Bangladesh feared the worst at the beginning of the pandemic when global orders for ready-made garments, which account for 80% of total exports, vanished and factories closed down. But, by the end of 2020, Bangladesh featured among the few economies that still managed to post economic growth. The government acted in a very proactive fashion, Salman Fazlur Rahman — the private industry and investment adviser to Bangladesh’s prime minister — tells fDi, helping the country avoid the worst. 

Q: What measures did you put in place when the pandemic hit? 

A: The government was very proactive, and as soon as it realised that the most affected sector would be the garment factories, it provided a stimulus package providing loans at very low costs and guaranteeing four months’ salary to its workers. If the government hadn’t provided that support, there would have been real chaos.

We also did a large amount of reskilling to serve the huge demand for personal protective equipment caused by the pandemic, so that our garment factories could start producing it. 

Q: Have you been targeting foreign inventors willing to move out of China, following Covid-19’s disruption to value chains?  

A: Absolutely. Rather than moving out of China altogether, we are seeing a lot of investors wanting an alternative to China.

There are people who want to invest in our market because of its size, but also as a base for exports to both China and India. Exports to China are duty-free on 97% of Beijing’s tariff line. Similarly, a lot of our products have duty-free access to India. On top of that, Bangladesh itself is a huge market of 170 million people. Foreign investors get tremendous market access to the whole region by setting up in Bangladesh.  

Q: How are you diversifying the economy at a time when global value chains are shortening? 

A: The garment industry accounts for 80% of Bangladesh’s exports and employs around 4.5 million people. We want to build on garment exports, go for the higher end of the market and increase the backward linkages between producers and local suppliers.

At the same time, we are doing tremendous work across several key sectors to diversify further. One of them is IT-enabled services. We have built a fibre-optic backbone across the country and now we are the second-largest internet workforce, after India, according to data from the Oxford Internet Institute. Millions of freelancers in Bangladesh are already generating exports worth $1bn, and we expect that to grow to $5bn in the next two to three years. 

Q: Are you looking at any other sectors? 

A: Another thing to consider is that we are now self-sufficient in electricity. This has been a game-changer. People didn’t have electricity to power white goods, but now they can buy refrigerators, microwaves and so on.

We used to import most of our white goods, but now 70% of what we buy is manufactured in the country. Local companies such as Walton are growing at such pace that they are now exporting white goods to dozens of countries. And then shipbuilding is another area where we started building and exporting ships. 

Another very interesting area for us is pharmaceuticals. Bangladesh is self-sufficient in pharmaceuticals, with 99% of demand being met by local production. And already we are exporting to over 100 countries. Exports make up about $1bn at the moment, but it’s another area we expect to break the $5bn mark in the next three to five years. 

This article was first published in the December 2021/January 2022 edition of fDi Intelligence magazine.