Our future lies in industry

Export is the most crucial pillar of our economic development. The trajectory of our economy is not actually set on the lines of India's development, but rather on a trajectory of perennial tradition. It’s manufacturing-centric. The countries that have developed, such as the United States, the United Kingdom, or the European Union, have primarily advanced by focusing on the manufacturing sector. Countries in East Asia such as Singapore, South Korea, Thailand, and Malaysia are referred to as the East Asian Miracle. These countries have also built their economies by emphasizing the manufacturing sector. Bangladesh has also been formulating development strategies by emphasizing the manufacturing sector.

Over the past 12-14 years, Bangladesh has witnessed a significant increase in the contribution of the manufacturing sector to its GDP. The contribution of the manufacturing sector to GDP has increased from around 22 percent to nearly 37 percent now. This indicates that Bangladesh is gradually becoming more dependent on the manufacturing sector.

A noteworthy aspect is the simultaneous increase in women's participation in the formal labor market alongside the development of the manufacturing sector. Previously, women did not have much opportunity to enter the formal labor market. Now, they are joining the manufacturing sector. Women's participation in the formal labor market has increased to around 42 percent. Countless women entrepreneurs in both rural and urban areas are creating job opportunities for many women through their entrepreneurial initiatives. The Nakshi Kantha industry in Jamalpur is a prime example. Hundreds of women entrepreneurs have provided employment opportunities to thousands of women.

This transformation is shaping the modern trend of rural and middle-level economy. Due to the increased participation of women in the formal labor market, undoubtedly, women's economic empowerment is increasing. At the same time, social dignity has also significantly increased compared to the past. Women from rural areas are now working in various factories oriented towards exports in urban areas. They have the opportunity to adopt a better lifestyle. When they return to the village, they bring along the opportunities and conveniences of urban life, thus creating a rural-urban linkage.

Overall, we are progressing towards industrialization. This rural-urban connection is very significant for the economy. As a result, business and commerce are expanding, and poverty is decreasing.

The export sector is extremely crucial for us due to various reasons. It not only helps in earning valuable foreign currency but also creates employment opportunities through export-oriented activities. In the trajectory of rural development, there's a blend of urban culture. Previously, rural areas didn't consider the various opportunities and conveniences of urban life, but now they are accessible in rural areas as well. Rural economies are progressing similarly to urban ones, and the export sector is creating new entrepreneurs for us. In the field of rural economy, there are individuals emerging as entrepreneurs who didn't have any traditional background in this area. Many are leaving traditional professions to become entrepreneurs. They are performing well, initiating small ventures at first and then establishing large industries with gained experience. They are creating possibilities in this field.

Those who are emerging as entrepreneurs are very modern, technology-dependent, and scientific in their mindset. Many of them are exporting their products. They are competing with products from other countries in the international market. The government is continuously supporting these new entrepreneurs. They are being provided with back-to-back LC facilities. The government is also providing various policy supports apart from economic incentives. Banks are also supporting these new entrepreneurs with necessary assistance. Consequently, new entrepreneurs are getting opportunities to develop themselves. We want this new trend of industrialization to continue and accelerate in the future. Alongside, complementary industries are emerging in the adjacent areas of EPZs and special economic zones. Many women workers are also getting jobs there. The development of industries in rural areas is indeed visible.

In this context, a question arises: what should we do to further accelerate this export sector? We do not want the development of only the garment industry in Bangladesh. We want other potential industries to develop alongside the garment industry. Especially, the development of labor-intensive industries dependent on local raw materials is very necessary. Alongside product manufacturing and export, we need to empower our workforce further for exports. The workforce is positioned after the product's export in terms of foreign currency earnings. We are receiving remittances due to the workforce being positioned after export. Workforce positioning contributes significantly to the national economy. The foreign currency earned through workforce positioning is used for adding value to the national economy to a large extent.

Moreover, nearly 1.5 crore Bangladeshis are working in various countries around the world. If they were working within the country, it would have solved unemployment issues to some extent. Even if we had provided a little training to them, their remittance earnings could have been increased significantly.

