Bangladesh is among the top five fastest growing economies in the world, said the World Bank. The report titled ‘The Bangladesh Development Update April 2019: Towards Regulatory Predictability’, published Thursday, said this growth, despite of insufficient private sector investment, has been attributed to stable macro and export-oriented industry-led growth. “Overall, the economy is moving forward, growing at a decent pace by Bangladesh’s own historical as well as international standards. Growth on the supply side in FY17 was driven by services and industry which accounted for 3.4 percentage point out of the officially estimated 7.3 percent GDP growth,” it said in the report. Bangladesh needs a revamped national accounts system, it advised adding, “Even if a revamped system lowers GDP growth from 7.3 percent to say 6.8 percent or even 6 percent in the last two years, Bangladesh will still be among the fastest growing countries in the world.” Despite many flaws, it is performing decently in a lackluster world economy. Incomes are certainly increasing, though not as rapidly as one would infer from official growth statistics, it added. The report revealed the growth was caused by manufacturing, construction and a bumper crop harvest, coupled with private consumption, remittance and rural income growth. The report added that regulatory predictability will drive the growth further up. “Domestic demand growth appears to have been the driving force with private consumption contributing 4.7 percentage points and investment contributing 3.25 percentage points. Weak exports and strong imports dragged growth in FY17. Private investment stagnated as a percentage of GDP,” it said. The industries sector grew at double digit (10.2 percent) in FY17 with significant contribution from the 11 Percent growth in large and medium scale manufacturing industries, it said in the report. “Services had a better year with growth rising from 6.25 percent in FY16 to 6.7 percent in FY17. Services growth was driven by wholesale and retail trade, transport and hotel and restaurants. Export of services grew by 10.8 percent in nominal dollars in FY17, compared with a 2.6 percent decline in FY16. Service export growth increased to 14.1 percent in the first half of FY18, compared to the same period a year earlier,” it added. Remittance flow recovered impressively, growing 16.5 percent in the first eight months of FY18, following successive declines in two previous years, it said.

Universities in Bangladesh should formulate curricula based on market demand and real-life situation as 36 per cent of employers in the country are now facing the shortage of skilled manpower, says Syed Alamgir, a renowned marketer and Managing Director of ACI Consumer Brands Limited. In an interview with UNB, he also said the universities need to build a strong rapport with industries and devise a framework for students to build experience while studying. Alamgir, who won the first-ever ‘Channel I Bangladesh Brand Forum Marketing Superstar Award’ this year, suggested the young generation interested in taking up marketing as their profession to enhance their ability to understand people’s need and mindset to have success. “Around 36 per cent of employers in Bangladesh are facing the shortage of skilled manpower which is a leading reason for entry-level vacancies,” he said. Alamgir said a company wants to hire a complete (ready) person, but the universities now only focus on education ignoring the issue of developing skills and mindset of their students. “University graduates should be taught the real-life situation instead of giving them knowledge on some theories and theses. Curricula should be linked to careers as well.” The ACI MD said there should have coordination between the industries and the universities to produce ready graduates with practical knowledge. “Industries asses a newly graduated student based on education, set of skills and mindset. So, the universities should give importance to improving skills (relevant transferable experience and qualities) and mindset (attitude, interests and initiatives) of their students for producing ready business graduates,” he said. Mentioning that a very few partnership projects are in place between the universities and businesses, the renowned marketer thinks constant collaboration and mutually beneficial projects and study need to be designed and implemented by the universities. “Our current practice needs to change as four-year business study and three-month internship gives very little to graduates for skill development. Students should be involved with the business right from the beginning of the study,” Alamgir observes. Alamgir said four things–good marketing strategy, product quality, innovation and premier services –are necessary for having success in marketing in this digital age. “Good marketing strategy doesn’t mean deceiving consumers, rather giving them good and quality products and persuade them to accept those,” he opined. Besides, the marketers need to know people’s mindset and their need, but there should not be any falsification. “You’ll be able to do many things if you don’t resort to falsification.” “The main reason behind my success is that I roam around all regions of the country, including the remote ones, to read people’s mind and know their needs. I talk to cross-sections of people to know them and their requirements. A marketer needs to know the needs and mindset from the wealthy to the bottom of the pyramid,” he pointed out. Before launching any product, the ACI senior official said they think two things — need gap and replacing any current product with diversification. For example, he said, there is a huge demand among people for real juice in Bangladesh, but there is no real juice here. “Real juice is available all over the world. So, if any company now comes up with real juice product with affordable prices, it will evoke tremendous response from consumers.” About his much-talked-about marketing concept ‘halal soap’, he said it gets remarkable success in the country as well as the globe as it is now being used by many multinational companies, including McDonald’. “Philip Kotler, a famous professor of marketing, included a case study on my concept halal soap in his book titled “The Principles of Marketing” describing it a smart and clever idea.” Alamgir said the modern marketing began in Bangladesh in the 80s while nearly 55 lakh people are now engaged in this profession who are working for the development of the business through which the country will be developed. “Marketing is not an easy job. It has a lot of challenges involving values and morality. I’ll have to take your hard-earned money from your pocket by satisfying your need with honesty, but I can’t take it through depiction. There’s no scope for deception in marketing for success and sustainability. It’s not possible to survive in the market with deception.” UNB

