For a near trillion dollar economy (PPP GDP), Bangladesh needs sums far larger than any puny World Bank commitment if it wants to get to two trillion dollars later this decade, along with a diversified industrial economy.
A country, especially amidst a foreign exchange imbroglio, cannot just fold. It has to rise to the challenge and really go for it.
Celebrating our 50th, well, that’s over. It's now crunch time, and the vultures are circling.
A certain gentleman allegedly suggested survival depends on the support of the neighbour to the west. Perhaps in the very, very short term (and in terms of politics not economics).
The neighbour is not in the business of building up a powerful economic rival to their east. Why would it and how could it?
In any case, it needs capital to solve its own poverty disaster on the Ganga.
The go-to source for massive capital flows is China.
Gulshan Avenue had better bite the bullet and admit that it is China or life in the lower divisions.
For Bangladesh the magic dates are 2041 and 2071.
For China it's 2035 and 2049. China has a plan and it's following an “all-of-society” approach to get there.
Bangladesh has a vague aspiration, but all is not necessarily lost.
Framework for a strategy
China supplies the materials and machinery on which run the low-tech garments industry of Bangladesh. The finished products do not return to China, and instead sail off to the US and Europe.
Bangladesh is unable to sell much to China even when offered zero tariffs on 98 percent of items. So Dhaka exports less than a billion but has to cough up ten billion for the imports.
Yet, hardly anyone loses sleep in the swankier parts of Dhaka. The natural reaction should be to craft a decade-long strategy of how to close the gap by exporting new stuff.
Here's the thing. Vietnam, that great rival (or so Bangladesh imagines), sells relatively little in the way of clothing to China. So why should Dhaka or Chittagong think they will?
Let's put this one to bed.
The BGMEA head honcho recently explained that the cheap low-rung T-shirts, etc are not wanted by China's middle and higher income consumers -- they produce these themselves.
They instead purchase high-end quality clothes from the West, and Bangladesh, in the aggregate, is years away from any of that.
Leather is a potential product to push for. Vietnam sells around two billion dollars worth a year. The duty-free 98 percent is a generous gesture from China, but the Bangladeshi economy is utterly unable to benefit.
Looking East
For decades, the foreign policy establishment has occasionally pondered about joining ASEAN.
Bangladesh's core industrial zone east of the Jamuna and Meghna rivers has potential to benefit from Thailand and Malaysia, in manufacturing and not merely as a manpower supplier.
RCEP (bigger than the EU) is ASEAN plus China and Japan. The regional supply chains, the new standards in manufacturing, environment, design, technology in the largest consumer market are being decided there.
If you are not there, it would be like producing analog phones while everyone else demands smartphones.
Apparently, a deputy secretary in the Commerce Ministry may or may not have sent a letter to Beijing requesting joining the RCEP.
When Britain entered and left the EU, there was massive debate across society about it. We need the same here. Now, especially as Bangladesh graduates from LDC1.0 to LDC2.0.
A Free Trade Agreement (FTA) with China is a natural stepping stone to entering a market larger than the US, but do you notice any discussion anywhere?
Vietnam has reaped the harvest of multi-nationals following a China + 1 policy. It annually exports at least 25 billion dollars worth of circuit boards, mobile telephones, and other electronic products to China alone.
That means Samsung, Intel, and the rest investing in giant plants in export zones. So on that scale how did Bangladesh miss that boat? How can we get it right this time?
China is to construct an economic zone near Chittagong, something Bangladesh should have enabled a decade ago. Clearly the future is a China + 2 vision where the sub-continent competes with Vietnam.
As the current CITFIT exhibition in Beijing shows, China is not only ditching low level industry for more advanced industries, it is also going big into digital services. Thus a transfer of Chinese factories to industrial platforms in a Chittagong to Teknaf corridor has to be the number one priority of the Bangladeshi elite. If only.
In the recent interview, Ambassador Li Jiming pointed out that Dhaka is not, so to say, picking up low lying fruit from China.
Why use scarce US dollars to buy inputs from China? Why not use Renminbi? This might mean negotiating a financing arrangement until exports earn enough.
An individual businessperson complaining of obstacles in banking and financial transactions is fair enough, but an entire commercial and policy elite is supposed to make it their mission to overcome this. They should coordinate action.
Listen, Bangladesh is being outclassed by the more nimble Communist Party led Vietnamese. It should induce a feeling of embarrassment. It does not. That's the problem.
Some opine that Bangladesh is unfortunate to be next to India not China. Maybe, maybe not. I have not yet lost faith in the genius of the sub-continent (especially the Deccan south). And a Maritime Belt initiative takes care of that.
Elephant in the room
As all eyes fixate on what may or may not happen in Delhi in the next few days, let us borrow something from the rich library of Chanakya's strategic thought.
The “Mandala” concept advised rulers that when confronted by a powerful neighbour, that one's diplomats should cultivate close relationships with the neighbour beyond our neighbour.
In our case, we can avoid the martial side of the advice and adapt it to peaceful geo-economics, not wargaming geo-politics.
Look North, people. China is a stone's throw away from Rangpur and Thakurgaon.
Dhaka can inform Delhi that it intends to strengthen (not weaken) relations with Beijing while simultaneously maintaining its historical amity with Delhi.
It can remind Messrs Jaishankar and Modi that this is not dissimilar to Delhi telling the EU and US to take a hike over relations with Moscow, that India, to its credit, refused to destroy links with Russia (and indeed expanded trade and diplomacy).
Bangladesh's foreign mission is to carve out a similar strategic autonomy to pursue an independent economic diplomacy. TIme to look around and discover some ambition.
