Work to become next China must start now: WB
The country has the potential to capture at least 15 million jobs in the next ten years, said the World Bank.
“Recent reports (e.g., McKinsey/USAID) have shown that the productivity of Bangladeshi workers is on par with Chinese workers in well-managed firms with their wages being five times lower than those of their Chinese counterparts (half those in Vietnam),” said the WB.
The country's unique competitive position comes at a time when China is in the process of outsourcing 80 million jobs from labour-intensive industries.
“This historical opportunity will not last for infinite period -- it is time-bound. So to avail the opportunity we have to start working to that end right now,” said Zahid Hussain, WB's lead economist, yesterday.
Accordingly, the multilateral financial institution suggested four tangible actions for the government.
Based on its calculations on Bangladesh's export processing zones (EPZs) and those of other countries, it said around 40,000 acres of land is needed, to be dedicated to EPZs, for the purpose of creating 15 million jobs.
“Economic zones will provide the private sector with easy access to land and an improved infrastructure and streamlined administrative procedures.”
Some of the land could come from rejuvenating idle state-owned enterprises (following the successful model of the Adamjee Jute Mills) and moribund tea estates, it said.
The public-private partnership office need to manage the tendering for needed infrastructure such as power and transport that the zones will need to operate.
An additional 5,000 megawatt of electricity will be needed for the creation of 15 million jobs, according to WB.
“This does not need to be a drain on public finances as the private sector would be eager to pay the full market price for quality power and transport infrastructure.”
The Bangladesh Bank (BB) needs to put in place the conditions to reduce the cost of trade finance, currently limited and very expensive.
“In addition to removing regulations that are an impediment, the finance ministry and BB should explore the feasibility of creating an Exim Bank to kick start a competitive trade finance market in Bangladesh, following the successful formulas of other countries, including India and China.”
The WB also called for a more proactive role of the Board of Investment in promoting the country to investors from high-growth economies, particularly to those from China who are looking for more convenient locations for outsourcing their manufacturing.
“East Asia is more expensive, Pakistan too risky, India too regulated, and Africa -- which also has a competitive labour force -- does not yet have the production capacity and track record to be a major competitor. With the right moves, Bangladesh should top foreign investors' list.”
The WB also said Bangladesh could become “the next China” if it can more properly utilise its large pool of underemployed labour and effectively implement the four action plans needed to break the infrastructure, energy and land bottlenecks.