Can Bangladesh economy be stronger than Pakistan's?

[gromell]

PM wants link to Asian road, rail
Mon, Apr 13th, 2009 9:37 pm BdST Dial 2324 from your mobile for latest news


Dhaka, Apr 13 (bdnews24.com)—Prime minister Sheikh Hasina has said Bangladesh needs to connect to the Asian highway and railway network without fail, for the resulting economic gains.

"When the world itself is opening up, we cannot keep our doors shut. (If we do so) we will become recluse," she said at a meeting with communications ministry officials at the Secretariat Monday.

She said Bangladesh could become a bridge between the West and the East.

"We have a lot of resources. If we can use these resources prudently we definitely can be a developed and wealthy nation," said Hasina.

She said Chittagong and Mongla seaports were important from national and regional perspectives.

"If we can develop and modernise these ports neighbours Nepal, Bhutan, India and even China can also use these ports. Then, the ports can contribute hugely to the economy."

Fast communications system was key to development which was why Bangladesh and needed to have a developed communications system.

The prime minister also touched on the possibilities of building a deep-seat port.

She revealed her government's plans to erect elevated highway from Tongi to Narayanganj, launch commuter train service, build underpasses and ring roads and develop waterways on rivers around Dhaka to resolve traffic jam in the capital.

Hasina said her government was firmly committed to build road communications network with the southern regions and build the Padma bridge.

She told the meeting about her government's plan to develop rail and waterways already in place and stretch rail link up to Cox's Bazar.

She urged public servants to work as a team for the people without fears and said it was not possible to work in despair and threats.

"Many are hesitant because of the past events and think they may be asking for trouble if they worked; so it's better not to work."

Hasina assured them that the government will take care of any problems they might face. "You please do you job. I tell you on behalf of the government that if anyone has to go to jail, it'll be ministers."

The prime minister asked the officials to remember that they were being paid from taxpayers' money.

Communications minister Syed Abul Hossain briefed her on the communications system across the country.

The prime minister's press secretary Abul Kalam Azad briefed reporters after the meeting.

 

[TopCat]

I want to see the deep sea port rolling within PPP budget.

 

[intellectual]

THE performance of Bangladesh economy was better than that of Pakistan in the last fiscal year ending in June 2009. Whereas Pakistan’s gross domestic product (GDP) growth plunged to two per cent from 4.1 per cent a year before, Bangladesh’s economy grew 5.9 per cent, only slightly lower than 6.2 per cent a year ago.


Pakistan’s economic growth came to a near halt in fiscal year (FY) 09 not only as a result of the international financial crisis followed by overall contraction in global economy but also because of some domestic and structural problems. These included a war on terror launched by Pakistan’s law enforcement agencies in North Western Frontier Province, bordering Afghanistan, and the resultant displacement of some three million people from their home towns. Both the war on terror as well as rehabilitation of internally displaced people or IDPs consumed a big chunk of the government’s financial resources, thus widening the fiscal deficit. What else led to overshooting of the fiscal deficit from the targeted 4.3 per cent to 5.2 per cent of GDP included over-sized federal and provincial governments, reckless spending by the ruling class, less-than targeted revenue generation and a 20.8 per cent inflation that increased the cost of everything. The government made desperate borrowings from the State (central) Bank of Pakistan to plug in the gaps between its income and expenses and that further fuelled inflation. The central bank made no big efforts to force the government to keep its borrowings within the targeted limits by downsizing the government and by reducing the non-development expenses.

On the other hand, as Bangladesh’s economy posted a handsome growth of 5.9 per cent it helped in keeping the fiscal deficit at 3.0 per cent of GDP-one percentage point below the target. Naturally then, the element of borrowing from the central bank as a key reason for higher inflation was missing in case of Bangladesh. But as tax revenues of Bangladesh slipped 20 basis points to 8.2 per cent of GDP the country was no better, rather worse, than Pakistan where tax revenue to GDP stood around 9.0 per cent. The tax-to-GDP ratios of both countries are much lower than what they should be to put the South Asian nations on a sustainable growth path and enable them to increase development spending, create enough jobs and contain poverty.

