Bangladesh is one of the apparel industry’s global hubs, yet it is lacking in prosperity compared to its East Asian neighbors.
According to a World Bank Group report released Monday, Bangladesh can become an export powerhouse at the level of other Asian countries by reforming its business competitiveness and trade regime, which will foster global competition among firms in the long run.
The report, “South Asia’s Turn: Policies to Boost Competitiveness and Create the Next Export Powerhouse,” said South Asia will contain more than one-fourth of the world’s working adults by 2030 and due to this growth, nearby nations should invest in higher education levels and urban areas.
Four policy levels were also identified in the report to help Bangladesh boost its international competitiveness and productivity. They included improving the business environment, connecting firms to the global value chain, maximizing agglomeration benefits and strengthening firm capabilities.
In the last decade, Bangladesh’s exports increased by 13 percent each year, with 80 percent of those focused on low value apparel products. The report said Bangladesh needs to improve the mix and quality of its apparel products, in addition to diversifying into new labor industries, including footwear, to grow its exports.
The report also homed in on how South Asian countries could improve their export outlook. Due to low productivity, South Asian nations have underperformed in the quality and quantity of their products. Currently, almost 80 percent of Bangladesh firms practice technological innovation, which is above the average in Africa and Eastern Europe, but most are limited to imitating existing products. The report suggested that South Asian countries, including Bangladesh, should expand their global value chain participation, which would gradually reduce tariffs and improve trade logistics.
For Bangladesh specifically, the report said the nation needs to provide manufacturing firms with access to required infrastructure and serviced land, in order for large foreign investors to invest in its garment sector. With government support, firms can focus more on employee training, introducing new products and processes and take advantage of online market opportunities.
“To realize Bangladesh’s competitiveness potential, the country needs to start by focusing on improving its trade policy regime and the business environment, and address the acute shortage of industrial land,” World Bank country director for Bangladesh, Bhutan and Nepal Qimiao Fan said. “With the right set of policies and enabling environment, there is no reason why Bangladesh cannot become the next Asian export powerhouse.”