Bangladesh on cusp of industrial revolution, HSBC says in Bangladesh Market Insights 2021

[SUVdaddy]

Pakistan borrowed to support revenue expenditure whilst BD has exclusively borrowed for capital expenditure.... that is the critical difference..... BD has never defaulted on our debts ever.....BD and PK are not similar when it comes to fiscal policy and outlook.

What if the project fails for which loan was taken .

 

[Bilal9]

O⁹


Bangladesh has got the fundamentals correct.

RMG sector is massively complex and others simply can not replicate it. BD needs to diversify without doubt but we need to nurture our goose so it can continue to lay the golden eggs for years to come.

Our RMG workers and our overseas expatriate community are not working so that their kids do the same job as them. BDs massive IT labour force are exclusively working in I suppose what is the black economy... they get paid in foreign currency online that is beyond what BoB can monitor and they are not covered by the tax net.

If we can regularise these people it will undoubted add to the official GDP stats. What is encouraging is that this labour force is graduating from freelancing to starting to set up companies and going for proper long term contracts. BD is where india was perhaps in the 2000s, some of these companies will be sucessful and I am hopeful we will see BD version of Cognizant or TCS soon .

IT revenue wise Bangladesh is now second only to India.

And you are correct, this is largely undocumented. Bangladesh specializes mostly in freelance and services labor, while India specializes in a broader spectrum of specialization which includes mostly tech support type scenario.

However - while there is no formalized Bangladeshi backoffice contractors like Indian TCS, Cognizant or Wipro, those Indian companies' overseas activities pre-date any activity by Bangladeshi companies by at least a couple of decades.

I am sure there will be Bangladeshi outfits too (or Indian TCS, Cognizant or Wipro will expand activities to include sourcing labor from Bangladesh), It is only a matter of time now, given Indian IT salary rates are at least twice those of Bangladesh, even in West Bengal.

 

[mb444]

What if the project fails for which loan was taken .

Its kind of difficult for a road, bridge, hospital, school not be built..... there would be corruption skimming from the top, perhaps the quality wont be world leading and project takes longer to implement than plan but there has not been a case of a capital project failure in BD. Also BD only borrows from international institutions that comes with certain level of audit and oversight. Every one of such projects builds infastructure and capacities that gives a return back consistently over a long period of time. BD also sometimes runs revenue deficit but deals with it mainly via borrowing from BD banks and sometimes using direct aid (not loans) and rarely through borrowing from international institutions.

Pakistan borrowed to balance its budget, it used many of these loans for fuel imports, to pay for public sector salaries etc on a regular basis. This is fine once in a while but pakistan have relyed on this regularly and has built up a large debt.

The two countries priorities and requirements are different as is the corresponding fiscal stance.

 

[UKBengali]

Its kind of difficult for a road, bridge, hospital, school not be built..... there would be corruption skimming from the top, perhaps the quality wont be world leading and project takes longer to implement than plan but there has not been a case of a capital project failure in BD. Also BD only borrows from international institutions that comes with certain level of audit and oversight. Every one of such projects builds infastructure and capacities that gives a return back consistently over a long period of time. BD also sometimes runs revenue deficit but deals with it mainly via borrowing from BD banks and sometimes using direct aid (not loans) and rarely through borrowing from international institutions.

Pakistan borrowed to balance its budget, it used many of these loans for fuel imports, to pay for public sector salaries etc on a regular basis. This is fine once in a while but pakistan have relyed on this regularly and has built up a large debt.

The two countries priorities and requirements are different as is the corresponding fiscal stance.

This talk about BD "debt trap" is totally stupid if we look at the numbers for debt to GDP ratio for the subcontinent for 2020:

1. Bangladesh - 30%
2. Pakistan - 84%
3. India - 70%
4. Sri Lanka - 87%


BD has probably now reached the peak of its debt as this level of debt has already "baked in' the cost of extremely costly infrastructure projects like Roopur and Matarbari and also cost of the pandemic, most of the costs of which have been borne already.

Just looking at the numbers will tell you just how conservative all BD governments have been on taken on more debt. It could borrow many 10s of billions of US dollars from multiple sources but chooses to only take loans after a thorough cost benefit study and not for showcase projects as happens in some other countries.

 

[xyxmt]

Some obsession stay for long .

