Thursday, March 11, 2021

Bangladesh: Development Over Democracy

Until 2010, Bangladesh was a laggard in South Asia region. Its per capita income was about half of Pakistan's. Now Bangladesh's per capita gdp is higher than both India's and Pakistan's. What changed? The biggest change is Bangladeshi leader Shaikh Hasina's decision to stifle the unruly Opposition and the media to bring political and economic stability to the South Asian nation of 160 million people. It has eliminated a constant sense of crisis and assured investors and businesses of continuity of government policies. With development taking precedence over democracy, Shaikh Hasina followed the example of Asian Tigers  by focusing on export-led economic growth of her country. She incentivized the export-oriented garment industry and invested in human development. Bangladesh now outperforms India and Pakistan in a whole range of socioeconomic indicators: exports, economic growth, infant mortality rate, primary school enrollment, fertility rate and life expectancy.       

South Asian Countries' Export Growth. Source: Wall Street Journal

Source: The Economist

Bangladesh's Exports:

Bangladesh's garment exports have helped its economy outshine India's and Pakistan's in the last decade. Impressed by Bangladesh's progress, the United Nations’ Committee for Development Policy has recommended that the country be upgraded from least developed category that it has held the last 50 years. 

Per Capita Income Growth in Pakistan 2002-2019. Source: World Bank

The next challenge for Bangladesh is to move toward higher-value add manufacturing and exports, as Vietnam has done. Its export industry is still overwhelmingly focused on garment manufacturing. The country’s economic complexity, ranked by Harvard University’s Growth Lab, is 108 out of the 133 countries measured. That is actually lower than it was in 1995, according to the Wall Street Journal

Pakistan Growth By Decades. Source: National Trade and Transport Facility

Vietnam's Rise:

Vietnam ruled by autocrats is rapidly becoming an Asian Tiger. With rising manufacturing costs in China and the US-China trade war,  many major manufacturers are relocating to other countries in Asia. This situation has helped Vietnam emerge as a hub of foreign direct investment (FDI). FDI flow into the country has averaged more than 6% of GDP, the highest of any emerging economy. The country’s recent economic data shows a rise of 18% in exports, with a 26% jump in computers/components exports and a 63% jump in machinery/accessories exports.  These figures have earned Vietnam the moniker of the newest "Asian Tiger".

Musharraf Years & History of Pakistan's GDP Growth Rates. Source: PBS 

Pakistan's Lost Decade:

It was in 2007 that Pakistan caught the "democracy" fever led by the lawless lawyers of Lahore. This led to the return of corrupt dynastic rule of Asif Zardari and then Nawaz Sharif. The year 2007 also marked the beginning of yet another lost decade that saw Pakistan's per capita gdp's continuing lag behind South Asia region and other emerging economies. 

Pakistan's per capita income started to lag behind other emerging nations in 2007

Pakistan's Potential: 

Pakistan was the original "Asian Tiger" back in the 1960s when  other developing Asian economies sought to emulate its development model. It became an export powerhouse in the 1960s when the country's manufactured exports exceeded those of Thailand, Malaysia and Indonesia combined.  The creation of major industrial estates in Karachi under President Ayub Khan's industrial policy incentivized industrial production and exports of value added manufactured products such as textiles. Now the country's industrial output lags its neighbors'. 

History of Pakistan's Manufactured Exports

With Chinese looking to relocate some of their industrial production to low-cost countries, Pakistan has a golden opportunity to grow its industrial output and exports again. Here's Karen Chen explaining why:

“Vietnam is too crowded already and moved into automobiles and electronics. There is no space for investment in Vietnam. Myanmar doesn’t have infrastructure. India is terrible. In Bangladesh you don’t have right conditions for setting up fabric units. So Pakistan is the ideal location for such garment manufacturing because of abundance of cheaper labour. The investment and tax policies for SEZs and new projects are also good. We’ve confidence to be at here.”

Seizing the opportunity to attract export-oriented investors will help Pakistan become the next Asian Asian Tiger economy. It will help the country avoid recurring balance-of-payments crises that have forced the nation to seek IMF bailouts with all their tough conditions. Focusing on "Plug and Play" Special Economic Zones (SEZs) is going to be essential to achieve this objective.

A video of retired General Amjad Shoaib responding to the question: "Is Pakistani military establishment to blame for all of Pakistan's problems?" He answers: "Yes, the Pakistani military produced Zulfikar Ali Bhutto and Nawaz Sharif....Zardari also rose from the NRO (pardon) granted by the Pakistani military". But then he asks: "Who forced the people to vote for them? Shouldn't the people share the blame for the ascent of these politician?"



Nayyar A. said...

These numbers use market exchange rates, which fluctuate wildly with currency swings that don't reflect change in living standards. By all metrics, Pakistanis and Indians enjoy higher living standards than Bangladeshis by wide margins. But BD textile exports are real success.

Ramiz S. said...

The graph shows the hidden truth. Businesses need stability and consistency. They don't care about democracy or human rights. This is why Pakistan also saw the best growth under dictators and saw economic instability under democratic governments

Riaz Haq said...

Nayyar: "These numbers use market exchange rates, which fluctuate wildly with currency swings that don't reflect change in living standards. By all metrics, Pakistanis and Indians enjoy higher living standards than Bangladeshis by wide margins. But BD textile exports are real success."

Yes, per capita GDP is based on volatile exchange rates. But Bangladesh outperforms India & #Pakistan on wide range of socioeconomic indicators: exports, economic growth, infant mortality rate, primary school enrollment, fertility rate & life expectancy

Rashid A. said...

In Development over Democracy debate

Few points:

1. Countries like Bangladesh, Singapore, etc. also do not have or have given up any plans and dreams of being “Great Military power”, a leader of the world, teaching west a lesson, beating a 7 times bigger rival, interfering in neighbors affairs and actually live peacefully.

2. Their military expenses are next to nothing.

3. Their military is not calling the shots. The leadership and control is still civilian.

4. And at least in case of BD, the corruption is still in the stratosphere. This seems to contradict the idea that corruption stifles development.

5. Not all dictatorships lead to development.

6. Not all democracies result in economic failure.

7. Yes, there is argument to be made that instead of procedural democracy nations need substantive democracy. That is a walk on a tight, razor thin rope. The tendency of the ruler is to slip into ruthless dictatorship, nepotism, cronyism, revenge, and narcissism. It is a miracle to get a truly genuine, honest and competent leader who ACTUALLY lifts the nation.

Riaz Haq said...

Rashid: "Not all dictatorships lead to development...Not all democracies result in economic failure"

There’s not a single example of a developing nation that became developed under democracy since the end of WW II. Asian Tigers became Asian Tigers under dictators. Taiwan under Gen Chiang Kai Shek. South Korea under Gen Park Chung He. Indonesia under Gen Suharto. Malaysia and Singapore became developed under civilian dictators.

Rashid A. said...

From quick memory:

Turkey was a dictatorship under military and sick economically till Erdogan liberated it and is doing much better under democracy.

Chile was military dictatorship under Pinochet, and sick, and now a democracy and much better economically.

Spain was under dictatorship of Francisco Franco, now a democracy. It’s economy has been rescued.

East Germany was under dictatorship and a truly basket case. Now a democracy with Germany, and thriving.

Cuba remains a dictatorship, and very poor.
Cubans are coming out of and not returning to Cuba.

Egypt, Libya, Syria have been dictatorships. They have nothing to show for their economy.

Burma’s military dictatorship did not do any miracles economically.

So this mantra that democracy is all bad, is what the military and civilian dictators or wannabe dictators like us to believe.

Riaz Haq said...

Rashid: "So this mantra that democracy is all bad, is what the military and civilian dictators or wannabe dictators like us to believe."

There’s absolutely no comparison of the countries you mention with formerly “developing” South Korea and Taiwan that are rightly considered “developed” now. Both are technologically very advanced. They are truly “miracles”.

Turkey and Spain were great empires that fell on hard times temporarily.

Chile was a basket case before Pinochet.

Democracy is designed to slow things down, not accelerate. It throws up a bunch of speed bumps that make rapid progress extremely difficult.

Pakistan’s history also shows it has consistently done better in periods of dictatorship. The decades of 1990s and 2010s have been disastrous for Pakistan.

So there are good reasons why countries do not develop rapidly under democracy.

samir sardana said...

