'It will be critical to boost investment in Bangladesh’s immense human capital'

In your discussion with the World Bank's Chief Economist for Equitable Growth, Finance, and Institutions, Ayhan Kose on the Global Economic Prospects Report: Implications For Emerging Markets, you said emerging market growth is going to see a few tough years in the short term. What policies can Bangladesh adopt to mitigate this and come out stronger?  

Bangladesh, like many other countries, is facing global economic challenges, including supply disruptions, rising global commodity prices, currency depreciation, and declining foreign reserves. 

The policy mix under the new IMF-supported program, which complements the country's Vision 2041 development agenda, provides a solid roadmap for Bangladesh to navigate these challenges and come out stronger and more resilient. 

Additionally, continued support of the private sector is important. 

Financial and capital market development is critical. 

This includes credit to SMEs, developing the local bond market, strengthening banks, and improving the business enabling environment for FDI to come in.

What structural changes does Bangladesh have to make to attract more Foreign Direct Investment (FDI)? 

Despite steady economic growth in the country over the past decade, foreign direct investment (FDI) has been relatively low in Bangladesh compared to regional peers. 

FDI inflows remained subdued at only 0.3% of GDP in FY22, unchanged from FY21 and well short of a subpar 0.9% of GDP in FY19. 

Structural reforms to attract more foreign direct investment can focus on improving governance, creating a level playing field for all companies, deepening the financial sector, developing human capital, and building climate-resilient infrastructure.

As a research economist, what do you think investors can focus on when investing in Bangladesh in such a volatile time of the global economy?

On my recent visit to Bangladesh, I had the opportunity to visit the Jinnat Knitwears garment factory, a longstanding partner of IFC's, and learned so much about the complex intricacies of textile production. 

As you are aware, the readymade garment (RMG) sector is a mainstay of the economy and remains Bangladesh's strongest comparative advantage, allowing the country to hold a competitive position in the global value chain. 

To increase value, the industry needs to move upwards in the value chain and focus on the production of more sophisticated garments. 

Foreign investment may also be directed to other sectors, such as agro-processing, light manufacturing of furniture, bicycles and IT and digital startups. 

The global supply chains in white goods and consumer electronics are currently shifting and Bangladesh may be able to enter these markets.

What are IFC's investment targets in Bangladesh and worldwide this year? 

IFC aims to double its business in Bangladesh, eventually reaching $ 1 billion per year. 

We look for opportunities to further support digital, financial inclusion, affordable housing, agri-business, healthcare, and logistics, among others.

IFC is also focused on developing a well-functioning securities market by removing distortions, introducing new instruments, and expanding the investor base. 

It is increasingly important to support climate change adaptation and mitigation measures as well. 

For Bangladesh to come out of this stronger, where do you think we should invest in to build a better, more inclusive labour force?

Bangladesh has made remarkable strides in reducing poverty -- from 43.5% in 1991 to 14.3% in 2016, according to World Bank statistics -- and raising living standards over the past decade thanks to the country's strong track record of growth and commitment to reforms. 

Yet the crisis over the last three years means that Bangladesh is at a turning point. 

The reforms now being discussed are critical to enable the next phase of growth. 

It will be critical to boost investment in Bangladesh's immense human capital, continue to increase the participation of women, and accelerate climate action to build resilience and ensure sustainability of development outcomes for generations to come.