Illustration: John Tomac

By Fahmida Khatun
Mar 20 2018 (The Daily Star, Bangladesh)

On March 16, 2018, for the second time in the history of independent Bangladesh, the country was adorned with a crown for its achievements in development. The first time was in 2015 when it upgraded itself to the World Bank’s “lower middle income” category by increasing its Gross National Income.

By becoming eligible for graduation from LDC, Bangladesh has taken its status to a new height. The LDC category was introduced by the United Nations in 1971 when there were 25 LDCs. In 2018, the number has increased to 47. So far, only five countries were able to graduate from the LDC group, including Botswana, Cape Verde, Maldives, Samoa and Equatorial Guinea. Bangladesh is the only country that met all three criteria for graduation including GNI per capita, Human Assets Index, and Economic Vulnerability Index.

This graduation will bring a lot of opportunities for Bangladesh and quite a few challenges as well. There will be benefits but there will be costs to pay also. Overcoming these challenges is critical for a smooth graduation process.

The new status will help in branding Bangladesh. Investors will be interested to invest in the country given its strength in certain areas such as the size of its Gross Domestic Product (GDP), exports and population compared to other LDCs. These will help Bangladesh’s credit worthiness which is reflected through better credit rating. Bangladesh will have more opportunities for taking commercial loans from the international market at a competitive interest rate. Such branding will help it to mobilise resources from the global market through sovereign bond. The private sector will also have the opportunity to generate capital from the global financial market.

The other impact will be reflected through the cost of development finance and higher debt servicing liabilities due to the cessation of access to concessional finance for LDCs. Over the years, Bangladesh has transformed itself from an aid-dependent country into a trade-dependent one. However, for poverty alleviation, social sector activities and infrastructural development, the role of official development assistance cannot be undermined. As a lower-middle-income country, Bangladesh is no more eligible for low interest loans. After graduation, Bangladesh has to go for blended finance that includes loans from the development institutions and other sources with a high interest rate and shorter repayment period. However, Bangladesh should also explore more resources from institutions such as the Asian Infrastructure Investment Bank (AIIB), New Development Bank (NDB) and other commercial sources.

Bangladesh’s major challenge will be to face “preference erosion” due to the LDC graduation. Bangladesh is entitled to have duty-free access to the European market under the “Everything But Arms” initiative. This is a huge opportunity for the country as more than 60 percent of its export goes to the European market. Except for the apparel exports to the USA, Bangladesh receives duty-free market access for all products in all developed countries. Even some developing countries such as India provide duty-free market access for all products, and China for more than a thousand tariff lines. Due to the graduation, Bangladesh will lose about 8 percent of its total exports because of the imposition of additional tariff on its exports by 6.7 percent without a preferential treatment. A Centre for Policy Dialogue (CPD) study reveals that the loss will be equivalent to USD 2.7 billion.

After graduation in 2024, there will be a grace period of another 3 years when Bangladesh can enjoy all LDC-specific benefits. So there are approximately 10 years for the country to prepare itself to start the new journey. Bangladesh needs to prepare for a smooth graduation by taking into account a few issues.

First, the overall capability of the economy has to be improved. This should be achieved through diversification of the economy, technological upgradation, training and skill development of human resources, and institutional strengthening. In order to attract foreign investment, the economy has to go through structural changes, achieve resource efficiency, and improve productivity. This is the age of artificial intelligence and robotics. Bangladesh has to gear up to face the challenges of the Fourth Industrial Revolution. The labour force displaced due to technological upgradation should be able to find themselves engaged in self-employment through micro, small and medium enterprises.

Second, in order to make up for the loss to be incurred by the preference erosion and end of various international support measures, Bangladesh must improve its export competitiveness and diversify both markets and products for export. Besides, Bangladesh has to play a proactive role at the regional and sub-regional initiatives, such as Bangladesh, Bhutan, India, Nepal (BBIN), Bangladesh, China, India and Myanmar (BCIM), and Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), for more meaningful partnerships. At the same time, it should remain active at the World Trade Organization to realise any potential benefit. In the post-graduation period, the country will still be eligible for Generalised System of Preferences or “GSP Plus” benefits for market access. In order to access this, countries usually have to comply with stringent conditions such as improved work conditions, higher poverty alleviation efforts, women’s empowerment and reduction of carbon emission.