Fact is that South Asians and South East Asians are naturally restive and w/o intellectual or physical discipline.Fact is that the people of PRC WANT a CENTRAL STRONG RULER.That is their HISTORY from BEFORE the Tangs and Mings.A nation of the size of PRC cannot function in "DEMOCRACY".

Singapore is a DEMOCRACY on paper.There are NO FUNDAMENTAL FREEDOMS.Fundamental Freedoms precede Fundamental Rights.

Cuba is NOT a economic miracle BECUASE ITS TRADE and BANKING is EMASCULATED by the USA.Same for DPRK.

Myanmar WILL BECOME A ECONOMIC MIRACLE,in less than 5 years,as it will wipe out Laos and Cambodia,and is a BETTER and LOWER COST OPTION,to Vietnam. It will also wipe out Indian Agri exports.This is the time for Myanmar to build its infrastructure.PRC investment will obviate all FDI in Myanmar.

Japan and Korea are Mahayani Buddhists and the purest Mongol DNA.A highly disciplined and evolved race even before Buddha (except for the chaos in Japan towards the end of the Tokugawa Shoguns - which led to the Meiji)

Take The Thai Magic.All Military Rule and the Monarchy.Entire industry run by Chinese,Japs, Koreans, USA and EU.The workers are mostly Thai.Foreigners need stability which comes from a strong central rule.

Same for Malaysia.dindooohindoo

Lastly,take the magic of Ayub Khan - the pinnacle of Pakistani Economic Growth.

Look at the disaster of India - a busted banking system and agri on verge of destruction with an impending insurrection by the Dalits and Muslims. Y ? The nation was left to the machinations of banias/marwaris/gujaratis/rajasthani trash etc.

A scrap dealer became a steel tycoon and busted the Indian Banking system.A person selling fake condoms became a plastics manufacturer ....and the same story.

Now you have a son of a dishwasher and whose father is an unknown algebraic quantity - and remember his magic,as under:


But Indians are only good at SHIT IN INDIA AND MAKE TOILETS IN INDIA - because,that is the ONLY worth of India !

samir sardana said...

The path to Salvation for Bangla,is PRC. They have to let the PRC invest in the Gas and Power infra sector,to produce power at the LOWEST COST IN ASIA.In the time to set up the capacities,the ports can be deep dredged and the road infra be put in order.Once that is in place - the lowest cost manufacturing in THE WORLD,will be in Bangladesh.

The Edge of Bangladesh,is Gas and the Sea (which makes for Offshore wind and tidal,low freight costs) - and combine that,with the power potential in Myanmar - and its cross border wheeling.

The only issue is the rising sea and the soft soil - and so,manufacturing will need to move into the interiors,or power can be wheeled to Myanmarese SEZs.The Bangla success,will wipe out the ENTIRE MANUFACTURING INDUSTRY IN NORTH EAST INDIA,AND THE ENTIRE EAST COAST OF INDIA.

Basically the Bangla state,has to allow Chinese,Korean and Japanese SEZs on an unrestricted basis,with limited NFE and Taxation - and the Taka will overshoot the Thai Baht and Peso,in 5 -10 years.

That will complete the Chinese Triad and the Chinese Parallel in South Asia.

The Chinese Triad is CPEC,Lanka SEZ and the Bangaladesh SEZ.Industry and manufacturing will migrate from Pakistan to Lanka to Chittagong ,on a value addition mode,on an absolute basis.Dhaka will lose its LDC soon,and so,those units can be relocated in Lanka or CPEC. So Chinese SEZ in Bangla,Lanka and CPEC will wipe out the industry in the East,West and South of India - and the impact of that on banking, unemployment and inflation in India,is obvious.

So there is a successful Chinese SEZ Triad

The Chinese Parallel is a line from CPEC to the Deep Draft Port of Myanmar,with its SEZ.The intersection of the Chinese Parallel and the Chinese Triad,is the CRUCIFIXION of the Satanic nation of Hindoosthan

East Bengal,Assam,Tripura and Manipur belong to Bangladesh.The 1st Ahom king was a Chinese,Arunachal are Hans and the rest are South Tibetans,and so,North East belongs to China

Bangladesh ports are the IDEAL PORT TO BYPASS MALACCA,and exit the LOGISTICS TRAP OF THE US NAVY.It is a better option to Gwadar. Then come the ports in Myanmar,and then comes in Gwadar.Gwadar is viable,when Kashmir is an independent nation,Afghan is under Taliban rule (as a US puppet,can block Chinese logistics) and Baloch is under Control.

That provides the pretext to the Chinese,to station the PLN,in The Bay of Bengal,Arabian Sea and build Artificial Islands in the Bay of Bengal, and Indian Ocean.

Once North East India is lost - the Indian weasels will give up Kashmir and Uttarakhand

Hence,the Chinese logistics and economic security strategy,will provide salvation to the People of Pakistan, Bangladesh,Lanka and Myanmar. This is providence and salvation.

A Mahayana Buddhist nation (PRC) is providing salvation to 2 Islamic nations and 2 nations of Theravada or Hinayana Buddhism. dindooo hindoo

samir sardana said...

The Grand Plan for Greater Bangla-desh !

The beauty of Bangladesh,is that,unlike Pakistan,it does not have Afghanistan and Persia,as neighbours - so it is NOT a proxy battleground,for superpowers.

Its borders with India are an ADVANTAGE,as the North East,is the weakest link in the Indian Military defense and economic deveiopment,and the North East Indians,DO NOT have Indian DNA.

PLA sponsored freedom struggles,in the North East,can be operated from Myanmar and Bangladesh, with complete deniability,and strategic ambiguity.

With the Chinese Hydel dam on the Brahmaputra,Bangladesh can be flooded with power at less than 1 cent/kwh - and that will doom all manufacturing in North East India and the Export manufacturing of East India.

This destruction will bring out the stark disparities between North East India and the Bangla race,across the border,in education,inflation,infra,health care etc. - and will start an insurgency in the North East - for secession from India.

With the Hydro and Renewable Power from China and Dhaka,and raw materials imported via Chittagong - North East India as a SOVERIGN NATION ,will enjoy LDC status,for exports to the US/EU - besides bringing an inflow,of US/EU Tourists,via the Bangkok-Dhaka Leg and PRC.

In addition,higher cost manufacturing,can migrate from Dhaka to North East India (as a soverign nation) and thus,qualify FOR LDC status (as the Bangla will lose the LDC status)

A simple Statistic - if Made in Bangla items flood North East India - the cost of living in North East India will fall by 50%,and all farmers and residences in North East India,can be supplied free power,for at least 50 years,from the Hydel power in PRC,and Renewable and Gas power in Bangla.The writing is on the wall !

The Impotent Indian Military CANNOT defend North East India and the Indian cannot develop North East India - as there is no Infra in the North East. Everything moves from Kolkata.It is time to liberate North East India - and it is also time for the Bangla race to populate the North East states

The Indian BSF is a race of corrupt and impotent cowards - and the BDR can easily provide cover for Bangla and North East Freedom Fighters !

The People of West Bengal have to see the writing on the wall.They have a port at the tip of the Bay of Bengal.It is time to secede from India.The People of West Bengal are not with Indian DNA

What does the Hindoo shastra think of Easterners ?

The Hindoo scriptures think of "Easterners", as devil worshippers and the lowest of the low, and as "Easterners follow the practices of the Shudras"- as stated below

The Mahabharata,Book 8:Karna Parva,Section 45

The Pancalas observe the duties enjoined in the Vedas ....... the Easterners follow the practices of the Shudras;

With the formation of Greater Bangladesh and the Soverign United States of North East,and a new race in Dhaka who were born a decade after 1971 - you will have a natural integration with the Islamic Republic of Pakistan - Inshallah !

It is as inevitable as the Sunrise !

Riaz Haq said...

Finland world’s happiest country; India 139th, between Sierra Leone & Burundi
World Happiness Report, now in its ninth year, places Denmark in second place, followed by Switzerland, Iceland and the Netherlands

The COVID-19 pandemic, which has claimed more than two million lives so far, has had little effect on the ranking of the world’s happiest countries, with Finland taking the No 1 spot for a fourth straight year, an annual UN-sponsored report said on Friday.

Once again European nations dominated the top spots; the World Happiness Report, now in its ninth year, placed Denmark in second place, followed by Switzerland, Iceland and the Netherlands. New Zealand, which fell one place to ninth, was again the only non-European nation in the Top 10.

The report used Gallup data asking people in 149 countries to rate their happiness. India was at 139th position. Only Burundi, Yemen, Tanzania, Haiti, Malawi, Lesotho, Botswana, Rwanda, Zimbabwe and Afghanistan were classed as unhappier than India.

