Bangladesh, a small country with vast amounts of low-lying land, is expected to force millions of its inhabitants to relocate due to rising sea levels. One of Bangladesh’s biggest domestic industries, agriculture (which contributes 16% to GDP) is therefore expected to experience the worst effects of this population shift. But will this really be the case? This frontier market, despite a seemingly doomed future, has a willingness to trade, a diversified economy and a large amount of cheap labour; consequently, the future may not be as bleak as it seems.
Bangladesh is making an effort to veer away from their agricultural industry by imposing customs duties on all imports: raw materials for garments, solar power, and poultry medicine and are exempt from this tax. This government intervention has allowed for an increased focus on foreign investment that would benefit the country in the long-term. For instance, the US company Paypal has recently agreed to operate in Bangladesh, allowing for entrepreneurs and freelancers to receive money electronically, enabling them to invest in goods and bring in further imports.
Originally, this had not been an easy feat due to the original payment system where payment was hard to obtain, making it difficult for people to receive their hard-earned cash safely. Bangladesh is also considered to be the entrance to several landlocked regions within the Asia-Pacific and has numerous, and growing, trade deals in place. Japan, for example, has agreed to invest in a Metro rail project in Dhaka worth an estimated $738m, which would bring further economic growth through encouraging further investment in the city and a reduction of transport costs.
Further investments in energy sources have also been made. With help from Russia, the Rooppur Power Plant Project will allow Bangladesh to veer away from fossil fuels and focus on an arguably less damaging source of energy – and one that will create jobs in the local area and reduce the effects of climate change.
Not All Plain Sailing
With geopolitical pressures in the region and a growing risk of terrorism at present, Bangladesh still has many hurdles. Despite macroeconomic stability, terrorism is a concern to many, which may affect the ways in which countries do future business in Bangladesh. The government has ousted concerns about terrorism by stating that it will not affect Bangladeshi industries – and particularly the garment industry – but several companies, such as Uniqlo, H&M and Puma, have all expressed wariness about the situation and its unpredictability.
Corruption, limited government transparency and outdated laws are all slowing down economic growth. Bangladesh also has a growing concern regarding inequality: poor and middle-class families are considered to be worse off than the upper-class today compared to over 30 years ago. This has been caused by weak labour market institutions, low-quality education and inadequate social protection systems, according to the Bangladesh Economic Association. Whilst the economy of Bangladesh is growing at a relatively quick rate, steps must be taken to ensure that inequality doesn’t become a major cause for concern in the near future.
Furthermore, progress is currently being made with gender equality in the country, as more women are now able to work and provide an income for their families. For example, 90% of the garment industry is made up of females. With 58.7% of females in India currently employed, the percentage of Bangladeshi women earning an income is set to rise in the coming years, and changes in social attitudes towards women and economic development shall aid this.
Even with growing concerns about the climate, economy and inequality, Bangladesh is doing its best to clear the hurdles stopping it from growing into a more economically strong country for all its people.