Comment by Riaz Haq on September 17, 2022 at 5:02pm

South Asia Index
@SouthAsiaIndex
New Delhi:— "I've requested Modi govt to do whatever is necessary to sustain Sheikh Hasina's govt." - Bangladesh's Foreign Minister Abdul Momen.

https://twitter.com/SouthAsiaIndex/status/1560623724012994560?s=20&...

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"When I went to India, I told the Indian government that Sheikh Hasina must be sustained. Bangladesh will continue to march towards development and will truly become a country free of communalism under her leadership," he said.

https://unb.com.bd/category/bangladesh/i-told-india-to-help-maintai...

Comment by Riaz Haq on September 17, 2022 at 5:08pm

India and Bangladesh on Tuesday signed a deal on withdrawing water from the Kushiara river in Assam and six other treaties as their leaders spoke of "shared cultural traditions" and solving issues through "clear discussions".

https://www.business-standard.com/article/current-affairs/india-ban...

Prime Minister Narendra Modi and Bangladesh leader Sheikh Hasina, who is on a 4-day visit to India, signed the agreements in Delhi. The agreements include a Memorandum of Understanding (MoU) on training Bangladeshi personnel in Indian Railways institutes and collaboration in Information Technology (IT) systems for freight operations. The countries signed MoUs on training programmes for Bangladeshi judicial officers in India, scientific and technological cooperation, technology and the public television sector.

The two nations inaugurated the first unit of the Maitri Super Thermal Power project, which Bangladesh constructed with development assistance from India. Prime Minister Hasina signed seven agreements in diverse areas in her last visit to New Delhi in 2019.

"Bangladesh has significantly progressed under the leadership of Prime Minister Sheikh Hasina, and our bilateral cooperation has also seen fast growth. In the past few years, Bangladesh has become India's largest development partner. Our close cultural and people to people relations have also continuously grown," Modi said, adding that he and the visiting leader agreed on extending connectivity and trade infrastructure.

Hasina thanked India for assisting Bangladesh in its economic development. "Our main focus is to help create a progressive future for citizens of both nations. All our foreign policy engagements with India are based on this one objective," she said.
India’s infra push

In response to China announcing infrastructure financing and construction projects in Bangladesh, India is stepping up assistance for its eastern neighbour

"The rising price of energy is proving to be a challenge everywhere in the world. Today, the inauguration of the first unit of the Maitri Thermal Plant in Bangladesh will raise the availability of affordable electricity in Bangladesh," Modi said. Constructed under India's concessional financing scheme, the project will add 1320 MW of electricity generation capacity in Bangladesh.

Modi praised the new Rupsha rail bridge, which is being constructed to connect the upcoming Mongla port in southwestern Bangladesh to its third-largest city of Khulna. India is providing concessional credit for the bridge and the port and the total project is set to cost $389 million.

Bangladesh wants Indian companies to use the port and transnational rail lines connecting the country to West Bengal and Tripura as an alternative direct access channel into underserved areas of Eastern and North Eastern India.

Trade ties

"Our bilateral trade is expanding fast. Today, India is the largest market in Asia for Bangladeshi exports. To push this growth even further, we will soon begin talks on the Comprehensive Economic Partnership Agreement (CEPA)," Modi said.

A quick deal on CEPA is a key policy objective for Dhaka after Hasina approved it in August. Preliminary joint studies suggest the deal is expected to raise Bangladeshi exports to India two-fold and expand the country's GDP by 2 per cent. While the talks are still in early stages, Modi's mention of the CEPA in the joint press statement likely indicates enough that New Delhi has accepted Bangladesh's request to accord the CEPA priority.

Comment by Riaz Haq on September 17, 2022 at 5:08pm

India and Bangladesh on Tuesday signed a deal on withdrawing water from the Kushiara river in Assam and six other treaties as their leaders spoke of "shared cultural traditions" and solving issues through "clear discussions".

https://www.business-standard.com/article/current-affairs/india-ban...


Trade ties

"Our bilateral trade is expanding fast. Today, India is the largest market in Asia for Bangladeshi exports. To push this growth even further, we will soon begin talks on the Comprehensive Economic Partnership Agreement (CEPA)," Modi said.

A quick deal on CEPA is a key policy objective for Dhaka after Hasina approved it in August. Preliminary joint studies suggest the deal is expected to raise Bangladeshi exports to India two-fold and expand the country's GDP by 2 per cent. While the talks are still in early stages, Modi's mention of the CEPA in the joint press statement likely indicates enough that New Delhi has accepted Bangladesh's request to accord the CEPA priority.