Among India’s neighbours, China was at 84th position, Nepal at 87th position, Bangladesh at 101st, Pakistan at 105th, Myanmar at 126th and Sri Lanka at 129th.

The report took into account measures such as GDP, social support, personal freedom and levels of corruption to give each nation a happiness score, which is an average of the past three years. But unlike in the past, this year the index included surveys on how countries have dealt with the pandemic.

This year’s report was faced with a unique challenge in trying to understand what effect the pandemic has had on subjective well-being and vice versa, the report said. Of all the factors usually supporting happiness, the most important for explaining COVID-19 death rates were people’s trust in each other, and confidence in their governments, it said.

The report said it was “no surprise” Finland once again took the top spot. It has always ranked very high on the measures of mutual trust that have helped to protect lives and livelihoods during the pandemic, it said.

The report quoted one of its authors, Jeffrey Sachs, as saying: “We need urgently to learn from COVID-19. The pandemic reminds us of our global environmental threats, the urgent need to cooperate, and the difficulties of achieving cooperation in each country and globally. The World Happiness Report 2021 reminds us that we must aim for wellbeing rather than mere wealth, which will be fleeting indeed if we don’t do a much better job of addressing the challenges of sustainable development.”

Riaz Haq said...

Bangladesh up 6 notches on happiness index

Bangladesh has moved up six notches on the Happiness Index, ahead of India, Pakistan, Sri Lanka, and Myanmar.

According to World Happiness Report 2021 Bangladesh was ranked 102nd among 150 countries of the world, while India, Pakistan, Sri Lanka, and Myanmar placed 140th, 106th, 130th, and 127th, respectively.

Nepal and Maldives ranked higher than Bangladesh, with Nepal ranked 88th and Maldives 90th.

Bangladesh ranked the 108th happiest last year.

Finland, for the fourth straight time, was declared as the happiest country while Afghanistan came out at the bottom of the annual list prepared from data compiled by the Gallup World Poll.

The other two Scandinavian nations, Iceland and Denmark, ranked 2nd and 3rd while Switzerland and the Netherlands came in fourth and fifth positions.

The US moved up from 18th to 14th place and the UK dropped from 13th to 18th. Australia held its 12th place position.

The report ranks countries on six key variables that support well-being, including income, freedom, trust, healthy life expectancy, social support, and generosity.

Due to the ongoing Covid-19 pandemic, however, The World Happiness Report 2021 was assembled slightly differently.

This year, the researchers focused on the relationship between wellbeing and Covid-19 to ensure the countries are judged in light of the new normal.

Riaz Haq said...

IMF says #PMLN government overstated #Pakistan #gdp and understated #debt to gdp ratio starting in 2016. This was done as part of sovereign loan guarantees. Current #PTI government has taken remedial action to correct the error to #IMF's satisfaction

The Executive Board of the International Monetary Fund (IMF) approved a 39-month Extended Arrangement under the Extended Fund Facility (EFF) for Pakistan in the amount of SDR 4,268 billion (about US$6 billion), equivalent to 210 percent of quota, on July 3, 2019. The first review under the arrangement was completed by the Executive Board on December 19, 2019, based upon, inter alia, the reported observance of the quantitative performance criteria (PC) at end-September 2019, including the amount of government guarantees. Upon completion of the first review under the EFF, Pakistan made a purchase equivalent to SDR 328 million (about US$452.4 million).

Subsequently, new information that came to the authorities’ attention, and which was shared with Fund staff, has revealed that the data on government guarantees dating back to FY 2016 was reported inaccurately. The revised data indicates a nonobservance of the PC on government guarantees at end-September 2019 by a margin of PRs 357 billion (about 0.9 percent of GDP), which resulted in a noncomplying purchase and a breach of obligations under Article VIII, Section 5 of the IMF Articles of Agreement. The authorities previously reported that the PC had been met with a margin of PRs 55 billion (0.1 percent of GDP) at end-September 2019. The statistical revision only had a small impact on public debt.

The authorities have taken strong corrective actions to address institutional and technical short-comings that gave rise to the inaccurate information, including: (i) creating a working group to reconcile and cross-check guarantees and debt data; (ii) announcing additional functions for the Debt Policy Coordination Office (DPCO), including to act as custodian of all guarantees issued by the federal government; and (iii) publishing a semi-annual debt bulletin that consolidates key debt statistics. Beyond these actions, the authorities have committed to include a list of all new guarantees expected to be issued in the FY 2022 budget submitted to Parliament.

At the conclusion of the meeting, Deputy Managing Director Antoinette Sayeh and Acting Chair, stated:

“The Executive Board of the International Monetary Fund (IMF) reviewed Pakistan’s remedial actions and data revisions linked to a noncomplying purchase under the Extended Arrangement under the Extended Fund Facility as well as a breach of obligations under Article VIII, Section 5. The non-complying purchase arose as a result of a lack of inter-agency coordination in the compilation of government guarantees provided by the federal government to state-owned enterprises that contributed to incorrect estimates of government guarantees starting as far back as FY 2016.

Riaz Haq said...

Pakistan has potential to push annual exports upto $88.1 bn: World Bank

Given Pakistan’s observable characteristics in terms of economic size, level of development, remoteness, and factor endowments, it is estimated that Pakistan’s potential annual exports are at US$ 88.1 billion, about 4 times the actual current level, World Bank said in its recent report “Pakistan Development Update”.

This large gap between actual and potential exports, or “missing exports,” places Pakistan among the top quartile of the distribution of countries with missing exports. Were Pakistan’s exporters to tap into that potential, the resulting export-to-GDP ratio would place the country at around the middle of the distribution of countries according to export orientation. To reach that point, Pakistan’s exports would need to grow at the same rate as Vietnam’s for 10 years, or Bangladesh’s for 13 years.

The report said that the opportunity cost of Pakistan’s “missing exports” is estimated at 893,000 jobs and US$ 1.74 billion in foregone taxes. Of these, 152,000 jobs could be created in the agriculture export sector, and 741,000 jobs could be created in the
manufacturing export sector.

While some of these jobs could be newly created, others may imply the reallocation of labor from relatively lower productivity, domestic-oriented firms, to higher productivity, export-oriented firms.

In terms of foregone tax revenue, a back-of-the-envelope calculation suggests that realizing the export potential would bring an additional US$ 1.74 billion in direct tax revenues annually, taking into account Pakistan’s value added share in gross exports, as well as the implicit direct tax rate across sectors.

The report added that since the turn of the century, Pakistan has become a more inward-oriented economy. A long-term examination of export performance reveals structural stagnation.

In 1990, Pakistani firms served 0.19 percent of the world’s imports. By 2019, they served only 0.12 percent—a nearly 40-percent decline in their market share. As a share of the economy, exports stood at 16 percent of GDP in 1999, but less than 10 percent in 2020.

To tap into the export potential, Pakistan needs to upgrade its trade policy framework. Specifically, it needs to reduce the anti-export bias of tariff policy. This entails gradually reducing import duties across the board, as well as reducing the extent of the cascading by applying larger import duty cuts to final goods relative to intermediates and raw materials.

Analysis shows that protecting the domestic market through high rates of import duties, as the ones observed in Pakistan, comes at the expense of missing out in terms of exports, because it incentivizes firms to sell domestically rather than to export.

The high levels of protection observed in Pakistan carry a high opportunity cost in terms of export-oriented jobs lost, and a higher productivity path the economy could undertake.

Second the government needs to reorient trade enhancement schemes. Currently, schemes such as those put forward in Statutory Regulatory Order (SRO) 711(I) 2018, provide support to exporters that reach destinations with low export potential and low
dynamism, thus not leading to an effective and efficient allocation of scarce public funds.

High-potential Asian destinations should be targeted rather than low potential African, Latin American, or Pacific Islands ones.

Thirdly the Pakistan government needs to negotiate market access with high potential destinations. Central Asian republics are a high potential for Pakistan, because of high missing exports to those countries, and because of their import dynamism.

Riaz Haq said...

Year 2007 marked the beginning of “#democracy” fever led by the lawless lawyers of #Lahore in #Pakistan. Then came the country’s lost decade under corrupt dynastic rule of #ppp and #pmln. Result: Pakistan's per capita income lags #India, #EmergingMarkets

Riaz Haq said...