Consumer Price Index (CPI) inflation in Pakistan accelerated 20.8 per cent in FY09-almost three times the CPI inflation of 6.66 per cent experienced in Bangladesh. Part of the explanation for a lower inflation in Bangladesh has been offered in the foregoing lines but a full explanation must also include the difference in the incidence of imported inflation in both countries. In most part of the FY09 food prices remained high in the international market and food importing countries like Pakistan and Bangladesh fell victims to imported inflation on this count.

But whereas in Pakistan imports of non-essential items continued albeit at a slower pace, Bangladesh’s imports of such items did not constitute a big part of the country’s overall import bill. And more importantly, since Pakistan ranked some notches below in governance, the inability of the government to ensure a fair inter-play of market forces also fuelled inflation at a pace faster than in Bangladesh. The Competition Commission of Pakistan-the country’s watchdog on corporate inter-market behaviour-and a very vocal media and strong judiciary all played their part in checking malpractices of the business community but a weak political will and strong political links of business tycoons kept stoking inflation through cartel making and hoarding.

Finally, the monetary policy stance of the State Bank of Pakistan and Bangladesh Bank also differed with the former opting for a loose stance in most part of FY09 to spur economic growth and the later sticking to a tight monetary policy to check inflation.

In FY09 Bangladesh also witnessed a relative stability in exchange rates whereas in Pakistan exchange rates remained volatile in most part of the year. Whereas the taka depreciated less than one per cent in the whole of FY09 Pakistani rupee lost more than nineteen per cent of its value against the US dollar. This huge decline in the rupee value increased local currency cost of Pakistan’s foreign debt and liabilities as well as the cost of foreign debt servicing. This further squeezed the already narrow base of domestic financial resources of the country forcing it to borrow heavily from the International Monetary Fund (IMF) and other multilateral lending agencies as well as from some friendly nations like the USA, China and Saudi Arabia. Bangladesh had no such compulsion.

A massive decline in the rupee value also resulted in a greater share of imported inflation into overall CPI inflation in Pakistan whereas Bangladesh’s inflation remained relatively low also because of the near-absence of imported inflation.

Going forward, Bangladesh’s economy looks set to outperform Pakistan’s also in the current fiscal year. Key indicators show Bangladesh’s real sector as well as external sector would perform far better than those of Pakistan.

If the government and the central bank of Bangladesh undertake a study showing how Bangladesh’s economy has performed in the last few years vis-à-vis Pakistan, it would reveal some strengths of Bangladesh and boost their confidence. At the same time, if the government of Pakistan and its central bank conduct a similar study it would expose some weaknesses of Pakistan economy, which if overcome immediately, would help Islamabad regain some of the lost grounds and prepare it for remaining ahead of Bangladesh in terms of economic progress.

But it seems whereas Bangladesh is still shy of comparing its economy with that of Pakistan, Pakistan is too complacent to compare its performance with a country like Bangladesh. This approach is removed from realities on ground. As a humble student of economics and as an economic journalist, I can say with a degree of certainty that the two countries need to compare their economic performance year after year for a healthy competition. That is in the interest of both.

Consider, for example, the phenomenal growth in workers’ remittances of Bangladesh that has been higher than those of Pakistan for the last four years. And even during the current fiscal year, Bangladeshis living abroad have been sending larger amounts of remittances back home than overseas Pakistanis. Pakistan’s media has not even highlighted this phenomenon so far let alone discuss in detail the reasons that have led to this situation. On the other hand, media in Bangladesh has also not been reporting comparative inflows of foreign exchange back home from overseas Bangladeshis and Pakistanis to boost the morale of Bangladeshis living abroad and increasing the confidence of Bangladeshi citizens in their own economy.