Bangladesh exports only $1.9 billion worth of goods to India from where it imports $16.15 billion. It imported $4 billion worth of cotton, $1.2 billion worth of wheat and a similar amount of petroleum. Hasina has pushed for the deal to allow this trade imbalance to rectify at least partially. A quick resolution on this front would allow her to answer her domestic critics who point to the country even importing $600 million of rice, mostly parboiled, as emblematic of India's overwhelming shadow on the country's economy, officials said.

Water sharing

Water sharing is a diplomatic issue as the Ganges and the Brahmaputra enter Bangladesh from West Bengal and Assam. Called Padma and Jamuna in Bangladesh, these rivers accumulate water from the hundreds of rivers that snake through the riverine nation. Access to water from the Teesta river, which is important for irrigation in northwest Bangladesh, is a contested issue as well.

Solutions seem to be flowing. "There are 54 rivers that traverse the India-Bangladesh border and have historically been a part of the livelihood of people in both nations. The songs and tales about these rivers are also a symbol of our unique, shared cultural traditions. The water sharing agreement on the Kushiara river will benefit South Assam and the Sylhet region in Bangladesh," Modi said.

India will continue to share real-time data on water flow and flood with Bangladesh, he added.

"We are two neighboring nations, and there may often be certain issues between two nations, but we have set an example by solving many issues through clear discussions," said Hasina, referring to sharing of river water.

Comment by Riaz Haq on September 17, 2022 at 6:41pm

The ground under Sheikh Hasina’s feet is shifting

By Avinash Paliwal

https://www.hindustantimes.com/opinion/the-ground-under-sheikh-hasi...

Bangladesh's foreign minister
AK Abdul Momen arrived in
India last month to fight polit-
ical fires. But he found himself
dealing with massive floods
that hit Sylhet and Assam.
Nature has its ways to convey
that not all is well in India's
near-east. Far from the glitz
about Bangladesh's economic
success, on display during the
recent inauguration of the
Padma Bridge, clampdown on
Islamists, and shrewd man-
agement of big power rivalries,
is a parallel potent reality of
Prime Minister Sheikh Has-
ina's authoritarianism,
heightened polarisation, and
economic distress. As an
Indian official mentioned to
me, and a Bangladeshi official
echoed. Hasina "has built a
house of cards"
The economic, social, and
political ground under Has-
ina's feet is shifting in real
time. It is slow enough to be
dismissed as non-urgent, but
sure enough to become press-
ing, if not dealt with urgently.
With general elections due in
2023, and external debt repay-
ment schedules kicking in
from 2024, it is a matter of
time for the veneer of (forced)
stability to lose its sheen. The
risk of dislocation, if not col-
lapse, of this so-called house
of cards has increased in
recent years, and it could
undermine whatever is left of
India's connectivity aspira-
tions in its near east.
Domestically, the Hasina gov-
ernment has exacerbated two
contradictions in a tradition-
ally polarised polity. One, she
is in power, but with little to
no electoral legitimacy. The
Awami League's (AL) manipu-
lation of the 2014 and 20118
elections (a practice not just
reserved for national elections
and against opponents),
unceasing harassment of its
key opponent, the Bangladesh
Nationalist Party (BNP), gag-
ging of media, social media
monitoring using advanced
digital surveillance, and a
forced tilt towards the conser-
vative Islamic Right as a bal-
ancing move after targeting
these formations using force,
has created wide pockets of
intense frustration.
Unlike her father, Sheikh
Mujibur Rahman, who created
a one-party State, but failed to
contain a famine in 1974, Has-
ina has placed her bets on eco-
nomic development. The argu-
ment runs that good economic
performance coupled with lib
eral use of force will make a
one-party State under Has-
ina's leadership sustainable.
But this is where the second
contradiction kicks in.
Bangladesh's external debt to
Gross Domestic Product ratio
has increased to 21.8%, import
spending has shot up by nearly
44%, forex reserves of $42
billion are falling and can
cover about five months'
worth of imports, and the rev-
enue from readymade gar-
ments export and remittances
is not keeping pace with the
fast rising costs to the
exchequer.