Pakistan has an untapped export potential of $66.1 billion
The authors stress the fact that Pakistan's current policies such as protectionist trade policies, including high tariffs deterring the industries like the textile sector of Pakistan from modernizing, accessing global markets, and being regionally competitive.

The World Bank in its recent report states that Pakistan’s potential annual exports are $88.1 billion, about four times the current level. The opportunity cost of these missing exports is estimated at “893,000 jobs and $ 1.74 billion in foregone taxes alone, of which 152,000 jobs could have been created in the agriculture export sector, and 741,000 jobs could have been created in the manufacturing export sector.”

However, neglecting this potential by seeking short-term economic fixes, raising the cost of doing business, and making procedures unnecessarily bureaucratic has retarded any progress in the economy.

The present government took cognizance of the essential nature of regionally competitive energy tariffs to allow exports to even continue at the present level or increase marginally. However, there remains a large gap between actual and potential exports, or “missing exports,” placing Pakistan among the top quartile of the distribution of missing export countries.

Pakistan’s exports would need to grow at the same rate as Vietnam’s for 10 years, or Bangladesh’s for 13 years, to match its potential. This is quite achievable given the growth achieved in the past by China, Vietnam, and Bangladesh, but will require focused dedicated long-term policies, and a level playing field on energy rates in particular.

There is an urgent need for transparency and rationalization in Pakistan’s tariff policymaking. Import tariffs on industry inputs ultimately serve as a tax on exports thereby hampering the profitability of the very sector that is positioned to enable economic growth for Pakistan.


Research has shown that productivity in Pakistan has been stagnant and aggregate gains have been mostly driven by more productive firms gaining market shares. This situation is likely to persist if timely efforts are not made to ease import conditions, rationalize tariffs, value competition, and markets and modernize education in the country.

High-potential Asian destinations must be targeted as export destinations, rather than low potential African, Latin American, or Pacific Island ones.

Furthermore, the Pakistan government needs to negotiate market access with high potential destinations. “Central Asian republics are a high potential for Pakistan, because of high missing exports to those countries, and because of their import dynamism. Preferential trade agreements with Uzbekistan or Kazakhstan should be priorities, along with the negotiation of agreements on transit trade with Afghanistan to facilitate physical access to those markets.”

It is about time the government, academia, and industry linkages were strengthened to stimulate R&D and innovation, thereby paving the way for enhanced productivity. Policies should target and facilitate young innovative companies to build them up and help to modernize Pakistan’s business environment.

Furthermore, the focus should be shifted towards taxing profitability, as taxing before giving the chance to be productive would be akin to jumping the gun, and would stifle many potential startups. Tariffs on intermediate inputs hamper productivity downstream, creating burdensome import conditions. This phenomenon serves to increase the cost of production, hampers profitability, and results in price escalation. Products are thus rendered uncompetitive in the international market.

Riaz Haq said...

CPEC to aid Pakistan’s industrial development

On the whole, weak foundation, and small scale are major problems holding back speed of Pakistan's industrial development. Industries such as cement and automobile manufacturing have long been overly protected, some analysts say.

Secondly, Pakistan's economic development relies heavily on external markets, but the dominant export industry, the textile industry, does not have outstanding advantages.

Thirdly, Pakistan has low domestic savings rates and low domestic investment rates. The Pakistani government attaches great importance to attracting and utilizing foreign investment, but the level of foreign investment in Pakistan is significantly affected by the regional and domestic security situations.

Fourth, low fiscal revenues and heavy external debt burdens have been major problems in Pakistan's economic development, limiting the government's ability to invest. The heavy debt burden has limited the government's ability to invest in public sectors.

Since the COVID-19 outbreak, the significance of the construction of the CPEC has become a key highlight for the country's economic development. The construction of the CPEC will play a supporting role in Pakistan's economic recovery in the post-pandemic era. Pakistan should seize the opportunity to formulate scientific development plans to advance domestic industries with competitive advantages.

Speaking of China-Pakistan industrial cooperation, agriculture is the sector that could help Pakistan consolidate its industrial advantages and industrial chain, and help the country quickly gain foreign exchange earnings through exports. At the same time, China should open its market to Pakistani agricultural products and fruits, and expand imports of Pakistani agricultural and industrial products.

The textile industry is a traditionally strong industry in Pakistan. When China's textile industry is shifting outward due to labor price rises, Pakistan should seize the opportunity to use the advantages accumulated by China's textile industry to upgrade its own industry and accept orders from aboard. In addition, the Indian textile industry has largely come to standstill due to the latest resurgence of the pandemic, and a large number of global orders have been transferred to other markets, including China.

Pakistan should seize the opportunity of global value chain and industrial chain restructuring to develop its emerging industries.

For example, since 2020, affected by India's increasingly hostile attitude towards Chinese companies, many Chinese mobile phone brands in India have begun to move their factories to countries like Vietnam, the Philippines, and Indonesia. This is also an opportunity for Pakistan.

Riaz Haq said...

Data compiled by the Ministry of Commerce showed on Friday, Pakistan’s exports of 13 sectors including value-added textiles posted double-digit growth in the 11 months of current fiscal year (11MFY21) compared to the same period a year ago.

Growth in exports of value-added sectors contributed to an increase in overall exports from the sectors. One of the reasons for growth in these sectors is due to low-base of last year when export-oriented industries remained closed due to the Covid-19 lockdown and cancellation of orders from international buyers.

Exports of home textile products were up by 27pc to $3.642bn in 11MFY21 against $2.879bn over the last year, followed by a 16pc increase in men’s garments to $3.505bn against $3.019bn last year. An increase of 33pc in women garments to $646.49m was noted against $486.52m over the corresponding months of last year.

Similarly, in the vale-added leather sector, exports of leather apparel posed a growth of 11pc to $584.02m in 11MFY21 against $528.02m over the corresponding months of last year, followed by an increase of 57pc in exports of jerseys, pullovers and cardigans to $530.14m against $337.39m in the same period in FY20.

Pakistan is one of the main suppliers of global surgical instruments. However, these instruments are re-marketed from western countries with famous brands. As a result, the export value of these products remain very less. The export of surgical instruments posted a growth of 17pc to $398.88m in 11MFY21 against $341.51m over the last year, followed by 23pc in gloves to $285.13m against $232.44m over the last year.

The export of pharmaceutical products posted growth of 27pc to $240.04m against $188.47m last year and worn clothing by 33pc to $228.47m against $171.18m over the last year.

Export proceeds of copper and articles thereof posted growth of 44pc to $463.17m between July to May 2021 against $321.95m over the last year, followed by 14pc in t-shirts to$453.4m against $398.79m last year, 15pc in made-up articles of textile materials to $432.47m against $377.24m of last year and 38pc in pantyhose, stockings, socks to $417.41m against $302.67m over the last year.

Riaz Haq said...

#Pakistan pins hopes on #export-oriented industries, #agriculture and #housing sector for sustainable growth. Keen to promote exports and take their volume from 8% at present to 20% of Gross Domestic Product (#GDP) in coming years. #economy #Budget2021

Addressing a joint post-budget press conference in Islamabad on Saturday, federal minister for finance Shaukat Tarin said the government has presented a growth-oriented budget that also includes relief measures to businessmen, investors, exporters, farmers and common man.

Federal Minister for Industries Khusro Bukhtiar, advisor to the Prime Minister on commerce Razak Dawood, special assistant to the Prime Minister on poverty alleviation and social protection Dr Sania and Federal Board of Revenue chairman Asim Ahmed were also present at the press conference and clarified various aspects of the budget.

Exports share in GDP

Tarin said the government is keen to promote exports and take their volume from eight per cent at present to 20 per cent of the Gross Domestic Product (GDP) in coming years. ”We have suggested various steps to promote exports that would help reduce pressure on the foreign exchange reserves, besides developing the local industrial sector,” he said.

The minister said the special economic zones being set up under the China-Pakistan Economic Corridor would also help in local industrial development and create job opportunities for the skilled and semi-skilled work force.

Agri sector development

Tarin said the government has proposed special initiatives for the development of agriculture sector and prosperity of farming community in the country.

“We accords special attention to small land holders up to 12.5 acres and will extend up to Rs450,000 interest-free loans to enhance agriculture production and alleviate poverty. We have also mobilised banking sector to extend credit facilities to growers at affordable rates,” he said.

“Every farming household would be provided Rs250,000 interest free loan for purchasing agriculture inputs. Another Rs200,000 will be provided to purchase tractor and other machinery to bring innovation and technological advancement in local agriculture sector,” he added.

