Month: September 2022

Bangladesh has made remarkable economic progress in the past five decades. To sustain and further accelerate the growth rate in the long term, the country needs a strong reform agenda, says a new report by the World Bank (WB).

The World Bank Dhaka office in a release on Thursday quoted Nora Dihel, Senior Trade Economist: “Greater Dhaka generates one-fifth of the country’s GDP and almost half of its formal employment. The already congested capital needs to be prepared to accommodate climate migrants,”

“Better urbanization and connectivity will help absorb the climate migrants and sustain fast productivity growth. Successful urbanization will mean attracting tradable activities to small and medium-sized cities,” she said.

This will require making the next tier of cities attractive to formal firms and skilled workers. Cities will need to raise their own revenues to finance infrastructure investments and the provision of services, including affordable housing. Faster broadband speeds, better access to basic services, and easier intercity transport connectivity can lead to tier-2 cities like Gazipur and Narayanganj promoting urban growth outside Dhaka.

Although digitalization of payments has increased rapidly with 34 percent of adults using digital payments in 2017 in comparison to 7 percent of adults in 2014, about 40 percent of adults do not have a bank account. Strengthening credit infrastructure and promoting further digitalization of financial services will be important to reach the most underserved population.

The report urges strong policy reforms in three areas critical to sustaining growth: stem the erosion of trade competitiveness, address vulnerabilities in the financial sector, and ensure an orderly urbanization process.

The report also explores the implications of digital development and climate change as cross-cutting themes in these reform areas.

“Over the past decade, Bangladesh has been among the top 10 fastest growing economies,” said Dandan Chen, World Bank Acting Country Director for Bangladesh and Bhutan.

“But there is no room for complacency. New and emerging challenges—including, advances in technology and climate change—demand new policy and institutional innovations to cater to the changing needs of a growing economy. To achieve its vision of upper middle-income country by 2031, Bangladesh will need strong and transformative policy actions.” Chen said.

The report envisages export diversification to reduce the risk of export volatility, create new sources of growth, and increase foreign exchange earnings in the long term.

The heavy reliance on ready-made garments and Bangladesh’s protective tariff regime inhibits diversified export growth. Further, with trade competitiveness based on low wages and trade preferences eroding, the country can increase the resilience of economic growth by diversifying its export basket.

The WB report said the average tariffs in Bangladesh are higher than its comparator countries: the average tariff rate on intermediate goods in Bangladesh is 18.8 percent, which is about twice the rate as in China, Thailand, and Vietnam.

Overall trade costs and inefficient border processes are major impediments to trade. Deep and comprehensive trade agreements with the European Union and India covering tariff modernization, increased trade facilitation, and services and investment reforms can boost Bangladesh’s GDP by 0.4 and 0.5 percent and exports by 1.4 and 3.9 percent, the report said.

Scaling up private sector financing is essential for sustaining economic growth. Actions to improve asset quality, increase the capitalization of banks, and address increasing non-performing loans are urgently needed to maintain financial stability and accelerate credit growth.

Unlike Thailand, China and Vietnam, Bangladesh has an untapped domestic capital market, which is required for raising long-term finance, particularly for infrastructure and climate adaptation projects.

Unlocking private sector financing for green investments and climate risk financing will become increasingly important. The country also needs to focus on expanding access to finance in underserved segments, such as women and MSMEs.

Bangladesh also needs to source external resources proactively, including through international capital markets, by promoting local currency financing, easing external borrowing constraints, and attracting foreign direct investment.

Source: United News of Bangladesh

Two bridge cranes have been installed in the turbine compartment of Unit-2 of Rooppur Nuclear Power Project.

According to Rosatom, the Russian contractor of the project, the cranes will be used for construction and installation works, and for NPP reconstruction, repair, and upgrade during operations.

A branch of Rosatom Engineering Division- VdMU did the installation of cranes having a lifting capacity of 50 and 180 tons.

Weights of the cranes with additional equipment were about 130 and 210 tons respectively. The heaviest and largest components were installed in the design position using the Liebherr 11350 crane with a lifting capacity of 1350 tons.

“Installation of bridge cranes is a complex technological process involving more than a hundred operations”, said Alexey Deriy, ASE Vice President and Director for Rooppur NPP construction project.

“Its successful completion allows proceeding to the next construction stage, which is the installation of the turbine compartment equipment, in particular, the main and auxiliary equipment of the turbine set”, he added.

Rooppur NPP will be equipped with two Russian 3+ generation VVER-1200 reactors of a total of 2,400 MW.

This type of reactor meets all the international safety requirements. The engineering division of Russia’s Rosatom State Corporation is the designer and general contractor of the project.

According to Bangladesh Atomic Energy Commission, the implementing authority of the RNPP, the first unit of the power plant was scheduled to start operation in 2022 and second one in 2024.

But recently the first unit’s operation was rescheduled to 2024 and second unit to 2025.

Source: United News of Bangladesh

Planning Minister MA Mannan has urged political parties to come to the negotiating table and resolve political issues without resorting to violence on the streets, saying that no one would benefit when a storm hits.

“I admit, there is certainly uncertainty. This is not a matter to hide,” he said, adding that violence will not bring down inflation or price hike. You have to come to a negotiating table,” he said at an event at a Dhaka hotel where the World Bank released a new report, titled “Bangladesh: Country Economic Memorandum-Change of Fabric”.

He, however, said the country’s violent phase is over, but there is vulnerability.

Dandan Chen, acting country director of World Bank for Bangladesh and Bhutan, made opening remarks at the function while its senior economist Nora Dihel, and lead economist consultant Zahid Hossain made two separate presentations on the issue.

Professor Selim Raihan, executive director of SANEM; Sonia Bashir Kabir, founder of SBK Tech Ventures and SBK Foundation; took part in the panel discussion at the event.

Responding to a question on economic reforms, the planning minister said it is a big failure that reforms could not be implemented in the banking and financial sector.

There are some historical facts behind it, he said, adding that reforms will definitely take place, but might not be in an intensified manner.

Responding to a question on currency swap and allowing Bangladeshi traders to use Chinese currency yuan for trade, he said currency swap will happen under a barter system.

The World Bank report focused on structural improvement to sustain high growth, boosting trade competitiveness and establishing digital connectivity and improvement of communication infrastructures for connecting rural areas with urban cities.

Dr Zahid Hossain said there are three major areas which should be focused on to achieve the target to become a middle income country and then a developed country by 2041.

“These are diversifications of export, reforms in financial sector and improvement in the efficiency of urban human resources,” he said adding, use of digital technology and threat of climate change will have to be taken into consideration in this regard.

Nora Dihel said greater Dhaka generates one-fifth of the country’s GDP and almost half of its formal employment.

The already congested capital needs to be prepared to accommodate climate migrants, he added.

Dr Selim Raihan said less focus is being given on improvement of health, education and social sector.

But unless our human resources are developed, we cannot take full advantage of the opportunities to be created with the digital technologies, he said.

Sonia Bashir said though the percentage of the country’s total non-performing loans (NLP) is less than five among women borrowers, they are not getting credit from the banks for their investment in business.

Source: United News of Bangladesh