In previous iterations of FinanceAsia’s Bangladesh Investment Summits, speakers sought to convince investors that their negative perception of the country was out of date with the reality. Today there is a consensus that Bangladesh is a success story.
The next challenge is therefore to increase foreign investment and raise economic growth rates by developing the country’s social development, said Gowher Rizvi, international affairs advisor to Sheikh Hasina, the prime minister.
“We don’t have to apologize about our image,” Rizvi told the audience of 240 delegates attending the September 1 event in Singapore. Instead of a narrative of natural disasters and political unrest, the country is touted by investment banks, global media and multilateral agencies as a model for developing countries.
It has clocked GDP growth of around 6% consistently over 15 years. Its stock market and currency have been resilient in the face of this summer’s emerging-markets selloff. Its credit rating is not investment grade but it is stable, and its debt-to-GDP level is a very low 20%.
“If investments can be channeled to right sectors, we can accelerate GDP growth to more than 6%,” said Abrar Anwar, country CEO at Standard Chartered.
With a per capita GDP of $1,300 and rising, among a young population of about 160 million people, poverty has been cut in half over the past decade and consumer demand is starting to take hold, said Soheil Hussain, CEO at domestic lender City Bank.
Farooq Sobhan, president of the Bangladesh Enterprise Institute, argued GDP growth should be in the 8% to 10% range. He thinks if the country improves areas such as infrastructure, foreign direct investments should be far higher than the current $1.5 billion per annum.
Rizvi’s argument is that the government understands the need to think about economic development in the context of social development, which will not just improve GDP growth rates but ensure more stability for investors.
In the seven years of Sheikh Hasina’s administration, he says the country has laid the foundations for upgrading people’s skills, improving human resources and cutting red tape for investors.
This means tackling issues of governance, integrity, transparency and efficiency, he said. Bangladesh has a better performance in this regard compared to many other frontier markets or South Asian neighbors.
Beyond per capita income, he pointed to higher life expectancy (70 years versus 66 years in India), infant mortality rates and maternal mortality rates.
The prime minister has also acted to improve conditions for women. Rizvi said female literacy rates have risen from 20% a generation ago to almost 60% today. The government has a program to pay families to ensure girls attend high school instead of being put to work in the village. Today, in many classrooms, girls outnumber and outperform boys, he said. The country last year achieved universal enrollment in primary schools.
Of the country’s 4.5 million garment workers, more than 80% are women. Of the 15 million microfinance borrowers/entrepreneurs, more than 90% are women.
“We are creating a silent social revolution,” Rizvi said. “This is the platform upon which stability and prosperity depends.”
The government has also rolled out very basic but universal healthcare and social safety net programs, and facilitated great improvements in nutrition and food diversity.
“We’ve proven this social spending is good economics,” Rizvi argued. “Spending on the social sector has contributed to accelerating economic growth. It has meant that the benefits of development are more equitably distributed, and helps maintain social stability.”
Although he said it is fine for the country to maintain GDP growth of 6%, this doesn’t reflect Bangladesh’s potential. “Double-digit growth is within our reach,” Rizvi said. “We’re getting ready for takeoff. The wheels have started moving.”