BANGLADESH: NOT THAT POOR RELATIVE!
No offence, but my first visit to Bangladesh in 2000 wasn’t a delightful experience. Without direct connections from Colombo to Dhaka, I had a long stopover in Bangkok; not a convenient arrangement. So I was tired when I reached the destination. My first view of the country, from above, was of horror. All I could see was muddy water, with scattered tall structures. The person occupying the seat next to mine wondered aloud if these were towers of mosques or brick kilns. My flight landed at Zia International Airport – now renamed Hazrat Shahjalal International Airport – in heavy rain. The next five days were a nightmare. I remember three things from that visit.
First, the food was excellent! Our host has taken extra care to please our taste buds, an eff ort too courteous given it was the month of Ramadhan. Second, I observed a nuclear reaction from a safe distance at the TRIGA research reactor at the Atomic Energy Research Establishment in Savar. Third, the newly established planetarium was inspiring. Dhaka itself was quite unpleasant: the traffic horrific and the air, dusty. Outside the hotel, the roads were messy, and people carried goats on their backs. I was amused, fearing harassment by the driver, to find passengers locking themselves in tuk-tuks and drivers doing the same to prevent passengers from mugging them.
When our vehicle stopped at traffic lights, kids rushed over unsolicited, cleaned windscreens and begged for money. That was Dhaka twenty years ago. I was glad my stay was short. Since then, I have visited Dhaka several times and on each occasion, noticed how dramatic its transformation has been. Infrastructure has visibly improved. The place has become more modern, more livable and cleaner. The country appeared to be developing. So what? Wasn’t that happening almost everywhere in Asia?
Somewhere in between, Bangladesh overtook Sri Lanka’s apparel exports; now it’s the world’s second-largest apparel exporter to western fast fashion brands. Of course, that’s because the labour is cheap. Perhaps them beating us in cricket hurt more – and, we deserved it. Bangladesh has also been achieving an annual average GDP growth of 6% since the mid 2000s. This growth accelerated, culminating at 7.3% last year, the highest in South Asia if we overlook the Maldives.
Now, that isn’t good for a typical Sri Lankan ego. Indeed, not good when Central Bank of Sri Lanka has already indicated we would only grow at 1.6% this year. Economic pundits at Janadhipathi Mawatha are known more for their optimism than not. We could go lower. Yes, we had the Easter bomb attacks and Bangladesh didn’t. It is easy to offer excuses. Should we continue to do so? It is worth analysing how Bangladesh developed its apparel industry. The country has a long relevant history. During Mughal rule, then-East Bengal was a major international cotton producer. Bengal exported cotton and silk textiles to far away markets such as Europe, Indonesia and Japan. This has little to do with the success of its over $30 billion apparel export market of today.
In the 1960s, a few Bengali entrepreneurs established their large textile and jute factories. Following its separation from Pakistan, the newly formed Bangladesh lost access to both capital and technical expertise. Then came ‘nationalisation’ madness and like everywhere else, it killed what remained.
The industry was reborn in the millennial years following liberalisation. Textile exports, mainly ready-made garments (RMG) accounted for over 75% of total merchandise exports by mid 2000s. By 2005, apparel exports were the only multi-billion dollar manufacturing and export industry in Bangladesh. By 2011, Bangladesh was the second-largest RMG manufacturer after China. By 2018 it was earning $32 billion – equivalent to more than one a third of Sri Lanka’s 2018 GDP – in apparels (compared to Sri Lanka’s $5 billion). They aim to surpass the $50 billion mark within the next three years. Cheap Labour? Yes. Wages of Bangladesh’s 4.5 million apparel workforce are said to be the lowest, but they are also lead South Asian productivity in the sector. The gender imbalance among workers is apparent, with sources’ estimates of the number of women in the industry ranging from 3.2 to 3.8 million. Most of them are rural, poor and illiterate. Generally, their working conditions are rather poor. But what’s the alternative? Otherwise, they would be dependent on the incomes of their poor agri-worker husbands. And which developing country ever offered perfect working conditions for its workers?
Bangladesh has learned quickly after the infamous Rana Plaza incident in 2013, when over 1,000 workers making clothes for Western brands died when the building they were working in collapsed. Since then over 1,250 unsafe garment factories have been shut. Meanwhile, about 350 new ones that comply with standards have opened. The argument is not for Sri Lanka to return to such labour-intensive industries. We lack a competitive advantage there. What we must learn from Bangladesh is to map our place accurately in industry and services.
Even within the apparel industry, we can only thrive if we gradually move upwards in the value chain. If we cannot, it is time to leave the industry. That’s what all export-oriented economies have done. South Korea, in the 1960s, moved from sweets and textiles to steel, chemicals and shipbuilding in 1970s, later finding excellent opportunists in the electronic industry. Just across Palk Strait Tamil Nadu is busy finding its place in electronics, healthcare, paper and alternative energy. Has Sri Lanka found its own best abilities?
There are other lessons for us. Bangladesh also has the world’s largest ship-breaking industry. It employs over 200,000 people and accounts for half of all steel in Bangladesh. The energy sector in Bangladesh, as of mid-2019, is booming with an installed capacity of 21,500 MW (compared to our own 4,000 MW). Yes, Bangaldeshis’ access rates (90% compared to our own near 100%) and energy consumption rates are low. These will change with the under-construction Rooppur Nuclear Power Plant, expected to join the grind in 2023. Sri Lanka cannot even imagine nuclear power in the national grid for another 15-20 years. What have we been doing all these years?
It may be unfair to compare one country with other more dynamic ones. Each has varying circumstances. But the comparison is exactly what investors and observers do. Sri Lanka, once South Asia’s frontrunner, is now a laggard, in cricket and economic development. While congratulating Bangladesh for the transformation, it’s time we sincerely ask, is it the Easter bomb attacks that retarded our own success?