Bangladesh: Development Over Democracy

[Riaz Haq]

Until 2010, Bangladesh was a laggard in South Asia region. Its per capita income was about half of Pakistan's. Now Bangladesh's per capita gdp is higher than both India's and Pakistan's. What changed? The biggest change is Bangladeshi leader Shaikh Hasina's decision to stifle the unruly Opposition and the media to bring political and economic stability to the South Asian nation of 160 million people. It has eliminated a constant sense of crisis and assured investors and businesses of continuity of government policies. With development taking precedence over democracy, Shaikh Hasina followed the example of Asian Tigers  by focusing on export-led economic growth of her country. She incentivized the export-oriented garment industry and invested in human development. Bangladesh now outperforms India and Pakistan in a whole range of socioeconomic indicators: exports, economic growth, infant mortality rate, primary school enrollment, fertility rate and life expectancy.       

South Asian Countries' Export Growth. Source: Wall Street Journal

Source: The Economist

Bangladesh's Exports:

Bangladesh's garment exports have helped its economy outshine India's and Pakistan's in the last decade. Impressed by Bangladesh's progress, the United Nations’ Committee for Development Policy has recommended that the country be upgraded from least developed category that it has held the last 50 years. 

Per Capita Income Growth in Pakistan 2002-2019. Source: World Bank

The next challenge for Bangladesh is to move toward higher-value add manufacturing and exports, as Vietnam has done. Its export industry is still overwhelmingly focused on garment manufacturing. The country’s economic complexity, ranked by Harvard University’s Growth Lab, is 108 out of the 133 countries measured. That is actually lower than it was in 1995, according to the Wall Street Journal. 

Pakistan Growth By Decades. Source: National Trade and Transport Fa...

Vietnam's Rise:

Vietnam ruled by autocrats is rapidly becoming an Asian Tiger. With rising manufacturing costs in China and the US-China trade war,  many major manufacturers are relocating to other countries in Asia. This situation has helped Vietnam emerge as a hub of foreign direct investment (FDI). FDI flow into the country has averaged more than 6% of GDP, the highest of any emerging economy. The country’s recent economic data shows a rise of 18% in exports, with a 26% jump in computers/components exports and a 63% jump in machinery/accessories exports.  These figures have earned Vietnam the moniker of the newest "Asian Tiger".

Musharraf Years & History of Pakistan's GDP Growth Rates. Sourc...

Pakistan's Lost Decade:

It was in 2007 that Pakistan caught the "democracy" fever led by the lawless lawyers of Lahore. This led to the return of corrupt dynastic rule of Asif Zardari and then Nawaz Sharif. The year 2007 also marked the beginning of yet another lost decade that saw Pakistan's per capita gdp's continuing lag behind South Asia region and other emerging economies. 

Pakistan's per capita income started to lag behind other emerging nations in 2007

Pakistan's Potential: 

Pakistan was the original "Asian Tiger" back in the 1960s when  other developing Asian economies sought to emulate its development model. It became an export powerhouse in the 1960s when the country's manufactured exports exceeded those of Thailand, Malaysia and Indonesia combined.  The creation of major industrial estates in Karachi under President Ayub Khan's industrial policy incentivized industrial production and exports of value added manufactured products such as textiles. Now the country's industrial output lags its neighbors'. 

History of Pakistan's Manufactured Exports

With Chinese looking to relocate some of their industrial production to low-cost countries, Pakistan has a golden opportunity to grow its industrial output and exports again. Here's Karen Chen explaining why:

“Vietnam is too crowded already and moved into automobiles and electronics. There is no space for investment in Vietnam. Myanmar doesn’t have infrastructure. India is terrible. In Bangladesh you don’t have right conditions for setting up fabric units. So Pakistan is the ideal location for such garment manufacturing because of abundance of cheaper labour. The investment and tax policies for SEZs and new projects are also good. We’ve confidence to be at here.”

Seizing the opportunity to attract export-oriented investors will help Pakistan become the next Asian Asian Tiger economy. It will help the country avoid recurring balance-of-payments crises that have forced the nation to seek IMF bailouts with all their tough conditions. Focusing on "Plug and Play" Special Economic Zones (SEZs) is going to be essential to achieve this objective.

A video of retired General Amjad Shoaib responding to the question: "Is Pakistani military establishment to blame for all of Pakistan's problems?" He answers: "Yes, the Pakistani military produced Zulfikar Ali Bhutto and Nawaz Sharif....Zardari also rose from the NRO (pardon) granted by the Pakistani military". But then he asks: "Who forced the people to vote for them? Shouldn't the people share the blame for the ascent of these politician?" 

https://youtu.be/6GWid1ypa-k

  https://www.youtube.com/embed/6GWid1ypa-k"; title="YouTube video player" width="560"></iframe>" height="315" src="https://img1.blogblog.com/img/video_object.png" width="560" style="cursor: move; background-color: #b2b2b2;" />   

Related Links:

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South Asia Investor Review

Pakistan's Debt Crisis

Declining Investment Hurting Pakistan's Economic Growth

Brief History of Pakistan Economy 

Can Pakistan Avoid Recurring IMF Bailouts?

History of Pakistan Business and Industry

CPEC Financing: Is China Ripping Off Pakistan?

Pakistan's Lagging Industrial Output

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[Riaz Haq]

Bangladesh protests US sanctions against RAB, security chiefs
Seven people, including Bangladesh’s national police chief, have been sanctioned by Biden’s administration over alleged rights abuses.

https://www.aljazeera.com/news/2021/12/11/bangladesh-protests-us-sa...