Similarly, the fact that Bangladeshi taka has become stronger than the Pakistani rupee finds no space in Pakistani media and I do not see enough discussions taking place on this subject even in Bangladeshi media. We, the south Asians, have been talking about integrating our economic activities for years but so far we have not even decided which country needs to compare its economic performance against which. India is an economic giant. The entire SAARC region minus India stands no match to it. But at least the economic managers of Pakistan and Bangladesh can initiate the process of comparing their performance to rebuild their confidence in their strengths and to overcome their structural weaknesses.

The writer is a freelance Pakistani journalist. He can be reached atMohiuddin.Aazim@Gmail.Com

 

[intellectual]

S&P credit rating 2010

Bangladesh and India: BB-

Pakistan: CCC+ (lowest rating)

 

[ABBASIA]

Size of Pakistani GDP crosses US Dollar 200 Billion Mark in Pak Rupee it is Rs. 17182.

Fiscal deficit in first half widens to 2.9 percent

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By Shahnawaz Akhter
KARACHI: Pakistan’s fiscal deficit widened to 2.9 percent of the Gross Domestic Product (GDP) during the first-half of the current fiscal year up from 2.7 percent recorded in the same period last fiscal year, a finance ministry report said on Monday.
The report on budgetary operation for July-December, 2010 showed expenditures rising to Rs1,480 billion, far ahead of the total revenue of Rs989.6 billion.
The size of the GDP grew to Rs17,182 billion out of which the revenue share was 5.8 percent and expenditures stood at 8.6 percent.
Analysts said containing deficit at this point seems difficult for the government because of heavy bleeding in the shape of subsidies given to the public sector enterprises (PSEs) and to keep petroleum prices lower in the country.
The government, in the meantime, had failed to augment the revenue during the current fiscal year, they said.
“Subsidy on fuel is the key reason behind the growth in fiscal deficit during the first-half,” said Ahsan Mehanti, Director at Arif Habib Investments.
In a struggle to remain in power, the government has been absorbing the rise in international oil prices for the last two months to avoid criticism from political parties and masses.
The price of keeping the prices unchanged, as estimated by the central bank, is likely to be in the range of Rs25 to 35 billion by the end of this fiscal year.
According to the central bank estimates, the government has borne an additional cost of Rs7 billion by maintaining the petroleum prices in December, 2010 and January, 2011.
Amid the recent unrest in the Arab world, the benchmark Brent crude oil shot up to a two-year high of $120 per barrel.
Finance Minister Dr Abdul Hafeez Sheikh recently said that the government had no option but to cut the development budget to curtain the growing fiscal deficit.
The government had initially allocated Rs663 billion for development projects in this year’s budget. The budget has already been slashed by Rs180 billion while another reduction of Rs140 billion is under consideration, the minister said.
In the budget for FY11, the government has estimated that the fiscal deficit would stand at four percent of the GDP, but the damages of the floods in July-August last year forced the government to revise the estimates to 4.7 percent.
An analysis of the SBP shows that containing the deficit within the revised target would require an annual growth of around 35 percent in tax revenues during the second-half of the current fiscal year.
“This seems quite difficult since the government has already postponed the proposal to reform the general sales tax (GST) and the implementation of other fiscal measures is also unclear,” the SBP said.
Analysts, however, said that the timely decision, including rise in petroleum prices in line with the international prices, phasing out the subsidies given to the public sector enterprises and going for political reconciliation in taking economic decisions would help curtail budget deficit.
“Reduction in the cabinet size to cut expenditures is a bold step of the government,” said Mehanti. Whereas showing intention of speeding up the privatisation process is also help improve the monetary situation, he said.
The analysts estimated that the fiscal deficit for the current fiscal year would exceed five percent or even more than that if the government failed to take a decision at a right time.
The Finance Ministry statistics revealed that the revenue collection improved by nine percent to Rs989 billion, primarily stemming from nine percent increase in the tax revenues, whereas seven percent increase was witnessed in non-tax revenues.
Tax revenues break-up shows 13 percent improvement in the direct collection, while seven percent increase was witnessed in indirect taxes, mainly led by higher sales tax, which was increased to 17 percent in the budget.
On the other hand, petroleum levy, which was Rs88 billion last year fell to Rs35 billion.
The total expenditures increased by 13 percent during the period under review due to surge in the head of the current expenditures, which increased by 16 percent. Major heads within the current expenditures interest payments and defence expenditures rose by six percent and 30 percent, respectively. On the other hand, developmental expenditures declined by 13 percent to Rs207 billion.
An analyst at the Topline Securities said that in the absence of external support, the government had to heavily rely on domestic resources to bridge the fiscal deficit.
During the first-half of the current fiscal year, domestic sources contributed around 90 percent to deficit financing against 73 percent during the first quarter of the current fiscal year.
The borrowing from banks increased by a massive 167 percent to Rs285 billion, according to the statistics.