While celebrating Bangladesh’s latest achievement, we have to recognise that we are facing a world full of challenges and crises. We have to be prepared for a world increasingly battling with conservatism, protectionism, extremism, refugee crises and confrontations. At the same time, the world has also set ambitious plans such as SDGs to be fulfilled by 2030. Bangladesh is committed to these goals. It is expected that implementation of these goals will also help its smooth graduation from the LDC group.

This story was originally published by The Daily Star, Bangladesh

Excerpt:

Following the end of almost fifty years of military rule in Myanmar and the release of the Nobel Laureate leader Aung San Suu Kyi in 2011, the world had looked at the country with much enthusiasm. The quasi-civilian new government brought some hope for the country to return to democracy as well as economic progress. Even with rich natural resources including land, forests, minerals, oil and gas, the country remained poor and could achieve a per capita income of only USD 1,197 in 2011. So once freed from the military regime, with a view to modernise its economy, Myanmar embraced economic openness and initiated reforms in areas such as currency exchange rates, taxation, foreign investment laws and anti-corruption. Several countries, including those which isolated the nation through economic sanctions such as the US and the European Union, saw opportunities to rebuild economic ties with Myanmar. Political leaders from the US, Europe, Japan, Australia, China, India, Thailand, Bangladesh and many other countries flew in, investors rushed and businessmen flocked into the country to explore its untapped resources. International endorsements revived the country’s confidence and growth prospects. Its GDP grew by more than 7 percent in the last couple of years.

The victory of Aung San Suu Kyi’s National League for Democracy in the election of November 2015 was considered to be another step towards re-establishment of the democratic process in the country. Unfortunately, this has not changed the political ideology of the country when it comes to dealing with the Rohingya minority. Suu Kyi’s upper hand in Myanmar’s politics has not changed the old image of a nation violent against the Rohingya population. In recent times, the unspeakable atrocities against the Rohingya population in the Rakhine state by the security forces of Myanmar have reinforced this image. Shockingly, while the world watches with horror as Myanmar’s army shoot innocent people, burn their houses and abuse women and children, Suu Kyi, the icon of democracy and human rights remains a quiet spectator of this brutality.

The Muslim Rohingya population has long been marginalsied. They are the poorest community of Myanmar, with little or no health, education and other basic facilities. They are a stateless ethnic minority, as they are not even recognised officially. They are denied citizenship, even though they were born and have been living in Myanmar for generations. Tellingly, some Buddhist monks, who are generally perceived to be non-violent and do not support killing, also take part in this abuse of the Rohingyas. Had such a crime been committed by a majority Muslim community, they would have been immediately branded ‘terrorists’ or human rights abusers, and taken to task by the international community. The cruelty of Buddhist monks only reiterates that extremism has nothing to do with religion. It can take root in anyone with an extreme sense of nationalism and intolerance.

Bangladesh has a 193-kilometres long border with Myanmar. Being its next door neighbour, Bangladesh bears the brunt of Myanmar’s brutality against Rohingyas. Thousands of Rohingyas have already entered Bangladesh. Several thousand others are waiting to cross to this side. From a humanitarian point of view, we cannot close our border. But Bangladesh itself is a poor and populous country with limited capacity. It requires both financial and managerial capacity to deal with the pressure of such large inflows of Rohingya refugees. Repatriation of these refugees will require political and economic efforts. There are security issues as well.

From 1978-79 and 1992-94, Bangladesh had to deal with a similar situation. And the flow of Rohingyas into Bangladesh and their illegal residence here has continued. Desperation has led them to disguise their identity. Several Burmese are working in Saudi Arabia as Bangladeshi labourers, and thus Bangladesh runs the risk of being liable for any unwanted acts of those migrants.

Myanmar should not take Bangladesh’s magnanimity for granted, and continue to push Rohingyas here. If Myanmar wants to prosper and be part of regional and sub-regional initiatives, it has to change its perspective and make place for all its ethnic groups and treat them equally.

Bangladesh is also connected with Myanmar through various sub-regional cooperation initiatives. These include the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) launched in 1997, and the Bangladesh, China, India, and Myanmar (BCIM) Economic Corridor initiative launched in 1999. Both these initiatives have high potential for economic advancement in the region through greater market access for goods and services, investment in infrastructure development, energy cooperation and higher connectivity. The BIMSTEC region has a GDP of about USD 2.7 trillion and a population size of around 3.1 billion. The BCIM sub-region, with a population of about 2.8 billion, has potential for intra-regional trade equivalent to USD 125 billion.

