Enhancing the competitiveness

The last survey of the Japan External Trade Organisation (JETRO) has found out good things about Bangladesh. JTETRO identified Bangladesh as the cheapest place for doing business in Asia. This rating was possible on the basis of comparative evaluation of wage rate, social security burden, utility charges, etc. However, this recognition as the lowest cost investment decision ought not to breed any self satisfaction among the policy planners. For a short term advantage acquired mainly from hiring workers cheaply, is no guarantee of its continuing in the medium and the longer terms.
Already, buyers of Bangladeshi products are stressing on issues such as better wages for the workers here as well as other benefits. Importing of products from Bangladesh is getting increasingly tagged to compliance with the demands of the buyers. The basic wage level in the country’s principal industry, the readymade garments (RMG) industry, has already gone up and is likely to go up further. The other sectors are also under pressure to raise wages. Thus, it is doubtful that competitiveness based on paying low wages to workers will last long.
It is important to search for other durable ways and means of enhancing the competitiveness on a sustainable basis. This will require making good progress in other very important areas such as infrastructures. It was good to see the incumbent government engaged in work to upgrade and turn really efficient one infrastructure which is pivotal for the economy, the Chittagong port that handles the greater part of the country’s external trade. The positive improvements noted so far in the functioning of this port in recent years, go to show that with real resolve and dedicated work, a government can certainly change operations of important infrastructures for the better.
Now, the good work done at this key port needs to be buttressed by building an expressway and establishing inland container depots (ICDs) along the way between Dhaka and Chittagong for the faster movement and handling of commercial cargoes in both directions. Similar attention should be paid to upgrade the functioning of the railways, the air terminals and waterways. There is a great need to boost investments in infrastructures related to diverse sectors. Government should increase its own investments in infrastructures and facilitate private sector participation in infrastructure building, operation and maintenance. Investors, both local and foreign ones, are likely to invest more in Bangladesh on seeing first class infrastructures depending on which they would be able to run their enterprises cost-efficiently. Thus, infrastructure building should be seen as very important for improving the competitiveness of the economy in the longer run.
Government should also consider its maintaining of a policy framework over the long haul that would be seen as investment-friendly. Fiscal and monetary measures applied on long term basis can be either inducement for investment, or, the same may be interpreted as hostile towards investors. If government policies change frequently and are seen as unfavourable by the investors, then the same do not create confidence among them and tend to be disincentives . Thus, the creation of a longer term conducive environment for investments crucially calls for the creation of it through appropriate policies on the part of the government.
Investors consider the corporate tax they have to pay in Bangladesh as specially heavy. A further reduction in the tax, therefore, may be considered along with responding to the suggestion of continuing with tax holiday facility for many industries long into the future. A declaration to this effect is likely to motivate many potential entrepreneurs to invest in industries without hesitation.