 

[ABBASIA]

Pakistan GDP is near two times the GDP of Bangladesh, with current growth rate BD will require 8-10 years to reach the GDP size of Pakistan (200 US Billion dollar). However Pakistani GDP might have crossed 350+ Billion dollar mark by then.

 

[53fd]

I have my doubts on Pakistan's economy. The Pakistani economy IMO is propped up by US aids, both economical and military. Debt servicing rescheduled for Pakistan as Pakistan is helping in 'GWoT', direct aids in billions of dollars, etc, etc. There are lots of things.

Some facts about Pakistan:

1) 27th largest economy in the world in terms of GDP (PPP)
2) 5th Largest Gold Mine
3) 5th Largest Coal reserves
4) 7th Largest Copper mine
5) 2nd Largest Dam, and the world's largest earth filled dam (Tarbela Dam)
6) 6th Largest Army
7) 1st Muslim and 7th Nuclear Power of World
8) 7th Largest Rice Producer
9) 8th Largest Wheat Producer
10) One of the best irrigation systems in the world, 5 rivers in the Punjab.
11) 3 Nuclear Reactors
12) Strongest Muslim army
13) World’s highest Polo ground at Shandur, Northern Pakistan.
14) Karakoram Highway : 8th Wonder of the World.
15) World’s Largest Deep Sea Port : Gwader.
16) Khewra Mines : 2nd Largest Salt Mine in the World.
17) Haleji Lake : Asia’s largest Bird Sanctuary.
18) Thar Desert : One amongst the largest deserts in the World.
19) The land of oldest Civilization : Indus Valley and Mohenjo-Daro.
20) Pakistan: World’s 9th Largest English Speaking Country.
21) Pakistan: World 7th largest Pool of Scientists and Engineer.
22) Pakistan the land of grand mountain ranges, a land that holds 4 out of 14 most highest peaks in the world. K2 the second highest mountain in the world with all it’s grandeur symbolizing the pride and strength of the people of Pakistan.
23) Pakistan: K2 the 2nd highest mountain peak in the World.
24) Pakistan: 2nd Largest Muslim Nation in the world.
25) World’s youngest certified Microsoft Experts Arfa Kareem and Babar Iqbal.
26) Asia’s Highest Railway Station Kan Mehtarzai that is located 2240 meters above sea level near Quetta.
27) Motorway: Asia’s most peaceful motorway.
28) Pakistan: World’s largest CNG Operator.
29) Pakistan: Only Muslim country after Turkey to open Combat Jobs for women.
30) Pakistan: Highest Tele Density in South Asia.
31) Pakistan: Largest WiiMax Network in the World, over 30 million internet users.
32) World’s largest run ambulance network by Edhi.
33) Baltaro glacier: biggest glacier in the world

 

[TopCat]

Pakistan GDP is near two times the GDP of Bangladesh, with current growth rate BD will require 8-10 years to reach the GDP size of Pakistan (200 US Billion dollar). However Pakistani GDP might have crossed 350+ Billion dollar mark by then.

