Bangladesh needs expatriates' investment
By Mahfuz R. Chowdhury
New York, NY, United States, — Some analysts believe that Bangladesh could become an attractive manufacturing center in Asia, and estimate that by 2015 foreign investment in the country could reach US$5 billion. This analysis is based on the current trend of globalization. Therefore, Bangladeshi expatriates should take a cue to invest in their native country, as it stands to benefit them as well as the local people.
Bangladesh offers comparative advantages to potential investors, including a cheap labor force, national resources and improved communications. It is a resource-rich country blessed with fertile land and an abundance of coal and natural gas. It is a major producer of raw jute, tea and leather.
The country’s labor force – the main concern in manufacturing – is not only plentiful, but also competent and competitive. These ingredients form a strong economic base for the country in attracting foreign trade and investment.
While countries like China and India have benefitted immensely by their rapid industrialization, which has attracted foreign direct investment, Bangladesh has failed in this area even though it possesses the necessary resources. This clearly is the government’s fault and responsibility.
Unfortunately, past governments did not shoulder the responsibility to address such issues, thereby missing many opportunities. For example, Bangladesh missed a great opening to advance in information technology because the government reportedly rebuffed overtures from U.S. businesses during the 1980s.
Now, after about 37 years of tumultuous history since its independence, Bangladesh is ready for change. Its leadership seems to have recognized past mistakes and is attempting to amend attitudes, although some of its actions are questionable.
While only time will tell how fast change will come to Bangladesh and in what way, there are reasons for optimism. Although the overall situation in the country may not be congenial for taking investment risks, the emerging trend is that people are becoming more conscious of their country’s situation and are clearly opting for change.
Presumably, the government is also working to improve law and order in the country and create a better atmosphere for investment. This transition period, though unpredictable, provides better opportunities for potential investors than in the past. After all, every business involves some risk, and if an investor waits for conditions in Bangladesh to improve, he may miss an opportunity or face a saturated market later on.
Under the present realignment process, more developing countries are picking up manufacturing tasks in Bangladesh. The race is clearly on. Expatriates, by coming forward with their varied knowledge, experience and financial resources, can take advantage of this changing world situation by choosing to invest in Bangladesh. By doing so they can gain personally and also help their native country achieve faster economic growth. Because of their close relationship and cultural ties, they stand to achieve more benefits than foreign investors.
Although industrialization is critical for economic development, Bangladesh has experienced a substantial drop rather than progress in many of its existing core industries. The jute industry, for example, has been experiencing a steady decline since petroleum-based synthetic substitutes were introduced in the 1960s. The irony is that India began capturing the world jute market that Bangladesh lost.
Now, with the high cost of petroleum,
the demand for jute products is on the rise and the trend is likely to continue. But looking at the troubled condition of the jute industry in Bangladesh, one wonders if the country can take advantage of the changed circumstances. The World Bank has estimated that Bangladesh has the potential to increase its share of the jute market to 80 percent for raw jute and 50 percent for manufactured products.
The leather industry is another area where Bangladesh could have made huge inroads, but didn’t. There is high demand for leather products globally – including in the United States, the world’s biggest market for leather goods – which Bangladesh failed to tap.
Similar arguments can be made about other key industries like tea, cotton and sugar. It is quite amazing, for example, that a German company successfully markets fine tea products when the country produces no tea.
Bangladesh’s fish industry may be an exception, although it has also fallen short of expectations. The circumstances of the fish industry might be somewhat different, yet the government couldn’t escape its basic responsibility in promoting and preserving it.
The garment industry is perhaps the only area where Bangladesh can claim considerable success. Today, garment exports are the main source of foreign exchange earnings for the country, after remittances. This success was not necessarily influenced by government policy, but essentially by outside forces.
In the 1970s, investors from Southeast Asian nations set up garment factories in Bangladesh to access export quotas granted by the United States. Later, Bangladeshi entrepreneurs rushed to establish their own companies, some with little or no experience. After a period of adjustment, the industry began to stabilize and grow.
Thus, the growth of the garment industry was achieved largely with the help and intervention of foreign investors, who supplied expert technical support for quality control and had an effective marketing plan. Additionally, the country enjoyed a favorable quota system from the United States.
Now the situation is changing as other developing countries have started gaining a trade advantage by manufacturing garments in their countries for U.S. vendors. But Bangladeshi entrepreneurs have gained enough experience in garments to stay competitive.
The skills that gave Bangladesh an advantage in textiles can easily be applied to other labor-intensive industries such as leather goods, footwear, sports equipment, carpet weaving, handicrafts and assembly of small electronic components, which can be imported from China or elsewhere and assembled in Bangladesh for electronic goods such as TVs and personal computers.
Bangladesh does not have to make any of these goods from scratch. Instead, it can merely focus on the manufacturing process that requires assembly by semi-skilled hands.
Food processing may also work well for Bangladesh, especially if U.S. companies such as Dole, Del Monte and Chiquita were made aware of Bangladesh’s food-production abilities and skilled labor, and offered adequate incentives by the government to set up shop.
Additionally, Bangladesh has shown some progress in manufacturing pharmaceutical products, which definitely has big prospects globally. With proper guidance and management, the country should be able to expand its market share in this area rather easily.
Production of quality goods is only half the battle. Marketing is as important as first-rate production and distribution. In fact, marketing could be the biggest hurdle for Bangladeshi entrepreneurs. Modern marketing requires both knowledge and skill to deal with competition. If scientifically planned, competitively priced and properly serviced, “Made in Bangladesh” goods would have no problems in capturing, maintaining and expanding their global market share.
What Bangladesh needs now is capital investment and workable plans to manufacture, market and distribute competitive products and services. If Bangladeshi expatriates with experience in these areas come forward and invest, everyone could benefit.
In conclusion, Bangladesh offers many opportunities for investment. Bangladeshi expatriates must aid their native country to boost economic conditions and attract foreign investment. They must catch and cash in on this opportunity. The government must also extend its full support.
http://www.upiasia.com/Economics/2009/08/05/bangladesh_needs_expatriates_investment/6669/