I guess you live in a village where you dont get Indian media

 

[bluesky]

If you think the political leadership in the UK is anything but mediocre or rubbish then you need to come and live here. The quality of the leaders has been going down every year since Margaret Thatcher left office in 1990. The current one(Boris Johnson) is totally out of his depth and makes Hasina look like a genius!

In order to prove that BD has bright leadership, you are claiming the UK has bad quality leadership. Visit the UK and study the quality of its general population to know the difference. You are a guy who understands little the difference between bad and good.

Leaders come out from the population. So, if the entire population is corrupt, it is inadvertently possible that the leaders are also corrupt. This is happening in Bangladesh and not in England. The entire population of BD is a bunch of thieves and cheaters.

 

[SpaceMan18]

This talk about BD "debt trap" is totally stupid if we look at the numbers for debt to GDP ratio for the subcontinent for 2020:

1. Bangladesh - 30%
2. Pakistan - 84%
3. India - 70%
4. Sri Lanka - 87%


BD has probably now reached the peak of its debt as this level of debt has already "baked in' the cost of extremely costly infrastructure projects like Roopur and Matarbari and also cost of the pandemic, most of the costs of which have been borne already.

Just looking at the numbers will tell you just how conservative all BD governments have been on taken on more debt. It could borrow many 10s of billions of US dollars from multiple sources but chooses to only take loans after a thorough cost benefit study and not for showcase projects as happens in some other countries.

Only foolish Indian nationalists scream " MUH DEBT TRAP "

In order to prove that BD has bright leadership, you are claiming the UK has bad quality leadership. Visit the UK and study the quality of its general population to know the difference. You are a guy who understands little the difference between bad and good.

Leaders come out from the population. So, if the entire population is corrupt, it is inadvertently possible that the leaders are also corrupt. This is happening in Bangladesh and not in England. The entire population of BD is a bunch of thieves and cheaters.

U.K even at is worst is doing better than BD at it's best which is kinda not a fair comparison , not saying BD can't beat it's former colonizer but it's gonna take a while.

BD is doing well enough to float , it just needs to get moving

 

[bluesky]

This talk about BD "debt trap" is totally stupid if we look at the numbers for debt to GDP ratio for the subcontinent for 2020:

We do not have to use the term "debt trap" to know the reality. BD borrowed $7 billion in 2020 and repaid arrears amounting to $1.93 billion. This year and years next the balance will more tilt downwards.

A time comes when BD borrows $7 billion but has to pay back $8 billion. This is happening in Pakistan and will also happen to BD not far away from now.

 

[bluesky]

Pakistan borrowed to support revenue expenditure whilst BD has exclusively borrowed for capital expenditure.... that is the critical difference..... BD has never defaulted on our debts ever.....BD and PK are not similar when it comes to fiscal policy and outlook.

Only ten years ago, Pakistan did not default in paying back its loans. Now, it is defaulting because of the cumulative pressure that built up in many years from a continuous borrowing from foreign sources as if there was no tomorrow.

Does it sound something to you?

মহাজ্ঞানী মহাজন যে পথে করে গমন হয়েছেন প্রাতঃস্মরণীয়
আমরাও সেই পথ ধরি ------------------------------------ l

 

[Pak Nationalist]

Published on 12:00 AM, August 05, 2021
Bangladesh on cusp of industrial revolution
HSBC says in Bangladesh Market Insights 2021

Bangladesh on cusp of industrial revolution

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.

www.google.com

Star Business Report

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.

Political stability and focus on exports-led growth were bound to put BD on the path to sustainable growth. Best of luck to Pakistan of the East. I can only hope that we take inspiration from our brothers and replicate the same success in our country. Exports-led growth is the only deliverance from our chronic twin financial deficits on the external and the internal front.

 

[mb444]

Its kind of difficult for a road, bridge, hospital, school not be built..... there would be corruption skimming from the top, perhaps the quality wont be world leading and project takes longer to implement than plan but there has not been a case of a capital project failure in BD. Also BD only borrows from international institutions that comes with certain level of audit and oversight. Every one of such projects builds infastructure and capacities that gives a return back consistently over a long period of time. BD also sometimes runs revenue deficit but deals with it mainly via borrowing from BD banks and sometimes using direct aid (not loans) and rarely through borrowing from international institutions.