Pakistan rebased its economy in 2005 while BD did in 1995. We are rebasing the economy this year, so you will get a more clear picture of the size of BD economy. But Pakistan economy still bigger and thats a bigger country too.

 

[53fd]

Pakistan rebased its economy in 2005 while BD did in 1995. We are rebasing the economy this year, so you will get a more clear picture of the size of BD economy. But Pakistan economy still bigger and thats a bigger country too.

But the populations of both countries are 'almost the same', correct? Pakistan probably only has 20+ million more people than Bangladesh. I'm not trying to be disparaging, I genuinely believe you guys have done well, I have huge appreciation for you, & I hope you keep doing in the future. I hope Bangladesh and Pakistan can have fantastic ties in the coming future. All the best Bangladesh!

 

[TopCat]

I can only tell after the census result comes out in 2 mos time. May be the population figure is 10 million less than the prediction of 160 million which govt is implying. Its not only the population which generates the GDP, Pakistan has a bigger agro sector (with bigger land mass) as well as mining sector.

 

[Nafees]

Rebranding country's image as ship-building nation​

By Shahiduzzaman Khan

The industries minister announced recently that the government would soon constitute a coordination cell, comprising experts in shipbuilding sector to ensure Bangladesh-built ships perform at the highest level of safety and operational efficiency. He said if the shipbuilding industry could maintain the current level of quality and production then this sector could be Bangladesh's surest path to attainment of Middle Income Country status while re-branding country's image as a 'ship building nation' through securing bilateral trade with friendly European partners.

While delivering two ships built by Bangladesh's leading ship building company Western Marine to its German buyer, the minister said that he felt proud as the company has handed over two more ships to Germany, just after delivery of two ships four months back. It is indeed encouraging to note that shipbuilding to cater to overseas buyers is becoming a fast growing sector for Bangladesh. Already quite a number of ocean-going cargo vessels were exported and orders for more are in the pipeline. It augurs well that contribution by the sector would comprise 3.0 to 4.0 per cent of GDP by 2015, and that export earning can go up to $2.0 billion in near future.

The country's shipbuilding industry could become the third largest foreign exchange earner in less than ten years if the government provides support services of issues relating to bank guarantees, access through green channels and declaring export-oriented shipyards as export processing zones (EPZs). This was revealed in a study on shipbuilding industry in Bangladesh: current position and prospects for future growth conducted by the Bangladesh Foreign Trade Institute (BFTI), a non-profit research institution.

Technology plays a major role in the industry and the industry is required to purchase basic drawings at an estimated cost of US$ 200,000, according to the study. Considering the importance of this technology, the government may consider subsidising the acquisition of technology, for instance, by undertaking to pay a certain percentage of the cost of acquiring such technology. Currently ship builders have to import virtually all materials required, which constitutes nearly 65 per cent.

The developments are presumably encouraging in the country's new and promising shipbuilding sector. Indeed, the government should not take so much time in making it a thrust sector as India and Indonesia are increasing their own ocean-faring vessel capacities. It noted that the ship building industry in India had grown from Rs 10.17 billion in 2002 to Rs 36.57 billion in 2007 as a result of government support over those five years, with sales increasing to Rs 52.83 billion in 2008. This would otherwise indicate what an important role the government can play in setting up an, what the study pointed out, enabling environment for the Bangladeshi shipbuilding industry.

The government has already granted the industry a partial green channel status. In terms of the current provisions, no customs duties are payable on imports of raw materials and components for use in shipbuilding. However, granting full green channel status to export-oriented shipbuilders will not place any additional burden on the government. It will save the industry 0.9 per cent of the contract value. If the shipbuilding yards are declared export processing zones, it would imply that all sales made to such shipyards would be considered exports.

Following the global economic recession, traditional shipbuilding countries are gradually becoming reluctant to build small ships (weighing less than 2,500 dead-weight tonne). This has had consequently opened a new window of export opportunity for Bangladesh. Given this encouraging signals, the Bangladeshi entrepreneurs were incentivised to enter the lucrative shipbuilding industry.