The finance minister said development of marketing services, cold storage facilities and building strategic reserves of food commodities would also help curb the menace of hoardings, artificial shortage of food commodities and practice of extra profiteering.

Growth-oriented budget

Tarin, who presented PTI’s fourth budget on Friday, said the main focus of the growth-oriented budget is to empower the country’s poor segment so that they would not have to wait for trickle-down effect of economic progress.

“The government is directly targeting the poorest of the poor and facilitating them with different initiatives to upgrade their living standards. It would utilise the ‘bottom-up-approach’ for improving the living conditions of around six million low-income households,” the minister said.

Under the initiative, Tarin said every urban household would be provided Rs500,000 interest-free business loan. Likewise, every farming household would be given interest free loan of Rs150,000 for every crop, interest fee farming loan of Rs250,000 and interest free loan of Rs200,000 for buying tractor and agricultural implements.

“Low-interest loans of up to Rs2 million would be provided to help the people buy houses, besides Sehat Card to every household to facilitate them in time of need,” Tarin said.

Riaz Haq said...

#Bangladesh to go into nationwide hard #lockdown from Monday June 28, 2021. The daily #COVID #infection rate rose to 21.22%, up from 15% a week ago. #DeltaVariant #India

All offices will remain closed; no one will be allowed to leave home without emergency

Amid the dramatic surge in coronavirus infections, Bangladesh is going into a nationwide hard lockdown from Monday (June 28) for seven days.

In a notification on Friday, the Information Ministry said that all government and private offices, except for emergency services will remain closed during the lockdown.

All kinds of transports, except for those carrying emergency supplies, will remain suspended, it said before adding ambulances and vehicles used for healthcare services and media will be exempted from the curbs.

No one will be allowed to leave home without emergency purposes.

The Cabinet Division will issue a detailed notification on Saturday, reads the notice by the ministry’s Press Information Department.

The announcement comes after the national Covid-19 advisory panel on Thursday recommended imposing a nationwide shutdown for two weeks, with all kinds of offices remained closed.

Soon after the panel made the recommendation, State Minister for Public Administration Farhad Hossain told the media that they were all set to impose a complete shutdown any time.

As Covid-19 cases kept growing at an alarming rate since mid-March this year, the government was forced to impose a nationwide lockdown for one week from April 5 to contain the spread.

Later, a stricter set of restrictions on public movement and gathering were extended several times, including the latest one till July 15.

Additionally, the authorities across the country has been imposing district-wise restriction on public movement in areas with higher Covid-19 infections till now.

But now, with the fresh directive, a strict lockdown will take place across the nation.

On Friday, the death toll from Covid-19 rose by 108, the second highest single-day jump since the pandemic unfolded last year in Bangladesh.

The caseload surged by 5,869 to 878,804, according to the latest government data. The daily infection rate rose to 21.22%, up from 15% a week ago.

Amid the dramatic surge in infections, public experts fear that the pandemic in Bangladesh could take a catastrophic turn.

Riaz Haq said...

Look at the #economic growth trend in #SouthAsia! #Pakistan #economy grew rapidly in 2000-2008 during #Musharraf years!! And then the bottom fell out!!! Bitter fruit of kleptocracy disguised as "democracy"??? #PPP #PMLN #PTI #PandoraPapers

Mr Khan’s current diplomatic offensive comes in the context of the dwindling options bequeathed by his country’s feeble economy, hypocrisy over Xinjiang and long history of double-dealing. “Pakistan is trying to use Afghanistan to rehabilitate itself,” says Michael Kugelman of the Wilson Center, an American think-tank. “Its message is that we were right all along, there never was a military solution, so it is wrong to blame us.” What Pakistan now wants is for other countries to lend a hand, and help shore up the Taliban government as the only way of sustaining regional stability. The trouble is that just as Pakistan’s leaders imagine the country’s strategic significance to have grown because it holds unique influence over the Taliban, the West’s withdrawal has entailed a steep decline in its interest in the region.

Mr Khan may well be right that the best hope for preventing a humanitarian disaster in Afghanistan now, and for keeping a grip on jihadist groups that linger on its blood-soaked soil, is to help the Taliban keep a lid on things. “If Afghanistan destabilises, the spillover effect comes to Pakistan,” says Moeed Yusuf, Mr Khan’s national security adviser. “After Afghanistan we are the biggest victim of the past four decades and we are not interested in going there again.” But coming from a country that has for so long run with the foxes while hunting with the hounds, as Pakistan has, such words carry limited credibility. ■

Riaz Haq said...

Bangladesh protests US sanctions against RAB, security chiefs
Seven people, including Bangladesh’s national police chief, have been sanctioned by Biden’s administration over alleged rights abuses.


Bangladesh is not among the 110 countries that are invited to the US President Joe Biden's virtual Summit for Democracy, according to a list disclosed by the White House.

Among the South Asian countries, India, Pakistan and Nepal are invited to the conference scheduled for 9-10 December. Afghanistan and Sri Lanka also could not make it to the list.

Even though it is not clear what criteria were followed to extend the invitation, international relations analysts in Bangladesh have come up with mixed reactions while the foreign ministry has not yet spoken on the matter.

Riaz Haq said...

India Is Backing Sheikh Hasina's Autocratic Govt for Own Interest: Ex Bangladesh Chief Justice
In a telephonic conversation with The Wire, Justice Sinha, in exile in the US, says India should meet its obligations. "If there is no rule of law, if there is no democracy in neighbouring countries, it will certainly affect Indian politics too."

By Tasneem Khalil

For years, Surendra Kumar Sinha was a member of the ruling order in Bangladesh, seen by many as a key ally of Sheikh Hasina and her regime. That was until he was put under house arrest and then forced into exile in late 2017. One year on, Sinha, former chief justice of Bangladesh, is speaking out against the “autocratic government” in Dhaka that is backed by New Delhi.

In his newly published memoir, A Broken Dream: Rule of Law, Human Rights and Democracy, Justice Sinha appears as the whistleblower many Bangladeshis have been waiting for. The chief justice once seen as a loyal insider is now revealing jaw-dropping details about a ruthless regime and the techniques of oppression and manipulation it deploys.

He is unrelenting in his criticism of the regime, and part of the criticism is directed at its main international patron: India.

“People cannot be ruled with the help of security forces consistently violating the civil rights of the citizens. No autocratic government can rule the country for an indefinite period,” Justice Sinha writes in his self-published memoir, which is already a bestseller on Amazon Kindle. “Unless democracy and rule of law are established, the sentiments of the people will keep rising against the tyrannical government and it will go against India as well because India is seen to be propping up an autocratic government for its own interest.”

As Justice Sinha tells me during a telephone interview, he took his criticism to the highest level of the Indian government when he met Prime Minister Narendra Modi during a trip to India in October 2015. “Actually, I questioned the prime minister of India when I met him – I questioned him. I said rule of law and democracy are not in existence in Bangladesh, you should not support this fanatic, autocratic government. I also explained to him that unless there is rule of law, I cannot administer justice because there is interference.”

What was Modi’s response?

“He said he is sorry about what is going on – he has limitations.”

“India supported our liberation struggle, [sacrificing] over 25,000 soldiers for the liberation of our country. We are not enemies, rather we are friends,” Justice Sinha wants me to know where exactly he is coming from. “[As a regional superpower], India has some obligations. If there is no rule of law, if there is no democracy in neighbouring countries, it will certainly affect Indian politics too.”

His worst fear? Bangladesh becoming another version of a dysfunctional Pakistan, where the writ of the constitutional state is ceded to rogue security agencies and jihadi groups.

Riaz Haq said...

India’s growing control over Bangladesh worries experts
Kushiyara agreement termed unfair, diesel import through pipeline to strengthen India’s control

India’s control over Bangladesh is growing thanks to the latter’s decision to unnecessarily increase dependence on its neighbour, speakers at a press conference organised by Sarbojonkotha, a Bangla quarterly journal, observed on Saturday.

The latest agreement over sharing of the Kushiyara river water is not fair, they said, expressing surprise at the necessity of seeking India’s permission when Bangladesh has its own rights to lift the river water that is inside Bangladesh.

India has already built 12 irrigation projects and power plants in the upstream along the river even without bothering to ask for permission from Bangladesh in the downstream, they noted.

‘Bangladesh’s dependence on India is being unnecessarily increased. The dependency may be useful for the government but does not appear to benefit ordinary people,’ said Sarbojonkotha editor Anu Muhammad.