Pakistan borrowed to balance its budget, it used many of these loans for fuel imports, to pay for public sector salaries etc on a regular basis. This is fine once in a while but pakistan have relyed on this regularly and has built up a large debt.

The two countries priorities and requirements are different as is the corresponding fiscal stance.

Only ten years ago, Pakistan did not default in paying back its loans. Now, it is defaulting because of the cumulative pressure that built up in many years from a continuous borrowing from foreign sources as if there was no tomorrow.

Does it sound something to you?

মহাজ্ঞানী মহাজন যে পথে করে গমন হয়েছেন প্রাতঃস্মরণীয়
আমরাও সেই পথ ধরি ------------------------------------ l

It does not at all, no.

Pakistan and bangladesh is not comparable in any way as others and myself keep pointing out to you.

Bangladesh has sacrificed economic growth to maintain low indebtedness. Our debt to GDP ratio is fairly constant and this policy i do not see changing.

Large debt that bangladesh has taken on has been facilatated by a growing economy whilst maintaining the golden ratio.

So there is no cumulative pressure and BD loans are exclusively for capital expenditure that returns a dividend in accelerating GDP growth.

Let me reiterate again you are not comparing apples with apples here. BD is fully aware that its tax base is not big and thus it lives within its mean.

On a general note, your concerns are valid and BD policy makers are fully aware and have plans to manage the issue. I do not see cause for concern, BD is well placed to absorb the covid induced shock.

The following article may assist you.

https://www.google.com/amp/s/www.th...s-debt-gdp-ratio-out-comfort-zone-1915837?amp

 

[bluesky]

So there is no cumulative pressure and BD loans are exclusively for capital expenditure that returns a dividend in accelerating GDP growth.

I did not know BD has borrowed money to build industries, I can see only a few construction projects are done. So, how do you think new wealth will be created without investment in industries?

Building a few hifi projects is not a recipe for economic development but industrialization is, because when public works projects cannot produce wealth industries can.

BD is following the Pakistani path. Pakistan has $103 billion foreign debt and BD has already $73 billion. What is the difference?

 

[Indos]

Political stability and focus on exports-led growth were bound to put BD on the path to sustainable growth. Best of luck to Pakistan of the East. I can only hope that we take inspiration from our brothers and replicate the same success in our country. Exports-led growth is the only deliverance from our chronic twin financial deficits on the external and the internal front.

Bangladesh is not yet an export led country, it still has large trade deficit (18.8 billion USD) that mainly comes from China

 

[mb444]

I did not know BD has borrowed money to build industries, I can see only a few construction projects are done. So, how do you think new wealth will be created without investment in industries?

Building a few hifi projects is not a recipe for economic development but industrialization is, because when public works projects cannot produce wealth industries can.

BD is following the Pakistani path. Pakistan has $103 billion foreign debt and BD has already $73 billion. What is the difference?

You may need to read up more. BD do not borrow to build industries. It borrows to build infastructure be it roads, bridges, power plants or schools. These are the essential ingredients for generating economic activities by the private sector. I am unware of these hi-fi projects that you keep complaining about...please elaborate.

BDs economy is bigger than PKs in absolute term, as is its per capita GDP and foreign reserves. BDs debt is also lower than PKs both in absolute terms and as a percentage of the economy. These are the essential differences.

 

[bluesky]

You may need to read up more. BD do not borrow to build industries. It borrows to build infastructure be it roads, bridges, power plants or schools. These are the essential ingredients for generating economic activities by the private sector. I am unware of these hi-fi projects that you keep complaining about...please elaborate.

Now, tell me what economic activities the local private sectors have done so far. It is nothing except that many BAL brats are stealing money in two hands and fleeing to Canada and Dubai.

You seem to be counting chickens long before the eggs are laid as usual. Pray, tell me what technology industries BD has built during the last two decades. It cannot even produce machines, tools, or even Lathe Machines.

Industries must be built on whatever infrastructure a country has, and built near the Sea Ports. It is not the other way. Do not you see garments and related factories were built without the presence of Padma and Roopur?

At least try to learn how to manufacture lathe machines because these are the mother of all other machines, motors, engines, and tools the production of which makes the country wealthier.

BD people are fond of putting cart before the horse, and start bickering when someone points out the fault.