Till now, none of these initiatives have taken off in a meaningful way due to lack of political commitment. With political relationships getting worse due to violence against Rohingyas, there is little hope of an improved situation. After all, regional economic cooperation cannot take place in a void. Peace and security are preconditions for regional success. Two giant Asian economies, India and China, have active interest in both Bangladesh and Myanmar. It is time for them to play their role to uphold the spirit of humanity. For decades, Myanmar has either ignored or refused to sign various international treaties that protect human rights, such as the United Nations Convention against Torture, and thus, it has found a convenient excuse to get away with such humanitarian crimes. It is also therefore time for the international community to take actions to stop such barbarism against innocent Rohingyas.

The writer is Research Director at the Centre for Policy Dialogue.

This story was originally published by The Daily Star, Bangladesh

President Barak Obama’s speech at the seventy first session of the United Nations General Assembly on September 20, 2016 carries great significance. This is not only because it was his last speech at the UN as the US president, but also for its content and message. While his speech has implications for the world today, some are probably more relevant for his own country. Emphasising that the world “must go forward, and not backward”, he spent a great deal of time highlighting the need for global integration and its benefits. He said that billions of people are now enjoying better lives, and the number of people living in extreme poverty has been reduced from about 40 percent to below 10 percent in the last 25 years, thanks to integration of the global economy. Reference to the contribution of immigrants to the US was another notable point of Obama’s speech, as he stated, “Today, a nation ringed by walls would only imprison itself.”

As opposed to what President Obama reiterated within the UN building, a part of the US presidential election campaign has been giving a different message outside. The Republican party’s presidential candidate, Donald Trump, has been crying for tighter immigration rules, building walls, dismantling trade deals like the Trans-Pacific Partnership (TPP) and keeping the US economy closed for the rest of the world. Being the beneficiary of globalisation himself, Trump successfully imprinted the wrong explanation of globalisation in the hearts of a large number of voters. Trump told them that immigrants would take their jobs and create social problems. His supporters, many of whom have lost their jobs following the financial meltdown in 2008 and many of whom are yet to get a place in the job market due to slow economic recovery, believe Trump’s concocted theory. The other cheap and easy-to-sell propaganda is that of terrorist activity by Muslims. While doing so, Trump dangerously equated Muslims with IS militants.

Unfortunately, many Western media often portray Muslims in the same manner. Additionally, his foul and indecent remarks on several people – which he always terms as “jokes” later on – have made him a controversial person. Though initially surprised by even the nomination of Trump, people around the world have now started to realise that Hillary Clinton will have a tough competition with him in the race to the White House.

Is this only because there is a trust gap among voters regarding Hillary? Or because her policies failed? Maybe both. But there is much more to the story than just this. When Barack Obama contested for his presidency for the first time in 2008, history was created. The US could finally vote for a black president. Surely, it wasn’t easy for him to enter the White House. But trust the diverse and multicultural American society. America is the champion of diversity in the world. Its identity as a country of immigrants has been at the core of creation of such diversity. Trump, whose campaign is undermining this, is taking advantage of that diversity himself. His candidature reflects that the US can choose anyone as its president. Relying on this, Trump, however, is taking the opportunity to deviate from the values which America upheld even after the deadly attack of 9/11.

This is not to say that American policies towards immigrants are flawless or its treatment towards them is perfect. The attitude towards Muslims has changed post-September 2001. But apparent attempts of tolerance and plurality were eventually taken in the country. Even the Republican Bush administration maintained the tradition of accommodating diversity. But will it be the same after the November 2016 US election?

Obama’s remark at the UN General Assembly that “America has been built by immigrants from every shore” has been truly reflected in academia, the corporate sector, sports, culture, etc. Irrespective of their colour, race, religion and nationality, top universities including Harvard, Columbia, Yale, Stanford and similar centres of excellence continue to enrol students from the poorest countries of Africa or from the Muslim world. They look for talent and innovation. Many students from the Bangladesh University of Engineering and Technology (BUET) have been directly recruited by large IT companies in the US. Some even work at the National Aeronautics and Space Administration (NASA). Here in our own country, many of Bangladesh’s change agents – from civil servants to engineers to professionals – have been educated and trained in the US. Millions of Bangladeshis follow Facebook founder Mark Zuckerberg. Hundreds of Bangladeshi youths have learned speeches of Steve Jobs by heart. They are inspired by these iconic figures to pursue their own dreams and aspirations. It’s the same US that has recognised the talents of a diverse group of people, be it Satya Nadella of Microsoft, Sundar Pichai of Google, Indra Nooyi of PepsiCo, Ginni Rometty of IBM, Sheryl Sandberg of Facebook or US federal judge Abid Qureshi. Talent and professionalism overruled colour, sex and religion. This is also the reason why the US continues to attract the best from around the world. The US economy cannot sustain if this legacy of diversity and pluralism are discontinued.