He said that Bangladesh planned to increase electricity import from India despite having excessive installed generation capacity.

‘India’s control over Bangladesh is strategically beneficial to a vested quarter in India and Bangladesh,’ said Anu Muhammad.

He demanded that border killings by the India’s Border Security Force be probed independently through the UN mediation.

Dhaka University teacher Moshahida Sultana presented a keynote paper at the virtual press conference held in the morning.

The keynote paper said that electricity import from India would soon contribute 16 per cent of the overall installed power generation capacity of Bangladesh.

‘Once the trans-border under-construction pipeline is established, Bangladesh will become dependent on India for meeting more than 20 per cent of its energy demand,’ she said.

The dependency is destined to strengthen India’s control over Bangladesh, she said, potentially opening a window for India’s interfering with Bangladesh’s internal affairs.

Bangladesh can save about $11 by refining imported crude oil in its own refineries but prefers instead to rely on India for refining oil through the construction of tarns-border pipeline which is said to save $2, said Moshahida.

The agreement for withdrawing water from the Kushiyara river in downstream was described as unfair by Md Khalequzzaman, who teaches geology at Lock Haven University in Pennsylvania in the United States.

India filled up canals and other infrastructures along the Barak River in the upstream, he said, reminding its adverse impacts on downstream.

Bangladesh recently reached an agreement with India for lifting 153 cusec of water from a Barak tributary, Rahimpur canal, which flows inside Bangladesh.

‘The agreement sets a bad precedent,’ he said, asking, ‘Why is there a necessity to seek permission from India for lifting water from a canal inside Bangladesh?’

Benefits of the Kushiyara agreement have been exaggerated, he said, adding that the water Bangladesh has permission for lifting from the river can irrigate maximum 3,750 hectares of land.

Riaz Haq said...

India’s growing control over Bangladesh worries experts
Kushiyara agreement termed unfair, diesel import through pipeline to strengthen India’s control

India has been lifting Kushiyara water apparently even without asking Bangladesh for a long time, Khalequzzaman said while presenting his keynote paper.

Dhaka University teacher Mohammad Tanzimuddin Khan in his keynote paper highlighted border killing by the India’s Border Security Force citing an issue of the US-based Foreign Policy magazine listing Bangladesh-India border among the 13 most dangerous places in the world.

In the years between 2015 and 2022, 161 Bangladeshis were killed by India’s Border Security Force. Another 45 people have been murdered along the border in other incidents in 2020 alone, the highest number of such murder in a decade.

‘Reality does not reflect friendship that the two governments enjoy bragging about,’ said Tanzim.

Experts also called for basin-wise river management, advising Bangladesh to rectify the UN watercourses convention and get a right share of water from trans-boundary rivers in exchange of giving transit to India.

Bangladesh should regularly publish data on stream flows on trans-boundary rivers, they said, reminding that India did not release agreed amount of water through the Farakka Barrage at 65 per cent of the time despite having a treaty.

Riaz Haq said...

India and Bangladesh on Tuesday signed a deal on withdrawing water from the Kushiara river in Assam and six other treaties as their leaders spoke of "shared cultural traditions" and solving issues through "clear discussions".

Prime Minister Narendra Modi and Bangladesh leader Sheikh Hasina, who is on a 4-day visit to India, signed the agreements in Delhi. The agreements include a Memorandum of Understanding (MoU) on training Bangladeshi personnel in Indian Railways institutes and collaboration in Information Technology (IT) systems for freight operations. The countries signed MoUs on training programmes for Bangladeshi judicial officers in India, scientific and technological cooperation, technology and the public television sector.

The two nations inaugurated the first unit of the Maitri Super Thermal Power project, which Bangladesh constructed with development assistance from India. Prime Minister Hasina signed seven agreements in diverse areas in her last visit to New Delhi in 2019.

"Bangladesh has significantly progressed under the leadership of Prime Minister Sheikh Hasina, and our bilateral cooperation has also seen fast growth. In the past few years, Bangladesh has become India's largest development partner. Our close cultural and people to people relations have also continuously grown," Modi said, adding that he and the visiting leader agreed on extending connectivity and trade infrastructure.

Hasina thanked India for assisting Bangladesh in its economic development. "Our main focus is to help create a progressive future for citizens of both nations. All our foreign policy engagements with India are based on this one objective," she said.
India’s infra push

In response to China announcing infrastructure financing and construction projects in Bangladesh, India is stepping up assistance for its eastern neighbour

"The rising price of energy is proving to be a challenge everywhere in the world. Today, the inauguration of the first unit of the Maitri Thermal Plant in Bangladesh will raise the availability of affordable electricity in Bangladesh," Modi said. Constructed under India's concessional financing scheme, the project will add 1320 MW of electricity generation capacity in Bangladesh.

Modi praised the new Rupsha rail bridge, which is being constructed to connect the upcoming Mongla port in southwestern Bangladesh to its third-largest city of Khulna. India is providing concessional credit for the bridge and the port and the total project is set to cost $389 million.

Bangladesh wants Indian companies to use the port and transnational rail lines connecting the country to West Bengal and Tripura as an alternative direct access channel into underserved areas of Eastern and North Eastern India.

Trade ties

"Our bilateral trade is expanding fast. Today, India is the largest market in Asia for Bangladeshi exports. To push this growth even further, we will soon begin talks on the Comprehensive Economic Partnership Agreement (CEPA)," Modi said.

A quick deal on CEPA is a key policy objective for Dhaka after Hasina approved it in August. Preliminary joint studies suggest the deal is expected to raise Bangladeshi exports to India two-fold and expand the country's GDP by 2 per cent. While the talks are still in early stages, Modi's mention of the CEPA in the joint press statement likely indicates enough that New Delhi has accepted Bangladesh's request to accord the CEPA priority.

Riaz Haq said...

India and Bangladesh on Tuesday signed a deal on withdrawing water from the Kushiara river in Assam and six other treaties as their leaders spoke of "shared cultural traditions" and solving issues through "clear discussions".

Trade ties

"Our bilateral trade is expanding fast. Today, India is the largest market in Asia for Bangladeshi exports. To push this growth even further, we will soon begin talks on the Comprehensive Economic Partnership Agreement (CEPA)," Modi said.

A quick deal on CEPA is a key policy objective for Dhaka after Hasina approved it in August. Preliminary joint studies suggest the deal is expected to raise Bangladeshi exports to India two-fold and expand the country's GDP by 2 per cent. While the talks are still in early stages, Modi's mention of the CEPA in the joint press statement likely indicates enough that New Delhi has accepted Bangladesh's request to accord the CEPA priority.

Bangladesh exports only $1.9 billion worth of goods to India from where it imports $16.15 billion. It imported $4 billion worth of cotton, $1.2 billion worth of wheat and a similar amount of petroleum. Hasina has pushed for the deal to allow this trade imbalance to rectify at least partially. A quick resolution on this front would allow her to answer her domestic critics who point to the country even importing $600 million of rice, mostly parboiled, as emblematic of India's overwhelming shadow on the country's economy, officials said.

Water sharing

Water sharing is a diplomatic issue as the Ganges and the Brahmaputra enter Bangladesh from West Bengal and Assam. Called Padma and Jamuna in Bangladesh, these rivers accumulate water from the hundreds of rivers that snake through the riverine nation. Access to water from the Teesta river, which is important for irrigation in northwest Bangladesh, is a contested issue as well.

Solutions seem to be flowing. "There are 54 rivers that traverse the India-Bangladesh border and have historically been a part of the livelihood of people in both nations. The songs and tales about these rivers are also a symbol of our unique, shared cultural traditions. The water sharing agreement on the Kushiara river will benefit South Assam and the Sylhet region in Bangladesh," Modi said.

India will continue to share real-time data on water flow and flood with Bangladesh, he added.

"We are two neighboring nations, and there may often be certain issues between two nations, but we have set an example by solving many issues through clear discussions," said Hasina, referring to sharing of river water.

Riaz Haq said...