In the given situation, investors, experts and the sector people are not happy with any temporary measures

Dhaka Stock Exchange (DSE), the premier bourse of the country, registered an 85 points gain in Thursday’s trading pulling out the market from a thirteen-consecutive weeks’ negative trend. But the question remains whether it would sustain or not. The sudden rise in the price index is an effect of a recent move by the policymakers and stock market regulators. The move to inject Tk856 crore on Thursday came after the investors took to the streets and staged rallies in protest of free fall of stock values. Since January 31 to May 2, DSEX, the key index of the premier bourse shed 534 points. The turnover at the DSE came down to Tk384 crore on Thursday, which was Tk1,034 crore on January 31. In the given situation, investors, experts and the sector people are not happy with any temporary measures as they prefer long-term and institutional measures to stabilize the market.

Recent development in wake of free fall

In the face of stock investors’ month-long protests, the government has come up with a measure to stabilize the market and stop the fall in stock prices in the country’s twin bourses. In a bid to increase the cash flow into the stock market and  boost the confidence of retail investors, the government on May 2 decided to sanction Tk856 crore to the affected small stock investors through the Investment Corporation of Bangladesh (ICB). The Ministry of Finance on the same day asked the Bangladesh Bank to sanction the fund in favour of ICB, it was learnt. It is going to be the second refinancing scheme for the retail investors who had lost huge sums of money during 2010 and 2011 market crashes. In 2013, the Bangladesh Bank gave a refinance scheme of Tk900 crore to the ICB. The new refinance scheme’s tenure has been fixed as of December 2022. Meanwhile, in the second session of the 11th parliament Prime Minister Sheikh Hasina said the government had taken many steps to keep the share market stable. She also warned “If anyone wants to play [with the share market], obviously we will  take action against them.” Besides, the finance minister also hinted that the corporate tax should not be increased in the in the upcoming budget, and pledged to offer policy support in the budget for businesses.

How to stabilize the market

In stabilizing the stock market the first and foremost condition is restoring the investors’ confidence, which can be ensured by enforcing regulations and protecting their rights. “The market will be stable if the Bangladesh Securities and Exchange Commission (BSEC) does their function properly. The ups and down of stocks will be based on the demand and supply of stocks,” Dhaka Stock Exchange Brokers’ Association (DBA) President Shakil Rizvi told Dhaka Tribune. BSEC should stop foul play in the market, if any. In addition, it should remain very cautious so that no company with weak financial performance can be listed in the market, he said. “There were irregularities in private placement and IPO approval, which is now taken into consideration by the BSEC and they pledged to fix the loopholes. ”As a result, investors have started regaining confidence which is a good sign for the market, he added. Meanwhile, stock brokers and experts have said long term policy should be incorporated in the budget documents for a sustainable stock market that can contribute to the country’s Gross Domestic Products (GDP) significantly. “Providing a certain amount of fund can be a temporary solution but in making the stock market a matured one, there is no alternative to policy supports that would encourage investment,” Ahmad Rashid Lali, Managing Director of Rashid Investment Services Ltd told Dhaka Tribune. Policy support such as calculating the capital market exposure on cost price basis could enhance the supply of money in the market, argued Lali. Right now, the market needs long term policy support, where Bangladesh Bank had a role to play in increasing the fund flow to the market, he added. However, economists say there must be a set of policies to woo more good companies  towards  the stock market. “If the government cuts corporate tax, it will attract companies to get listed in the stock market,” said Professor Abu Ahmed, a former teacher at the University of Dhaka. He also suggested offering tax rebate for companies declaring dividends of over 20%.