The writer is Research Director at the Centre for Policy Dialogue.

This story was originally published by The Daily Star, Bangladesh

At a time when Bangladesh has broken the 6 percent growth trap and has begun its journey towards achieving a faster growth of about 7 percent, and at a time when Bangladesh has achieved the status of a lower middle income country with a per capita income of USD1314 in 2015, it experiences the greatest shock in recent times. This has suddenly changed the perspective on Bangladesh. The ruthless killing of 20 lives, including 17 foreigners at the Holey Artisan Bakery of Gulshan in Dhaka on July 1, 2016, by terrorists has brought new realities for Bangladesh. A country which boasts to be a moderately Islamic country, holding the values of Islam yet being tolerant to other religions and a country that is reputed for its warmth and hospitality towards foreign nationals, has come under the global radar due to the brutality of recent terror attacks. While the grief for the lost lives is going to make a permanent place in our hearts, the implications of this painful episode on other spheres of lives cannot be ignored either.

Photo: Prabir Das

As for Italy, it is one of the important export destinations for Bangladeshi products, particularly readymade garments. In 2015, Bangladesh exported goods worth USD 1,170 million, of which USD 1,070 million constituted of apparels. Italy is also a source of remittance for Bangladesh. On the other hand, India’s aid disbursement amounted to about USD 93 million, while exports from Bangladesh to India were worth USD 542 million in 2015. Bangladesh expects these countries to continue supporting its efforts in achieving sustainable economic growth and poverty alleviation in the coming days. The assurance of the prime ministers of the respective countries to work together towards counter-terrorism is the recognition of the fact that terrorism is now a global phenomenon which kills people across the globe – Dhaka, Istanbul, Paris, Nice, Iraq.

On its part, Bangladesh has to work hard in bringing back the confidence of investors, development partners and the foreign community. The damage has already been done through worldwide media coverage. Now Bangladesh needs to reassure foreigners working here about their safety. The government has beefed up the security of the diplomatic zone in Gulshan and Baridhara, and other important places, including the Dhaka airport. But there are also foreign consultants and officials involved with projects, who are working at the field level. Their safety should also be ensured. We should also be careful in sending out our messages to the global community. While the Prime Minister fears more terror attacks in the country, some ministers are probably trying to show a brave face, dispelling possible negative impacts of the recent terror attacks in Bangladesh.

But the terror attack at Holey Artisan Bakery has been taken very seriously by the diplomatic community and development partners working in Dhaka. Some of them have given their officials the option to send their families to their respective countries, and many officials have already started to move their families out of Dhaka. Some are considering continuing their operation through regional offices, such as Delhi or Bangkok. We hope that this will not have any negative impact on the size of their operation in Bangladesh. But this obviously is an indication of the insecurity felt by foreigners in Bangladesh. This will have an impact on prospective investors and visitors to Bangladesh. As an important sourcing destination of apparels, the country may face new challenges if buyers do not feel secure to come to Bangladesh, and if they place their orders in other countries.

The shocking revelation of the terrorists’ social background has prompted us to reflect on our education system, particularly that of the private universities where some of these terrorists studied. Run like private banks, some of these universities have made education a commodity, through which they can mint money. Many of these universities do not have a registrar or a proctor, and the Vice Chancellor has no say at the board room. Several of these universities have mushroomed through high profile connections without any plans for human resources and curriculum. Borrowed teachers from public universities often find no reason to be an integral part of the university. The curriculum of these universities does not include holistic education that helps students to become enlightened human beings. Instead, they try to cater to the need of the corporate world, sprinkling a bit of everything in the syllabus. It is time to bring an overall change in the education system.

Globally, the impact of terrorism has been manifested through reduced growth, mainly due to higher government expenditure for actions against counter-terrorism and loss of investment. The new reality dictates that Bangladesh has to strategise its security measures with the help of its friends so that its growth momentum can continue.

The writer is Research Director at the Centre for Policy Dialogue.

This story was originally published by The Daily Star, Bangladesh