Couple this with the global
inflation created by the Rus-
sia-ukraine war and United
Statesled sanctions, and it
becomes clear why Momen is
asking India to remove anti-
dumping duties on Banglade-
shi jute exports. Further com-
plicating this situation is
Dhaka's propensity to accept
external loans for infrastruc-
tural projects at highly inflated
costs, making repayment dif-
ficult. One of the cases in point
is the 2015 Rooppur Nuclear
Power Plant deal with Russia
for which Dhaka is to repay
$13.5 billion. India paid $3 bil-
lion for a similar plant in
Kudankulam.
Why does Dhaka accept such
deals? Because external fin-
ance fuels (limited) infra-
structural growth, chronic
corruption, and keeps the
political illusion of economic
development alive. To be clear
and fair, Bangladesh's eco-
nomic journey has been more
than commendable. But to
expect an economic miracle,
which is bound to dwindle due
to internal or external shocks,
to sustain a corrupt system
pretending to be a democracy
is a tall ask. Herein, Hasina has
ensured that neither the
Islamists nor the BNP
which enjovs public sympathy,
even if it may not get a fair
election - pose a serious
challenge to her.

Comment by Riaz Haq on September 17, 2022 at 6:42pm

The ground under Sheikh Hasina’s feet is shifting

By Avinash Paliwal

https://www.hindustantimes.com/opinion/the-ground-under-sheikh-hasi...

But her real challenge doesn't
come from known opponents.
It comes from opaque factions
within a securitised State (and
the party) that has made so
much illicit profit that being
out of power is not an option
for them. This leaves Hasina
with an unenviable dilemma.
Either she allows free elections
and risks being ousted or
manipulates them and invites
international opprobrium that
could unleash mass protests
and violence. Bereft of a clear
succession plan, both these
scenarios could tempt oppor-
tunistic adversaries to force a
regime change, of which there
is an unfortunately rich his-
tory in Bangladesh.
Hasina's internal problems are
linked to external dependen-
cies. Politically reliant on New
Delhi, she is finding it increas-
ingly difficult to manage the
ramifications of India's turn
towards Hindu nationalism
that misuses migration from
Bangladesh and the Rohingya
crisis for domestic electoral
gain. Similarly, accepting of
Chinese finance that may not
translate into political sup-
port, Dhaka is struggling to
keep targeted US sanctions
against the Rapid Action Bat-
talion, an anticrime and anti-
terrorism unit of the
Bangladesh Police, for serious
human rights violations, at
bay. Dhaka's replacement of
its ambassador in Washington
DC after a visit by a team of AL
parliamentarians from the
standing committee on foreign
affairs will make little differ-
ence in how the US deals with
Bangladesh.
Add to this, an uptick in
demand for repatriating
Rohingya migrants - some of
whom have been silently
resettled in the Chittagong Hill
Tracts to the locals' displeas-
ure - to Myanmar, including
within Bangladesh's military
establishment, and the situ-
ation becomes even more
volatile. Hasina requires a
political off-ramp to prevent a
foreseeable crisis that can turn
violent. The last thing the sub-
continent needs is turmoil in
Bangladesh

Comment by Riaz Haq on September 17, 2022 at 8:22pm

Since mid-2021, global commodity prices, especially of oil, have begun to rise. This was intensified by the Russian invasion of Ukraine in March. As a consequence, Bangladesh, as a major energy importer, is facing a number of challenges. Its foreign currency reserves are declining and the value of its currency, the taka, is weakening. Electricity load shedding has worsened, adding to the woes of citizens.

https://scroll.in/article/1031735/how-global-economic-instability-i...

As a result, the cost of imports in Bangladesh has increased significantly even as earnings from exports have increased only moderately.

In the financial year 2022, the expenditure on imports increased by 36%, compared to 20% the previous financial year. The high import cost is due in part to the increased demand for imported goods and in part to the higher import prices on the global market.

As a result, the terms of trade have gone against Bangladesh. During 2021-’22, the import-price index increased by 5.06%, while the export-price index increased by 3.23%. This has hurt the current account balance.

In the financial year 2022, the current account balance reported a deficit of $18.70 billion compared to the previous year’s deficit of $4.58 billion.

The current account deficit in Bangladesh is generally met by remittances from abroad, which have also decreased significantly in the financial year 2022. Remittances fell by 14% in the financial year 2022, following a 36% increase in the financial year 2021. This has affected the balance of payments, foreign currency reserves, and weakened the taka against the US dollar.

Despite adjusting the exchange rate to match the market demand, the Bangladesh Bank continued to sell dollars from reserves to keep the taka stable. As a result, reserves declined further.

Foreign currency reserves fell to $39.77 billion on July 14 from $46.39 billion the previous year. Though the country has received relatively large remittances from expatriates in July due to Eid, the taka’s value against the dollar is deteriorating.

Foreign exchange reserves are not only critical for maintaining the exchange rate of domestic currency but also contribute significantly to increased capital investment and long-term economic growth.