Plastic goods exports have risen significantly in FY2018–19 financial year (July-March) thanks to the availability of raw materials at a cheaper rate, quality production, good mould, a robust government policy framework, enhanced manufacturing efficiency, and exporting products to new and untapped countries, according to industry insiders. According to the Export Promotion Bureau (EPB), a growth rate of 18.34 per cent and net export earnings of USD 87.09 million were achieved in FY2018–19 (July-March). The export earning was USD 73.59 million during the same period (July-March) in FY2017–18. Jashim Uddin, president of the Bangladesh Plastic Goods Manufacturers’ and Exporters’ Association (BPGMEA), told The Independent that the US and European countries have increased their purschase of plastic products from Bangladesh. As a new market, Bangladesh has started exporting plastic products to Germany. “To meet the overseas demand, most of the export factories are increasing their respective capacities. We have been exporting reasonable quantities of film plastic, garments accessories made of plastic, and household items to many countries around the world,” he said. Shamim Ahmed, former president of the BPGMEA, said Bangladesh is producing four categories of plastics—flexible packaging, toys, household products and garments accessories—which eventually contributed to the boom in export of plastic goods. “But plastic wastes have seen a negative growth of -28.96 per cent. India is importing plastic wastes from us, but the quantity is very small,” he explained. However, India had started taking recycled PET flakes. Earlier, China used to take those from Bangladesh, he added. PET is used as a raw material for making packaging materials like bottles and containers. Citing another reason, Shamim Ahmed said that the price of plastic raw materials is stable, which is promoting the export growth. He also said that China is the prime plastic manufacturing country in the world. As it has started moving towards high-tech industries, there is a massive opportunity for Bangladeshi exporters to increase their global market share, he added. At present, Bangladesh mostly exports plastic products to the US, Canada and European countries, said Ahmed. According to the BPGMEA, the plastic industry contributes around USD 900 million to the garments accessories market. Garments accessories and allied products, such as hangers, buttons, clips, collarbones and collar chips, are supplied by local plastic suppliers. Pointing out some challenges, Ahmed suggested that proper policy support and further financial incentives could lead to a three-fold increase in this sector’s export earnings in the next couple of years. The local plastic market, now worth around Tk. 35,000 crores, is growing,” he said. “There are 5,000 small, medium and large plastic goods manufacturing units. The number was around 3,000 units a couple of years back,” he added. Around 1.4 million people are engaged in this sector, he added.

Since initiating market reforms in 1978, China had shifted from a centrally-planned economy to a more market-based one and subsequently experienced rapid economic and social development. The country’s gross domestic product (GDP) growth, according to a report, averaged nearly 10 per cent a year-the fastest sustained expansion by a major economy in history-and more than 850 million people got out of the poverty cycle. China attained all the Millennium Development Goals (MDGs) by 2015 and made a major contribution to achievement of the MDGs globally. China’s GDP is now heading for a more balanced and sustainable growth. With a population of 1.3 billion, China is the world’s second largest economy. It is still the largest if measured in terms of the purchasing price parity. China has been the single largest contributor to the world growth since the global financial crisis in 2008. The country is on track to eliminate absolute poverty by 2020, according to its poverty standard. Its per capita rural net income is RMB 2,300 per year, as measured on the 2010 constant prices. However, there are still an estimated 373.1 million people below the “upper middle income” international poverty line of $5.50 a day. Rapid economic ascendance has brought on many challenges as well, including high inequality, risks to environmental sustainability, and external imbalances. China also faces demographic pressure related to an aging population and the internal labour migration. China’s rapid economic growth exceeded the pace of institutional development and there are important institutional and reform gaps that it needs to address to ensure a sustainable growth path. Analysts say significant policy adjustments are required for China’s growth to be sustainable. China’s 13th Five-Year Plan (2016-2020) highlights the development of services and measures to address environmental and social imbalances, setting targets to reduce pollution, increase energy efficiency, improve access to education and healthcare, and expand social protection. The fact that the world reached its UN millennium development goal of halving extreme poverty was largely driven by China, which accounted for more than three quarters of global poverty reduction between 1990 and 2005. Similarly, such development fuelled the ballooning of the Asian middle class that underpinned global economic convergence and a reduction of inequality between countries. China became the world’s manufacturing hub, specialising in the labour-intensive, export-led production of cheap goods that enabled a gradual increase in product complexity. In a nutshell, its growth strategy was to assemble and sell cheap goods to the world. This impact of China’s economic progress on global poverty statistics is not surprising considering that it accounts for about 18 per cent of the world’s population. Between 2010 and 2016, private sector firms produced between two-thirds and three-quarters of China’s GDP; which accounts for 90 per cent of the country’s exports. This is quite a recent development and part of the frequently discussed economic rebalancing that China is undertaking. Services are also the most important driver of job creation. An increase of 1.0 per cent in services output generates one million jobs, compared to only half a million jobs created by a 1.0 per cent rise in industrial output. Wages outside the agriculture sector are typically three times higher than wages in agriculture. Such growth in services reflects the upswing in wealth and disposable household income. Chinese consumers are spending more on lifestyle services and experiences while also moving from mass to premium segments. Among the fastest growing sectors of the economy are healthcare, technology, education and entertainment – which are gaining in importance in the light of China’s economic rebalancing. Since the 1990s, state-owned enterprises (SOEs) have been revamped through closures and mergers. China has a substantive bearing on global economic performance. Since 2010, it has been the world’s largest exporter and second-largest importer of merchandise as well as the fifth largest exporter and third largest importer of commercial services. China also has the world’s largest foreign exchange reserves of $3.21 trillion. Furthermore, between 2005 and 2016 China’s total global investment and construction activities amounted to a value of about $1.2 trillion. A big part of this investment comes in the form of development finance. Also, the country has doubled the available financial capital for development finance globally over the past decade and accounts for more such loans than the world’s six major multilateral institutions combined. China is expected to be the world’s largest economy by 2030. As an overview shows, the country is on its way to claim its position as the world’s largest economy amid a flurry of revolutionary activities in the industrial sector.