City dwellers gather at New Market to buy clothes and various things in Dhaka, Bangladesh.
I was munching on a breakfast of jackfruit and pineapple in downtown Dhaka, chatting with Zarif, a partner at Boston Consulting Group. He was in an upbeat mood, having just finished a major study of Bangladesh’s consumer economy. He was understandably bullish on the economic prospects of this country that is approaching a population of 170 million, and the paper lays out the basis for optimism.
But beyond the high rates of economic growth, Bangladesh has its share of challenges as well. Spending just a few days in Dhaka will bring home the need for greater infrastructure investment and the cost of pollution. A trip to the must-see military museum or a round-table on the economy at Dhaka University might take an hour just to cover a distance of 10 kilometers (6.2 miles).
And beyond the to-be-expected challenges of the developing world, Bangladesh is just starting to define its international role. Although it has done an admirable job of attracting investment in the garment industry, it still has a ways to go in opening its economy and developing a more attractive profile for investment, such as adjusting its capital controls. The World Trade Organization reminds us that 4.5% of Bangladesh’s imports are duty-free (for the U.S. it is 47.3%). Multinationals would find it very tough to include Bangladesh in their global strategies with those barriers in place. But following the tragedy of the 2013 collapse of the nine-story Rana Plaza garment factory, which resulted in the deaths of more than 1,100 workers, the government has shown a stronger sense of regulatory oversight for responsible sourcing from the garment industry.
As with its international economic outlook, Bangladesh’s international relations are only slowly developing. The seminal event in the country’s history was the 1971 war of liberation, and that continues to shape much of the country’s international thinking.
It was my work with the Asia Foundation (where I am a trustee) that took me to Dhaka, and those discussions brought to light another tendency that is plaguing many countries: a reduction of the civic space, with greater difficulties in competitive politics and in press freedom. Unhealthy developments in their own right but all the more so if they impinge economic development. One chum at the U.S. embassy noted that not only can opposition candidates be harassed, but even the U.S. Ambassador was subjected to a “dial-a-crowd” harassment—hardly taking the relationship in a healthy direction.
Where does this discussion of promise and challenges leave us? Let me offer a suggestion to both Dhaka and to Washington:
For Bangladesh, the high tariffs need to be addressed by benchmarking each tariff line item so that they are no higher than India’s or Pakistan’s. This would mean that Bangladesh would always be part of the conversation when it comes to South Asia strategy. If Bangladesh holds on to tariffs that are always higher than its neighbors, it will always be at a disadvantage.
For the U.S, engagement needs to be improved. One challenge in the U.S. system is a focus on the immediate, which means it can overweigh the larger economies and historical relationships. The NSC (National Security Council) should ensure there is at least one cabinet-level visit to Bangladesh every year to build dialogue and greater understanding between the two nations. Historical relationships are great, but let’s think about tomorrow’s relationships as well.