To keep the taka’s value stable, the Bangladesh government and Bangladesh Bank have taken measures to reduce imports and increase the flow of dollars. The government has discouraged the import of luxury items. The depreciation of the taka compelled the government to seek a loan from the International Monetary Fund. Only a year ago, Bangladesh had supported Sri Lanka with $250 million.

The weakening of the Taka against the dollar not only makes imports more expensive, but also raises the domestic prices of imported goods and other non-imported goods due to the substitution effect – which is when the sales of a product decline due to an increase in its price which prompts consumers to switch to cheaper alternatives. This worsens inflation.

Inflation at 9-year-high
For the past few years, inflation in Bangladesh had been under control but it began to increase in 2021 and has now risen to 7.56% according to official accounts, though the actual rate is thought to be much higher. The prices of rice, wheat, edible oil and other essential commodities are increasing and the inflation rate has climbed to a nine-year-high.

Several studies indicate that low-income citizens are struggling to cope with the high prices of essential commodities and compromising on their food and nutrition.

The government recently hiked urea fertiliser and fuel oil prices without implementing measures to improve the management of the energy sector and reduce inefficiency and system loss.

Comment by Riaz Haq on September 18, 2022 at 7:30pm

Global supply and Bangladesh
Mahtab Uddin Chowdhury | Published: 00:00, Sep 19,2022 | Updated: 23:21, Sep 18,2022

https://www.newagebd.net/article/181441/global-supply-and-bangladesh

According to the report, based on Dun & Bradstreet data, at least 374,000 businesses worldwide depend on Russian suppliers, while at least 241,000 businesses across the world rely on Ukrainian suppliers. As stated in Forbes magazine, ‘If the pandemic crippled the global supply chain, the war in Ukraine knocked it to its knees.’ The war generally destroys natural resources and creates enormous barriers to the market. This general tendency is manifested in the aftermath of the Russia-Ukraine war when commodity and oil prices saw an increase, global economic activities slowed down and inflation rate increased. Reportedly, the war reduced global GDP by about 1.5 per cent and led to a rise in global inflation of about 1.3 per cent.

Bangladesh’s post-pandemic economic recovery programme even before gaining momentum is at risk because of the Russia-Ukraine war. In terms of oil production, Russia ranks third in the world; hence high oil prices are hurting the entire economy. Bangladesh, an oil-importing nation, is already under strain from hefty import duties. Additionally, given that Russia is a significant market for Bangladesh’s ready-made garment products, global sanctions on Russia imply that Bangladesh’s trade with Russia will be impacted. In the last July–February, the revenue from exporting clothing to Russia was $482.23 million, or $60.15 on an average per month, but the revenue fell to $27.05 million in March–May 2022.

Furthermore, the high import dependency of Bangladesh has created a serious economic stagnation. Since Bangladesh primarily imports wheat from the Black Sea region, the price of wheat flour sharply increased. The government raised diesel prices by approximately 23 per cent in November 2021, which is already reflected in the high cost of transport and other necessities. Additionally, there has been a significant increase in the price of soybean oil.

All these things are causing the country’s inflation rate to be high, approximately 7.42 in May which is the highest in the last eight years. Let’s not forget the foreign debt that Bangladesh needs to pay back. At the end of fiscal 2020–21, Bangladesh’s external debt was $60.15 billion. However, the underlying concern is that, according to prominent economist Debapriya Bhattacharya, although Bangladesh’s external debt status is now in the green, it may move into the yellow zone by 2024–25.

Under this circumstances, Bangladesh is in dire need of taking some bold and dynamic steps to stabilise the economy. Bangladesh should look for alternative sources of importing goods. It’s essential to avoid being overly dependent on any one location or nation for specific products. In this context, the government of Bangladesh initiated some talks with Canada and some other countries.

The government has initiated these dialogue particularly after India stopped exporting its supply of wheat to Bangladesh. Similarly, Bangladesh needs to diversify its agricultural production to reduce import dependency. More research should be facilitated to encourage innovative approaches in this sector, particularly focusing on regularly imported products such as wheat, corn, and oilseed.

When it comes to talking about a better supply chain system, port management plays a vital role in Bangladesh or elsewhere. Based on a report by the World Bank and S&P Global Market Intelligence, the Chattogram port has been ranked as Asia’s least efficient trade hub for handling containers. Considering the low ranking, the government should focus more on improving the efficiency of the port management so that quick tracking and a better supply of goods can be ensured.

