In 2005, Goldman Sachs included Bangladesh on its list of 'Next Eleven' countries considered to have the potential to be among the largest economies in the 21st century.
Since then, Bangladesh has had mixed fortunes and its finance minister, Abul Maal Abdul Muhith, admits that there has not been sufficient foreign investment into the country over the past few years.
He says: “Bangladesh hasn’t attracted much foreign investment, even though for the past seven years it has featured as a country with good prospects. The lack of interest could be [historical], as Bangladesh emerged in 1971 and there was a justified nationalisation drive at the time.”
In the past five years, Bangladesh’s economy has grown steadily, at a rate of about 5.5% each year, according to the World Bank. Much of this growth is down to the country's thriving garment sector, which has grown to be among the world’s largest, with many multinationals outsourcing their production and factories to the country.
While Bangladeshis would bristle at their country being considered 'India lite', the prospect of investing in 'the next India' is something that will attract the attention of many global companies. Although there has hardly been a stampede of foreign investors, Bangladesh is generating significant interest as a country that shares many of the characteristics and attractions of India. For a small country, it has a gigantic population of more than 160 million, meaning that it has one of the highest population densities at 1126 people per square kilometre.
Poverty and corruption
Despite its potential and recent growth, the country has remained desperately poor for decades. This has played a huge part in what could be considered Bangladesh’s biggest obstacle to growth: rampant corruption. In 2005, Transparency International listed Bangladesh as the most corrupt country in the world, a distinction it had held for the previous five years.
Mr Muhith acknowledges that corruption is a serious problem, but he insists that the situation is improving and cites more interest and competition for government contracts as evidence that there is more trust and confidence in the government and the tender process.
He says: “When we opened bidding for a power supply [contract], we received 21 offers. General Electric, which had previously almost abandoned Bangladesh, is now back [bidding for work in the country].
“Bangladesh is still a land of wants. People need a lot of things and this is good ground for corruption. To get your demands met, you have to get preference over somebody else.”
In his mind the best way to fight corruption is to give people more opportunities. This is much easier said than done, and he is up against a poverty problem that no politician in Bangladesh has ever been able to effectively tackle. He does not list specific measures that the government has taken, but believes that its policies on more rurally-focused investment and development are the right way forward.
Mr Muhith says: “Most of the population lives in rural areas and now the economy is highly integrated through the transport network. With the new government, rural and agricultural development is happening. We recognise that this is the core of the country, and we believe that in the past there has not been enough attention in this area.”
IT and telecoms
There is also a sizeable amount of activity in Bangladesh’s IT and telecoms sectors. Prime minister Sheikh Hasina declared on taking office in 2008 that she wanted a “digital Bangladesh” by 2021. According to Mr Muhith, the country is well on its way to achieving that, and more progress has been made than the government expected. He says that while there is still a very low rate of computer and internet use among the population, mobile phone use has grown exponentially. Roughly 40% of the country is below the poverty line, but right now there are 70 million mobile users.
Mr Muhith says: “Our biggest constraint against investment is no longer our reputation; now it is our energy supply. We are victims of dire neglect in this sector. In seven years we hardly had any new drilling for wells and didn’t install a megawatt of extra power generation. Power [demand] growth during those years was more than 15%, so we need investment there and hopefully we’ll get it.”