Bangladesh should welcome Chinese investment | The Daily Star
12:00 AM, June 03, 2019 / LAST MODIFIED: 12:00 AM, June 03, 2019

Bangladesh should welcome Chinese investment

Do everything to cash in

With the ongoing US-China trade war and because the Chinese economy is also currently undergoing some structural changes, a number of Chinese garment makers are looking to set up factories in Bangladesh under joint ventures. Because of rising production costs in China, Chinese textile and garment industry owners have for the last two decades invested heavily in Vietnam and Cambodia. And this apparently has led to overinvestment in both countries. As Bangladesh is still relatively new ground, Chinese entrepreneurs are looking to relocate their “sunset industries”—old and less successful in terms of profitmaking—to Bangladesh in order to take advantage of its low labour costs. However, Bangladesh isn’t the only country these investors are looking at, as Myanmar, too, is on their radar. This means that Bangladesh, despite having the advantage of cheap labour, will have its work cut out if it wants to be the main beneficiary of Chinese investments.

So far, Bangladesh has not allowed foreign investment in basic apparels, limiting their presence in high-end and value-added textile and garment items. But given that investment—other than public—has remained stagnant for years, the possibility of the Chinese investing in the sector should not be dismissed without carefully analysing the opportunities that it may present us.

What also needs to be thought out is how we can make the best of this opportunity. Simply having a comparative advantage through cheap labour is not a prudent long-term strategy. And as the Chinese have said, they are worried about the high lead time in Bangladesh’s garment sector—much of it being the result of weak infrastructure and poor transportation facilities. These are things that the government must take into account and actively work to overcome.

 

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