The shipbuilding sector is endowed with a certain level of technical edge that allows it to participate in higher value addition in terms of production. Taking this cue, it could be assumed that while it took around 25 years for the country's garment industry to flourish and play a key role in foreign earnings, shipbuilding could do the same but in less time (in about 10 years) with higher local value addition, assuming proper facilities and policies are provided towards the development of its backward linkage industries.

Entrepreneurs see Bangladesh's good prospects of flourishing shipbuilding industry. The country's economy could witness a big progress if it catches the global shipbuilding market and finds its modest room in the international shipbuilding country club. Establishment of deep-draft ports, duty exemption for import of capital machinery, bonded warehouse facilities, special financial subsidy and providing green channel for importing raw materials to ensure healthy growth of the sector are, thus, advocated by the concerned circles. Their forecast is that 'the sector has promising chances of contributing to the economy after garments sector'.

Bangladesh has advantages like cheap labour, a presence of nearly 0.1 million skilled and semiskilled workers and industry-related educational and training institutes. A long history of maritime activity and a favourable geographical location also placed the country at a favourable position, with about 200 shipyards and workshops to cater to the domestic needs for water vessels. The country has the skilled manpower required to vitalise the ship building industry. Some of this workforce is now displaced in some parts of the world but time has come to bring them back to utilise their capability in flourishing the sector. The government needs to patronise the much prospective sector by providing them with all logistic supports. India is providing 30 per cent financial subsidy on ship building industry while Vietnam is providing 40 per cent. Bangladesh can easily turn itself into a ship exporting country from present ship breaking one by giving due attention to the industry.

The Bangladesh economy is at present dependent on a few export items. It badly needs export diversification for its sustainable growth. The shipbuilding sector has the potential to expand the country's export basket, fetching much-needed foreign currency as well as generating employment opportunities. With an aggressive marketing plan, the new breed of entrepreneurs is expected to obtain a notable slice of the 400 billion dollar global shipbuilding business. In order to meet buyers' requirements in conformity with international standards, skill development is one of the pertinent issues that both entrepreneurs and the government do need to look into, concertedly.

Finance Minister AMA Muhith said recently that the government would announce a new policy for the shipbuilding industry. The emerging shipbuilding industry will also be declared a thrust sector in the new industrial policy, as it has huge export- and job-creation potential. Shipbuilding is predominantly a technology-driven sector. In this sector, constant improvement of engineering skill keeps one ahead of the others in competition. On its part, the government is pledge-bound to extend full support to the sector through reforming or enacting new policies. This pledge has to be translated into action in order to enable the shipbuilding sector to help lift the country's image, besides earning precious foreign exchange.

Source: Rebranding country's image as ship-building nation

 

[fujistu]

its possible because our economy is going down and down with the passage of time

 

[Naveed Ritom]

Both of us were brothers and still are.there are several events take place between India,Pakistan,Bangladesh.Truth is we all are
the same people of same origin.so the real means of development lies between piece among us.
Now lets talk about the topics.Bd economic condition may be stronger but i think it would be better if we think about our common enemy.
It's true that we both pakis and bd people ar indian nation origin but also true ,now in present india is the only responponsible for creatin all the problems of both of these two country's ; thats why our nation bd is sufferin.if there was no india ,pak-bd can live a pieceful life forever infct not only we but also the people of kashmir.kyun ki kashmir pakistan ki zameen hai,india key nahin.

 

[RiazHaq]

Economic gap between East and West Pakistan in 1960s is often cited as a key reason for the secessionist movement led by Shaikh Mujib’s Awami League and the creation of Bangladesh in 1971. This disparity has grown over the last 40 years, and the per capita income in Pakistan now stands at 1.7 times Bangladesh’s in 2011, slightly higher than 1.6 as it was in 1971.

Haq's Musings: Economic Disaparity Between Bangladesh & Pakistan