Currently, there are many questions raised regarding whether it is possible to increase the amount of remittance coming into the country every year. There are certain policy decisions to be made to increase remittance. Whether remittance flows into the country through formal channels or not largely depends on the exchange rate. The discrepancy between the exchange rate in the banking channel and the exchange rate in the informal market can influence the preference of expatriate Bangladeshis to send remittance through formal channels. Indeed, this is happening. It has become crucial to align the exchange rate with the market rate. The Bangladesh Bank acknowledges this issue, but it seems somewhat hesitant to address it directly. They must understand that delaying action will only complicate the situation further. Moreover, providing appropriate training and payment facilities online to freelancers within the country can significantly facilitate the inflow of foreign currency, legitimizing opportunities for earning livelihoods from abroad.

Our economic reliance largely determines the extent to which we can use it with integrity, which in turn depends on increasing remittance inflows. There is a slight decline in the effective initiatives to bring remittance into the country through formal channels. The exchange houses of government banks are trying to send dollars at unrealistic exchange rates, making it difficult to encourage expatriates to send remittances at this rate. The fact that remittances are not coming in full through formal channels does not mean that remittances are not coming into the country. Remittances are coming in through informal channels. Most of these remittances are going to rural areas. They are being used in various ways in rural economies. In recent times, there has been significant improvement in rural economies. A transformative transformation is taking place in rural economies. Remittances play a significant role behind this transformation. It is noteworthy that most of those who migrate abroad from Bangladesh come from rural areas. The remittances they send directly benefit the residents of the villages. Since the main destination of remittances is rural areas, the flow of money in rural areas has increased significantly. We witness the impact of this directly in the rural inflation rate. Previously, the inflation rate of urban areas used to be higher. Now, the inflation rate is often higher in rural economies. This means that the flow of money in rural economies is increasing. Consumption expenditure is increasing. Currently, there is a kind of reconciliation between rural and urban economies. Coordination between both economies is targeted. This inclusiveness is very good for the overall development of the economy.

The question may arise, how can we increase product exports? In this regard, my opinion is that efforts should be made to increase the export of prevalent products. Alongside, new products should be included in the export list. Especially, products that rely on local raw materials should be given priority in the export of products. New and innovative product exports need to be increased. There are certain limitations in our product export sector. We need to work on processing, packaging, and branding. Efforts should be made to eliminate these. For example, many products from Bangladesh are being exported to the international market, focusing on a limited number of countries and regions. Ready-made garment exports top the list of export products; however, the garment industry is not entirely dependent on local raw materials, resulting in relatively less value addition in this category in the national economy. In this regard, products such as jute and jute goods, leather and leather goods, tea, frozen food, etc., are more capable of adding value in the national economy. Efforts can be made to increase the export of these products.

Moreover, new and potential products can be identified, and efforts can be made to include them in the export list. If new products are included in the list of exports, multi-dimensional development of export products will be possible. The Ministry of Commerce has started to pay attention to this. This is a good sign. There are many such products in Bangladesh that can easily find a place in the international market. Prime Minister Sheikh Hasina has said that in order to increase exports, we need to diversify our export products. We must take maximum initiatives to add value to our export products. We must prepare ourselves from now on to face intense competition in the international market when Bangladesh becomes a developed country in 2026. In that situation, we must be prepared from now on to face open competition in the international market. The government is working on many preparatory measures for this.

Challenges are being identified in the quest to develop a progressive nation. Efforts are being made to address those challenges to pave the way for progress. The Prime Minister's Office is leading this initiative, with several expert committees working on it. Simultaneously, we need to focus more on environmentally friendly product manufacturing and exports. Because to sustainably compete in the international market in the future, there is no alternative to producing goods that are conducive to the environment. In this regard, jute and jute-related products could be beneficial for us. Innovation in the diversified use of jute products needs to be encouraged. In the future, the demand for environmentally friendly products will significantly increase, especially in the packaging industry. We must be proactive to capitalize on this opportunity. Recently, a researcher has made efforts to produce plastic products from jute, and another has attempted to create yarn by mixing jute and tula (a type of plant). Some success has been achieved in these endeavors. We need to encourage and support such initiatives. For this, investment, both public and private, needs to be increased in research and development. Collaboration with universities and research institutions would be highly beneficial.

Author: Professor Emeritus, Dhaka University and former governor, Bangladesh Bank

Transcribe: M A Khaleque