The ground under Sheikh Hasina’s feet is shifting

By Avinash Paliwal

Bangladesh's foreign minister
AK Abdul Momen arrived in
India last month to fight polit-
ical fires. But he found himself
dealing with massive floods
that hit Sylhet and Assam.
Nature has its ways to convey
that not all is well in India's
near-east. Far from the glitz
about Bangladesh's economic
success, on display during the
recent inauguration of the
Padma Bridge, clampdown on
Islamists, and shrewd man-
agement of big power rivalries,
is a parallel potent reality of
Prime Minister Sheikh Has-
ina's authoritarianism,
heightened polarisation, and
economic distress. As an
Indian official mentioned to
me, and a Bangladeshi official
echoed. Hasina "has built a
house of cards"
The economic, social, and
political ground under Has-
ina's feet is shifting in real
time. It is slow enough to be
dismissed as non-urgent, but
sure enough to become press-
ing, if not dealt with urgently.
With general elections due in
2023, and external debt repay-
ment schedules kicking in
from 2024, it is a matter of
time for the veneer of (forced)
stability to lose its sheen. The
risk of dislocation, if not col-
lapse, of this so-called house
of cards has increased in
recent years, and it could
undermine whatever is left of
India's connectivity aspira-
tions in its near east.
Domestically, the Hasina gov-
ernment has exacerbated two
contradictions in a tradition-
ally polarised polity. One, she
is in power, but with little to
no electoral legitimacy. The
Awami League's (AL) manipu-
lation of the 2014 and 20118
elections (a practice not just
reserved for national elections
and against opponents),
unceasing harassment of its
key opponent, the Bangladesh
Nationalist Party (BNP), gag-
ging of media, social media
monitoring using advanced
digital surveillance, and a
forced tilt towards the conser-
vative Islamic Right as a bal-
ancing move after targeting
these formations using force,
has created wide pockets of
intense frustration.
Unlike her father, Sheikh
Mujibur Rahman, who created
a one-party State, but failed to
contain a famine in 1974, Has-
ina has placed her bets on eco-
nomic development. The argu-
ment runs that good economic
performance coupled with lib
eral use of force will make a
one-party State under Has-
ina's leadership sustainable.
But this is where the second
contradiction kicks in.
Bangladesh's external debt to
Gross Domestic Product ratio
has increased to 21.8%, import
spending has shot up by nearly
44%, forex reserves of $42
billion are falling and can
cover about five months'
worth of imports, and the rev-
enue from readymade gar-
ments export and remittances
is not keeping pace with the
fast rising costs to the

Couple this with the global
inflation created by the Rus-
sia-ukraine war and United
Statesled sanctions, and it
becomes clear why Momen is
asking India to remove anti-
dumping duties on Banglade-
shi jute exports. Further com-
plicating this situation is
Dhaka's propensity to accept
external loans for infrastruc-
tural projects at highly inflated
costs, making repayment dif-
ficult. One of the cases in point
is the 2015 Rooppur Nuclear
Power Plant deal with Russia
for which Dhaka is to repay
$13.5 billion. India paid $3 bil-
lion for a similar plant in
Why does Dhaka accept such
deals? Because external fin-
ance fuels (limited) infra-
structural growth, chronic
corruption, and keeps the
political illusion of economic
development alive. To be clear
and fair, Bangladesh's eco-
nomic journey has been more
than commendable. But to
expect an economic miracle,
which is bound to dwindle due
to internal or external shocks,
to sustain a corrupt system
pretending to be a democracy
is a tall ask. Herein, Hasina has
ensured that neither the
Islamists nor the BNP
which enjovs public sympathy,
even if it may not get a fair
election - pose a serious
challenge to her.

Riaz Haq said...

The ground under Sheikh Hasina’s feet is shifting

By Avinash Paliwal

But her real challenge doesn't
come from known opponents.
It comes from opaque factions
within a securitised State (and
the party) that has made so
much illicit profit that being
out of power is not an option
for them. This leaves Hasina
with an unenviable dilemma.
Either she allows free elections
and risks being ousted or
manipulates them and invites
international opprobrium that
could unleash mass protests
and violence. Bereft of a clear
succession plan, both these
scenarios could tempt oppor-
tunistic adversaries to force a
regime change, of which there
is an unfortunately rich his-
tory in Bangladesh.
Hasina's internal problems are
linked to external dependen-
cies. Politically reliant on New
Delhi, she is finding it increas-
ingly difficult to manage the
ramifications of India's turn
towards Hindu nationalism
that misuses migration from
Bangladesh and the Rohingya
crisis for domestic electoral
gain. Similarly, accepting of
Chinese finance that may not
translate into political sup-
port, Dhaka is struggling to
keep targeted US sanctions
against the Rapid Action Bat-
talion, an anticrime and anti-
terrorism unit of the
Bangladesh Police, for serious
human rights violations, at
bay. Dhaka's replacement of
its ambassador in Washington
DC after a visit by a team of AL
parliamentarians from the
standing committee on foreign
affairs will make little differ-
ence in how the US deals with
Add to this, an uptick in
demand for repatriating
Rohingya migrants - some of
whom have been silently
resettled in the Chittagong Hill
Tracts to the locals' displeas-
ure - to Myanmar, including
within Bangladesh's military
establishment, and the situ-
ation becomes even more
volatile. Hasina requires a
political off-ramp to prevent a
foreseeable crisis that can turn
violent. The last thing the sub-
continent needs is turmoil in

Riaz Haq said...

Since mid-2021, global commodity prices, especially of oil, have begun to rise. This was intensified by the Russian invasion of Ukraine in March. As a consequence, Bangladesh, as a major energy importer, is facing a number of challenges. Its foreign currency reserves are declining and the value of its currency, the taka, is weakening. Electricity load shedding has worsened, adding to the woes of citizens.

As a result, the cost of imports in Bangladesh has increased significantly even as earnings from exports have increased only moderately.

In the financial year 2022, the expenditure on imports increased by 36%, compared to 20% the previous financial year. The high import cost is due in part to the increased demand for imported goods and in part to the higher import prices on the global market.

As a result, the terms of trade have gone against Bangladesh. During 2021-’22, the import-price index increased by 5.06%, while the export-price index increased by 3.23%. This has hurt the current account balance.

In the financial year 2022, the current account balance reported a deficit of $18.70 billion compared to the previous year’s deficit of $4.58 billion.

The current account deficit in Bangladesh is generally met by remittances from abroad, which have also decreased significantly in the financial year 2022. Remittances fell by 14% in the financial year 2022, following a 36% increase in the financial year 2021. This has affected the balance of payments, foreign currency reserves, and weakened the taka against the US dollar.

Despite adjusting the exchange rate to match the market demand, the Bangladesh Bank continued to sell dollars from reserves to keep the taka stable. As a result, reserves declined further.

Foreign currency reserves fell to $39.77 billion on July 14 from $46.39 billion the previous year. Though the country has received relatively large remittances from expatriates in July due to Eid, the taka’s value against the dollar is deteriorating.

Foreign exchange reserves are not only critical for maintaining the exchange rate of domestic currency but also contribute significantly to increased capital investment and long-term economic growth.

To keep the taka’s value stable, the Bangladesh government and Bangladesh Bank have taken measures to reduce imports and increase the flow of dollars. The government has discouraged the import of luxury items. The depreciation of the taka compelled the government to seek a loan from the International Monetary Fund. Only a year ago, Bangladesh had supported Sri Lanka with $250 million.

The weakening of the Taka against the dollar not only makes imports more expensive, but also raises the domestic prices of imported goods and other non-imported goods due to the substitution effect – which is when the sales of a product decline due to an increase in its price which prompts consumers to switch to cheaper alternatives. This worsens inflation.

Inflation at 9-year-high
For the past few years, inflation in Bangladesh had been under control but it began to increase in 2021 and has now risen to 7.56% according to official accounts, though the actual rate is thought to be much higher. The prices of rice, wheat, edible oil and other essential commodities are increasing and the inflation rate has climbed to a nine-year-high.

Several studies indicate that low-income citizens are struggling to cope with the high prices of essential commodities and compromising on their food and nutrition.

The government recently hiked urea fertiliser and fuel oil prices without implementing measures to improve the management of the energy sector and reduce inefficiency and system loss.

Riaz Haq said...

Global supply and Bangladesh
Mahtab Uddin Chowdhury | Published: 00:00, Sep 19,2022 | Updated: 23:21, Sep 18,2022

According to the report, based on Dun & Bradstreet data, at least 374,000 businesses worldwide depend on Russian suppliers, while at least 241,000 businesses across the world rely on Ukrainian suppliers. As stated in Forbes magazine, ‘If the pandemic crippled the global supply chain, the war in Ukraine knocked it to its knees.’ The war generally destroys natural resources and creates enormous barriers to the market. This general tendency is manifested in the aftermath of the Russia-Ukraine war when commodity and oil prices saw an increase, global economic activities slowed down and inflation rate increased. Reportedly, the war reduced global GDP by about 1.5 per cent and led to a rise in global inflation of about 1.3 per cent.

