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Trade News Articles Export, Remittance and GDP Growth
| Export, Remittance and GDP Growth |
| Sunday, 30 August 2009 21:11 |
 Name: Mamun Rashid Position: CEO Employer: Citigroup, NA, Bangladesh Location: Dhaka, Bangladesh Specialisation: International Trade Finance Contact: This e-mail address is being protected from spambots. You need JavaScript enabled to view it The current financial and economic turmoil is putting Developing Countries everywhere under pressure. Mamun Rashid shares lessons to be learnt for all Emerging Markets from Bangladesh’s perspective. Over the last few months I have been privileged to have participated in the debate and discussion surrounding the current international Financial Crisis affecting the World, and in particular have drawn a number of conclusions which while formulated in the context of the economy in Bangladesh, I believe also apply to emerging economies in general.  1) This is a crisis the likes of which has not been seen in over 80 years.2) The popular viewpoints regarding credit and its increase of money supply being an attractive tool for stimulating economic activity warrants a ‘Deep review’. 3) Regulators and Policy planners must draw a line between market and state. 4) Improvement of governance must be driven beyond personal, corporate or even national interest. How may it impact Bangladesh or other emerging markets? Bangladesh and other developing markets will eventually suffer an adverse impact from recessionary pressures in terms of exports, remittances and aid disbursements which will have a negative impact with a slowdown in GDP growth. On the upside, international institutional investors will prowl less emerging markets stock markets and net importing countries will see the benefit of lower fuel, food, steel and shipment costs. Moving forward emerging markets need to maintain focus on massive poverty reduction, creation of wealth and optimum distribution of that wealth or diversion to the hungry streams of the economy. Most of this growth will inevitably be private sector led, by micro-finance institutions, business and industry, export and remittance earners and not least by the agricultural sector. In order to ensure the private sector participates fully in this recovery a buoyant and congenial business environment is essential. A particular challenge in the case of Bangladesh is in Power generation. Industries and manufacturing plants are limping due to lack of power. To provide an incentive for power generation in the private sector, gas connections are needed. Competitive gas pricing is essential to attract gas companies to join in exploration. Small power plants can be set up mostly for captive use or including usage by surrounding neighbourhoods. Competitive exchange rates are needed to keep exports and inward remittance going and growing. Exporters, irrespective of their 'project or financing bank', should be allowed to sell their proceeds to any bank that offers attractive exchange rates. To make our exports competitive, we should also look at a turnaround time with regard to L/C advising, confirming, negotiation or discounting. Delay or mishandling at the ports must be avoided. Issues like the 'Open account' trading or `export against contract' should also be reviewed appropriately when adequate security is available. It is true that most emerging markets are reducing their GDP forecasts. Economists are projecting 6.8 percent GDP growth this fiscal year and 5.5 percent in the next fiscal for India, down from 8 to 9 percent growth. China is already witnessing 8 percent GDP growth, not 11 or 12 percent any more. But of course with coordinated efforts, driving leadership, emerging markets can change the course. And for that we need to address the power, gas, law and order, port management, congenial labour situations and timely agriculture input supply and procurement issues with absolute precision and without delay! Mamun Rashid is a banker and economic analyst. He is also the Chairman of ICC standing Committee on Banking Technique and Practice for Bangladesh. This Article was summarised from one originally printed in The Daily Star, a leading Bangladeshi Newspaper. www.thedailystar.net Add your comments |
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