Bangladesh should look towards replicating its success story in readymade garments (RMG) in a wider variety of other sectors, including pharmaceuticals, electronics, automobiles and fast-moving consumer goods (FMCG), a leading global banker has said. Simultaneously, financing should be made available to businesses, which really need it, especially the small and medium enterprises (SMEs), so that they can adequately take part in the trading opportunities. Farooq Siddiqi, global head of trade and transaction banking of international financial giant Standard Chartered, said these in an exclusive interview with the FE. “The global trade outlook is obviously better this year than the previous year, and Bangladesh is well positioned to maximize the resulting opportunity,” said Mr Siddiqi, who was on a visit to Dhaka this week. “This country is growingly becoming an important part of the global supply chain for retail, especially for RMG. However, similar opportunity exists for other industries,” he observed. “For example, pharmaceutical is an area where I see the next level of opportunity coming for Bangladesh. Meanwhile, potentials also exist in electronics, automobile and FMCG etc.” The StanChart high official noted that the key thing in diversifying the country’s international trade portfolio is to identify the factors that led to the success of RMG and replicate them in other industries. Mr Siddiqi was also quite optimistic about the huge investment flow that is currently coming to infrastructure, noting that investment in the sector has a multiplying effect. “The whole investment, which is coming to infrastructure, will unblock a lot of things. Infrastructure will create more jobs and more demands as well as help in the rise of various other industries.” “Investment in infrastructure will also help to attract a lot of foreign investment,” he added. Mr Siddiqi, who has more than 20 years experience in corporate banking, also noted that having an investment-friendly environment is crucial for fostering trade in a country. “The critical thing here, however, is to focus on how to make the environment more investment-friendly while protecting the interest of the local people simultaneously.” “It is about creating a balance between driving economic growth and making the economic growth inclusive.” “At the same time, the countries should look towards creating various economic blocs, where they can lower the trade barriers, and thereby can foster trade and business activities among themselves,” he opined. The Standard Chartered high official also noted that financial sector has a strong role to play in channeling adequate financing and fostering trade opportunities across various segments. “Firstly, the financial institutions should look towards making the required capital available to the entrepreneurs. Secondly, adequate financing should be made available, particularly to the SMEs.” Citing a recent report of the Asian Development Bank, Mr Siddiqi said the global trade financing gap stands at around US$ 1.6 trillion. More importantly the bulk of that gap exists when it comes to SME financing. Such scenario is even more relevant in the context of the Asian countries and the emerging economies, he noted. “This implies that the SMEs are not getting adequate financing, which also means that they are not being able to participate duly in the trading opportunities.” “But, channeling adequate trade financing across all segments is important, as studies show that every 10 per cent increase in access to trade financing creates one per cent increase in employment,” Mr Siddiqui observed. “In Bangladesh, capital has to be made available to the people who really need it.” He identified the emergence of automation and artificial intelligence as a major challenge in global trade arena, given that the increased use of such technology may result in job loss across the countries. “With the emergence of robotics and artificial intelligence, some of the basic jobs will go away. However, new jobs requiring new kinds of skills will be created.” “So, one key thing, in such case, is to continue to invest more in education, so that people can keep acquiring more skills. It is all about how to make them future-ready.” “Also, it is crucial to identify sectors where new employment opportunities will come. In addition, it is also important to go up the value chain in terms of industrial production,” Mr Siddiqui added further. The international banker also observed that the banks across the world will have to invest more in technology or have to tie up with the fintech companies, as the increased use of digital technology will define the next wave of evolution in financial industry. “With the ongoing boom in fintech, we are already seeing a disruption in payments modalities as well as in SME financing and p2p lending etc.” “Such disruptions will continue to take place in the near future. The banks, in this context, will either invest more in technology or will partner with the fintech companies to deal with these disruptions,” he also added.