Bangladesh’s post-pandemic economic recovery programme even before gaining momentum is at risk because of the Russia-Ukraine war. In terms of oil production, Russia ranks third in the world; hence high oil prices are hurting the entire economy. Bangladesh, an oil-importing nation, is already under strain from hefty import duties. Additionally, given that Russia is a significant market for Bangladesh’s ready-made garment products, global sanctions on Russia imply that Bangladesh’s trade with Russia will be impacted. In the last July–February, the revenue from exporting clothing to Russia was $482.23 million, or $60.15 on an average per month, but the revenue fell to $27.05 million in March–May 2022.

Furthermore, the high import dependency of Bangladesh has created a serious economic stagnation. Since Bangladesh primarily imports wheat from the Black Sea region, the price of wheat flour sharply increased. The government raised diesel prices by approximately 23 per cent in November 2021, which is already reflected in the high cost of transport and other necessities. Additionally, there has been a significant increase in the price of soybean oil.

All these things are causing the country’s inflation rate to be high, approximately 7.42 in May which is the highest in the last eight years. Let’s not forget the foreign debt that Bangladesh needs to pay back. At the end of fiscal 2020–21, Bangladesh’s external debt was $60.15 billion. However, the underlying concern is that, according to prominent economist Debapriya Bhattacharya, although Bangladesh’s external debt status is now in the green, it may move into the yellow zone by 2024–25.

Under this circumstances, Bangladesh is in dire need of taking some bold and dynamic steps to stabilise the economy. Bangladesh should look for alternative sources of importing goods. It’s essential to avoid being overly dependent on any one location or nation for specific products. In this context, the government of Bangladesh initiated some talks with Canada and some other countries.

The government has initiated these dialogue particularly after India stopped exporting its supply of wheat to Bangladesh. Similarly, Bangladesh needs to diversify its agricultural production to reduce import dependency. More research should be facilitated to encourage innovative approaches in this sector, particularly focusing on regularly imported products such as wheat, corn, and oilseed.

When it comes to talking about a better supply chain system, port management plays a vital role in Bangladesh or elsewhere. Based on a report by the World Bank and S&P Global Market Intelligence, the Chattogram port has been ranked as Asia’s least efficient trade hub for handling containers. Considering the low ranking, the government should focus more on improving the efficiency of the port management so that quick tracking and a better supply of goods can be ensured.

Riaz Haq said...

Here's how prominent Indian journalist SNM Abdi explains Indian intelligence agency RAW's influence in Bangladesh: "India wields more influence in Bangladesh than the Security Council’s five permanent members put together. The Research and Analysis Wing (RAW) is the most dreaded outfit in the neighboring country surpassing even the brutally unforgiving RAB. Hasina lives in mortal fear of RAW. She knows that she will be toppled if she displeases India. So she has adopted the policy of pleasing India to retain power at any cost".

Make no mistake: Bangladeshi Prime Minister Sheikh Hasina is no Jacinda Arden — the New Zealand premier who became a global icon of compassion and tolerance by hugging terrified Muslims after the massacre of 51 worshippers in a Christchurch mosque in 2019 and vehemently criticising Islamophobia.

In contrast, Hasina’s crackdown on rampaging Islamist mobs who vandalised temples during Durga Puja and killed two Hindus, is a calculated political response to benefit herself — poles apart from the empathy, morality, and principles, which characterised Arden’s acknowledgment of White Christian terrorists. Arden, 41, bared her heart and soul, while Hasina, 74, works with her cunningness and guile.

Deploying the Rapid Action Battalion (RAB), hundreds of fundamentalists were arrested in a nationwide swoop. Most importantly, the two “foot soldiers”, Iqbal Hussain and Saikat Mandal, who placed the holy Quran at the feet of goddess Durga and telecast it live on Facebook respectively, to whip up religious passions were hunted down using CCTV footage. The duo’s handlers are yet to be caught, though.

Moreover, Hasina condemned the targeting of Hindus and the ruling party organised processions in Dhaka and other cities demonstrating the political and administrative resolve to take on extremists. Civil society too stood by Hindus; writers, poets, singers, cricketers, professors, university students, doctors, and human rights activists; swearing to shield the frightened minority community at any cost.

India's Vice-Like Grip Over Bangladesh & Hasina
The BJP in West Bengal, where by-elections will be held on Saturday, 30 October, is predictably exploiting the communal flare-up in Bangladesh to harvest Hindu votes after the drubbing at the hands of Trinamool Congress in the Legislative Assembly elections.

But the Narendra Modi government quickly complimented Dhaka’s “prompt” handling of the situation. And on Friday, 22 October, Foreign Secretary Harshvardhan Shringla, described India-Bangladesh relations as “deeper than any strategic partnership and a model for nations that share borders”.

How Did the Awami League Govt Respond?
At one level, Hasina’s Awami League government did exactly what any upright, law-abiding administration must do — shoot dead attackers belonging to the majority community to save the minority community from death and destruction.

Five Muslim law-breakers were killed in police firing – a fact obfuscated in media reports in India, which create an impression that all seven killed in the Durga Puja-centred violence are Hindus, whereas the police shot dead five Muslims.
Deploying the Rapid Action Battalion (RAB), hundreds of fundamentalists were arrested in a nationwide swoop. Most importantly, the two “foot soldiers”, Iqbal Hussain and Saikat Mandal, who placed the holy Quran at the feet of goddess Durga and telecast it live on Facebook respectively, to whip up religious passions were hunted down using CCTV footage. The duo’s handlers are yet to be caught, though.

Riaz Haq said...

Prime Minister Sheikh Hasina said on Wednesday that her recent visit to India benefitted Bangladesh and she has not returned "empty handed" and emphasised that her trip has opened up a new horizon in the relationship between the two friendly neighbouring countries.

During Hasina's visit, India and Bangladesh signed seven agreements, including one on sharing of waters of Kushiyara river which is expected to benefit the regions of southern Assam and Bangladesh's Sylhet region.

"They (India) have shown much sincerity and I have not returned empty handed," Hasina told reporters here, nearly after a week she returned home following a four-day visit to India from September 5 to 8.

"I think that my visit, after a long break of three years due to the Covid pandemic, has opened a new horizon in Bangladesh-India relations, she said, adding that the people of both sides would be benefited from the cooperation in all the areas identified during her India visit and the decisions taken to solve the existing bilateral problems.

Her comments came as leaders of the main opposition outside parliament BNP alleged that Bangladesh gained nothing from her India visit while its secretary general Mirza Fakhrul Islam Alamgir said, "Hasina is unable to deal with India".

Hasina said a MoU on the cross-border Kushiyara river was one of the major achievements of her tour as it was expected to protect over 5,820,000 hectares of land in Bangladesh's northeastern Sylhet region from sudden and protracted flooding.

She said that as per the MoU, Bangladesh would receive 153 cusecs of water under the Surma-Kushiyara project from the common river Kushiyara and as a result, 5,000 hectares of land would get irrigation facilities through Rahimpur Link Canal.

She said the water sharing issue of major Teesta also featured during her talks with Indian counterpart Narendra Modi while BNP chairperson and former prime minister Khaleda Zia even forgot to raise the long pending Ganges water issue during her New Delhi tour."

Bangladesh and India had signed the Ganges Treaty in 1996 during Hasina's ruling Awami League government.

She said the two countries reached an agreement on cooperation in the fields of environment, climate change, cyber security, space technology, and green economy, cultural and people-to-people communication.

"We agreed to complete the construction work of the second gate proposed by India at the Petrapol-Benapole border as soon as possible to expand trade. A delegation from Bangladesh will soon visit India to participate in the start-up fair," Hasina added.

Hasina said New Delhi agreed not to halt export of products like sugar, onion, garlic and ginger to Bangladesh without informing Dhaka in advance so Bangladesh could find alternative sources for those essentials.

She said that cessation of border killings, trade expansion, withdrawal of anti-dumping duty on Bangladesh jute products, repatriation of the Rohingyas, import of electricity from Nepal and Bhutan via India, were also discussed.

"After all, in the changed world situation, this visit would accelerate both the countries to move forward together in a new way, Hasina said.

She added that similarities of language and culture deepened the historic relations with our closest neighbour and friendly country, India.

"Apart from this, the support during the Liberation War and cooperation after the independence has reached this friendship at a special level, she added.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)