SANEM’s Quarterly Review of Bangladesh Economy

SANEM’s Quarterly Review of Bangladesh Economy

20 September, 2017

This September 2017, QRBE presents SANEM’s reflections on the major challenges of the Bangladesh economy. Dr. Selim Raihan, Executive Director of SANEM, makes the keynote presentation.

There has been a 44% rise in the price of coarse rice in recent time compared to the its price one-year back. According to FAO and USDA projections, rice production in Bangladesh during 2017/18 would decline. In order to contain the soaring price of rice, there is a need for increasing the supply of rice in the local market. Attempts to import rice from India, Cambodia and Myanmar should be strengthened. Also, there is a need for the better functioning of Chittagong port and Benapole port, and internal transportation and supply mechanism. The OMS price of rice needs to be set at 20 taka. There should be careful actions against hoarding so that such actions don’t disrupt the supply chain.
The recent influx of Rohinga refugees has created pressure on the economy and overall security of the country. Bangladesh’s future development hinges on some critical projects in the Chittagong and CHT areas, especially, Chittagong port, SEZs and deep sea ports. A possible conflict with Myanmar can hamper Bangladesh’s efforts for integration with Southeast Asian countries. This current situation has increased the risk of external conflict. There is a risk of rise in military expenditure in Bangladesh, which can have implications for the development activities. There is a need for prudent diplomatic strategies and proper management of refugees, aid and security issues.

Still, there is no clear roadmap on the establishment of the SEZs which has put the private investors into an uncertain scenario. We have constructed an index of the progress of SEZ based on four criteria: (i) Land acquisition; (ii) Feasibility study; (iii) Infrastructural development; and (iv) Final investment activities. The progress index is scaled between 0 and 100. Out of the 79 SEZs: 4 have index value of 75, and they are Meghna Economic Zone, Aman Economic Zone, Bay Economic Zone and Meghna Industrial Economic Zone. 4 have index value of 68.75; and they are Abdul Monem, Arisha Economic Zone, A. K. Khan & Co. Ltd. Economic Zone and Akij Economic Zone. After this, 38 have different magnitude of index values. Finally, 39 have index values equal to 0.
Bangladesh is at the risk of the phenomenon of jobless growth. Between 2013 and 2015/16, share of industry and manufacturing in employment declined for the first time in Bangladesh. Employment generation was negative in agriculture. Employment generation in industry was very small. There was a large employment generation in the services sector. Employment of female in industry declined whereas there was a feminization of agriculture. To counter this there is a need for economic diversification, and promotion of labour-intensive and high-productivity sectors.

A critical issue with respect to the implementation of SDGs is the substantial volume of resources required to finance such development goals. A recent study by SANEM for the GED of Planning Commission shows that additional resources required for the implementation of the SDGs in Bangladesh would be 10% of GDP in 2017, which can increase to 24% of GDP by 2030. Given the changing global scenario, for financing SDGs, Bangladesh will have to rely more on domestic sources, and this is, no doubt, a big challenge. It is also important to note that mere generation of resources would not ensure implementation of the SDGs if institutional and governance related aspects are not properly addressed. Efforts need to be something extraordinary and a strong political commitment is needed for implementing the SDGs.

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Press Coverages of September 2017 QRBE: