment workers with which they are buying consumer products. McKinsey forecasts a 9% a year of such growth for another decade.
Thirdly, remittances sent by Bangladeshis abroad continue to climb. Besides accessing new labour markets some large market like Malaysia, which had been closed for Bangladeshi workers, have reopened in 2012. This has added large numbers to the existing cohort of remitters. Remittances may therefore climb to an all time high. This huge inward remittance of over $12 billion has further fuelled demand for consumer goods. But it may also have put pressure on prices of commodities in the market.
New areas of growth have also become evident this year. These are shipbuilding, production of electronics (white goods) and high-end pharmaceuticals, as well as information technology (IT) products and services. During 2012, Bangladesh was able to produce an additional 3,000 MW of electricity. When added to the previous generation it totals 6,350 MW. Further steps are underway to continue to generate even more electricity. This will help meet the accelerated demand for energy.
At the same time, the government has introduced policy measures that encourage the setting up of solar units in homes and in markets around the country. Grameen Sakti is just one of the many companies supplying solar power to homes. Single-handedly it has completed the setting up of one million solar units this year, while another million homesteads are in the process of being connected by this company. Bangladesh is literally being lit up now at night. Businesses and educational institutions are benefiting from this development. Micro-credit agencies, the banks as well as the World Bank are supporting this massive change. Empowerment of the individual is also being increasingly aided by use of mobile phones (total subscriber base is now 100 million people). Internet penetration is also increasing rapidly.
In spite of all these developments, there are three main areas where Bangladesh did not concentrate this year. First is, of course, narrowing income inequality between persons and within regions.
The next is establishing better connectivity within the country by roads, rail and waterways. The government has not been able to take up any major infrastructure project in 2012. It has been unnecessarily bogged down with the proposed Padma Bridge, and also the project to develop a deep- sea port in Chittagong. Not much headway has been made there either. The widening of the Dhaka Chittagong highway is another project that must move fast, so that the country can take greater advantage of international trade. Improvement in cyber connectivity between countries can also bring in big revenues as well as employment opportunities.
Though 2012 has seen a deep crisis in leadership in the country, the general people do not seem to have lost heart. The civil society and the media continue to prop up their hopes through affirmative actions. Internationally, in 2012 Bangladesh has been able to effectively change strategic perspectives about itself. The visit of the US secretary of state to Dhaka to sign the Joint Declaration for institutionalising security talks annually at a ministerial level, and receiving a favourable verdict from the International Tribunal of the Law of the Sea in the maritime boundary dispute with Myanmar were significant. The country now has to work assiduously to get road and rail connectivity with China.
Bangladesh scores high marks for its better than average performance of the economy and in matters pertaining to foreign relations. The scores become less than average when the performance of the leaders and their politics are assessed. The country can therefore rightly claim average scores for its general performance this year. The question now is whether 2013 will bring seminal changes in its politics. We will have to wait and see. The general elections are due then.
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