Bangladesh is on the cusp of an industrial revolution as incomes rise and technology plays an ever-increasing role in the economy, according to HSBC.
“Urbanisation, smaller households and more women at work are powerful consumption drivers that support high levels of growth,” said Devendra Joshi, equity strategist for ASEAN and Frontier Markets at HSBC.
A lot of investors do not know that Bangladesh’s economy is not only larger than that of Vietnam but also growing faster, he told a virtual discussion on “Bangladesh Market Insights 2021: Consumption Propelling Growth” yesterday.
This growth was in the face of some adversities such as a lack of infrastructure, power shortages and a banking system that has a higher rate of nonperforming loans, he said.
Although now Bangladesh is getting more and more attention, it deserves even more as it has a strong external position with low external debt, strong foreign exchange reserves and remittances, said Joshi.
He said foreign direct investment (FDI) remains low but was expected to improve as it moves up the value-added ladder fast.
“While Bangladesh is one of the cheapest places to manufacture goods in Asia, it will need to diversify away from garments. In terms of ease of doing business, Bangladesh still lags behind Vietnam but is making efforts to improve,” he said.
Fifty years past its independence, Bangladesh has grown into one of Asia’s fastest growing economies with a very exciting long-term demographic story, said Joshi.
“With this backdrop, the Bangladesh stock market deserves more attention as it holds opportunities for investors looking for diversification and ‘hidden gems,” he said.
He said the stock market was where it was five years ago and was well placed to start closing the gap.
Bangladesh’s economic growth exceeded 7 per cent for four years in a row in the pre-pandemic period while its population grew at a fast pace to stand at around 165 million, said the official.
The country’s robust economic growth has not been reflected in the capital market, said Ahmad Kaikaus, principal secretary to the prime minister.
“Whenever a country grows, it is always reflected in the capital market. Probably Bangladesh is completely an exception and growth of the economy is not reflected in the capital market,” he said.
“This is really puzzling for me,” he added.
“Maybe I belong to a different school of thought. So, I think the foreign direct investment is very important, but not the sole mover of the economy,” said Kaikaus, who has a PhD in public policy and political economy from the University of Texas.
“Even if you allow all the FDI coming into the country, it might not move forward unless you have robust economic support within the country and local investment is equally important,” he said.
He said although the economy had bloomed, the capital market had been stalled for a decade.
“When you talk about equity, we are falling behind. This is something we need to work on,” he said.
The GDP per capita in Bangladesh is now $2,228 and this happened within 50 years, he pointed out.
“We are now more energised to do better and for which the country needs the entrepreneurs within the country and outside,” said Kaikaus.
In response to a keynote presentation, Kaikaus said, “Education is good for the nation but I can show you many instances where the country’s economy has improved without improving in education.”
“So the matter is contradictory, not unequivocal that education is the prime factor of economic growth. Education is needed for the society, education is needed for a better life of the citizen but it is not the determining factor,” he said.
“In its past 50 years, Bangladesh’s trajectory of economic growth has been a testament of the people’s insatiable desire and effort to do better,” said Md Mahbub ur Rahman, chief executive officer of HSBC Bangladesh.
“Continued digitalisation and up-gradation of technology, consistent rise in per capita income leading to incremental consumptions and demographic dividend have been opening up a world of opportunities for Bangladesh,” he said.
“Historically, our private sector has always been resilient during challenging times and HSBC will continue to play its part through unparalleled international network and connectivity,” he added.
Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry, attended as a special guest.
Sandeep Uppal, global co-head of International Subsidiary Banking, Commercial Banking, HSBC, and Kevin Green, country head of Wholesale Banking, HSBC Bangladesh, also spoke.
In attendance were key members of the business community, regulatory bodies and representatives from state-owned enterprises.