Comment by Riaz Haq on September 19, 2022 at 4:49pm

Prime Minister Sheikh Hasina said on Wednesday that her recent visit to India benefitted Bangladesh and she has not returned "empty handed" and emphasised that her trip has opened up a new horizon in the relationship between the two friendly neighbouring countries.

https://www.business-standard.com/article/current-affairs/i-have-no...

During Hasina's visit, India and Bangladesh signed seven agreements, including one on sharing of waters of Kushiyara river which is expected to benefit the regions of southern Assam and Bangladesh's Sylhet region.

"They (India) have shown much sincerity and I have not returned empty handed," Hasina told reporters here, nearly after a week she returned home following a four-day visit to India from September 5 to 8.

"I think that my visit, after a long break of three years due to the Covid pandemic, has opened a new horizon in Bangladesh-India relations, she said, adding that the people of both sides would be benefited from the cooperation in all the areas identified during her India visit and the decisions taken to solve the existing bilateral problems.

Her comments came as leaders of the main opposition outside parliament BNP alleged that Bangladesh gained nothing from her India visit while its secretary general Mirza Fakhrul Islam Alamgir said, "Hasina is unable to deal with India".

Hasina said a MoU on the cross-border Kushiyara river was one of the major achievements of her tour as it was expected to protect over 5,820,000 hectares of land in Bangladesh's northeastern Sylhet region from sudden and protracted flooding.

She said that as per the MoU, Bangladesh would receive 153 cusecs of water under the Surma-Kushiyara project from the common river Kushiyara and as a result, 5,000 hectares of land would get irrigation facilities through Rahimpur Link Canal.

She said the water sharing issue of major Teesta also featured during her talks with Indian counterpart Narendra Modi while BNP chairperson and former prime minister Khaleda Zia even forgot to raise the long pending Ganges water issue during her New Delhi tour."

Bangladesh and India had signed the Ganges Treaty in 1996 during Hasina's ruling Awami League government.

She said the two countries reached an agreement on cooperation in the fields of environment, climate change, cyber security, space technology, and green economy, cultural and people-to-people communication.

"We agreed to complete the construction work of the second gate proposed by India at the Petrapol-Benapole border as soon as possible to expand trade. A delegation from Bangladesh will soon visit India to participate in the start-up fair," Hasina added.

Hasina said New Delhi agreed not to halt export of products like sugar, onion, garlic and ginger to Bangladesh without informing Dhaka in advance so Bangladesh could find alternative sources for those essentials.

She said that cessation of border killings, trade expansion, withdrawal of anti-dumping duty on Bangladesh jute products, repatriation of the Rohingyas, import of electricity from Nepal and Bhutan via India, were also discussed.

"After all, in the changed world situation, this visit would accelerate both the countries to move forward together in a new way, Hasina said.

She added that similarities of language and culture deepened the historic relations with our closest neighbour and friendly country, India.

"Apart from this, the support during the Liberation War and cooperation after the independence has reached this friendship at a special level, she added.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Comment by Riaz Haq on November 25, 2022 at 9:00am

BD to become a trillion dollar economy: BCG

https://www.business-standard.com/article/international/bangladesh-...

Bangladesh is on course to become a $1 trillion economy by 2040, driven by consumer optimism, innovation in emerging economic sectors and a young engaged workforce, according to Boston Consulting Group.

With average annual growth of 6.4% between 2016 and 2021, the South Asian nation has outpaced peers such as India, Indonesia, Vietnam, the Philippines and Thailand, BCG wrote in a report released on Friday.

Bangladesh’s domestic consumer market is set to become the ninth-largest in the world. And a rapidly expanding middle and affluent class is projected to rise substantially between 2020 and 2025, the report said, with a robust gig economy propping up a workforce where the median age is just 28.

“The country could have easily been overshadowed by its neighbor to the northeast -- China -- or its continental cousin to the west -- India -- but in this region of economic powerhouses, Bangladesh stands tall,” BCG wrote.

Bangladesh progressed from a low-income to lower-middle-income country in 2015. Though that’s five years later than India, Bangladesh’s GDP per capita is already higher than its neighbor. The nation aims to become an upper-middle-income country by 2031.

Some challenges remain. Recent issues with liquidity, as well as foreign exchange and inflationary pressures, may slow growth in the short term, according to BCG. But Bangladesh has taken measures to position its $416 billion economy for a lucrative few decades, so long as it maintains an average growth rate of about 5%.

In a BCG survey analysis, 57% of respondents “continue to believe the next generation would have better lives than themselves, especially as the country transitions to a skill-based economy.”

“Though the economy faces some near-term volatility, we are confident that this highly resilient economy will continue to demonstrate robust growth in the long term,” the report said.

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