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Bangladesh is not among the 110 countries that are invited to the US President Joe Biden's virtual Summit for Democracy, according to a list disclosed by the White House.

https://www.tbsnews.net/world/bangladesh-not-invited-bidens-summit-...

Among the South Asian countries, India, Pakistan and Nepal are invited to the conference scheduled for 9-10 December. Afghanistan and Sri Lanka also could not make it to the list.

Even though it is not clear what criteria were followed to extend the invitation, international relations analysts in Bangladesh have come up with mixed reactions while the foreign ministry has not yet spoken on the matter.

[Riaz Haq]

The Bangladesh story

https://www.dawn.com/news/1664104

The two major political parties, Sheikh Hasina’s Awami League and Khaleda Zia’s BNP, have alternated in power since 1991. Since 2009, the Awami League has ruled, having won three consecutive elections. The Battle of the Begums has remained intense and bitter. Khaleda Zia boycotted the elections and has remained in jail for quite some time along with many of her party stalwarts. Hence, it is interesting to examine how the country could make substantial economic and social headway with such fierce political rivalry and perceived instability.


First, unlike India and Pakistan, Bangladesh is culturally homogenous with the same language, ethnicity and a shared history and practically no religious, sectarian, tribal and feudal divisions. There is a rural-urban divide but rapid development has ensured that the level of general dissatisfaction is low. The pursuit of doing better has become a strong societal ethos. Bangladesh also doesn’t face any serious external threats.

Second, the unitary form of government, without the intervening tiers of state and provinces, has conferred full control of administrative, political, legal and financial powers upon the central government, minimising the frictions inherent in multi-tier government structures. Policy and its execution follow a well-defined chain of command. Given a weak opposition and strong leadership at the top (sometimes criticised as quasi or semi-authoritarian), the winning party calls the shots, reinforcing execution capabilities and holding bureaucrats accountable.

Third, women empowerment prevailed even before 1971 but the continued campaign for family planning, female education, health services and microcredit at all levels was carried out vigorously by successive governments with the active involvement of NGOS. BRAC, Grameen, ASA, etc have played a pivotal role in spreading education and health facilities and providing women access to microcredit. Aware of its own shortcomings, the government has extended full support to civil society organisations and allowed NGOs to operate freely. Educated, healthy women with fewer and well-spaced children and with access to financial resources have raised female labour participation rates and reduced the gender gap. Female primary enrolment ratio is 105pc.

[Riaz Haq]

Is #Bangladesh heading toward a #SriLanka-like #economic crisis? #Imports surging to reach $85 billion this year, #exports $50 billion. $35 billion trade deficit, leaving $10 billion current account deficit after #remittances. #energy #food #inflation https://www.dw.com/en/is-bangladesh-heading-toward-a-sri-lanka-like...

Like Colombo, Dhaka has also taken on massive foreign loans to embark on what critics call "white elephant" projects. The economic turmoil in Sri Lanka should serve as a cautionary tale, say experts.

Sri Lanka has been mired in economic turmoil over the past few months, with the country battling severe shortages of essential items and running out of petrol, medicines and foreign reserves amid an acute balance of payments crisis.

The resulting public fury targeting the government triggered mass street protests and political upheaval, forcing the resignation of Prime Minister Mahinda Rajapaksa and his Cabinet, and the appointment of a new prime minister.

Many in Bangladesh fear that their country could face a similar situation, given the rising trade deficit and foreign debt burden.

Bangladesh imported goods worth $61.52 billion (€58.48 billion) in the first nine months of the 2021-2022 fiscal year, a rise of 43.9% compared to the same period last year.

Exports, however, rose at a slower pace of 32.9% while remittances from Bangladeshis living abroad — a key source of foreign exchange — dropped about 20% in the first four months of 2022 from the year before, to $7 billion.

'Foreign reserves will go down to a dangerous level'
Muinul Islam, a Bangladeshi economist and former professor at Chittagong University, fears that the trade deficit could grow in the coming years as imports are increasing at a faster pace than exports.

"Our imports are set to reach $85 billion by this year, while exports won't be more than $50 billion. And, the trade deficit of $35 billion can't be bridged by remittances alone," Islam told DW, adding: "We will have to live with around a $10 billion shortfall this year."

The expert also pointed out that Bangladesh's foreign exchange reserves have fallen from $48 billion to $42 billion over the past eight months. He is worried that they may drop further in the coming months, likely down another $4 billion.

"If the trend of more imports against exports continues and we fail to minimize the gap with the remittances, our foreign reserves will go down to a dangerous level in the next three to four years," he stressed, underlining that this would lead to a significant devaluation of the nation's currency against the US dollar.

Massive loans for 'white elephant' projects?
Bangladesh, like Sri Lanka, has also taken on foreign loans in recent years to fund what critics call "white elephant" projects, which are expensive but totally unprofitable.

These "unnecessary projects" could cause trouble when the time comes to repay the debts, Islam said.

"We have taken a loan of $12 billion from Russia for a nuclear power plant which has a production capacity of just 2,400 megawatts. We can repay the debt in 20 years but the installments will be $565 million per year from 2025," he pointed out. "It's the worst kind of a white elephant project."

In total, the country will likely have to repay $4 billion per year from 2024, as installments for foreign loans, Islam estimated.

"I fear Bangladesh won't be able to repay those loans at that time because of the shortage of income from the mega projects," he stressed.

[Riaz Haq]

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...

[Riaz Haq]

In today’s “one party-one leader” Bangladesh, Hasina did not do what she did out of administrative compunction or commitment to secularism. Though she is increasingly leaning on Beijing – the landmark 6.15 km long road-rail Padma Bridge nearing completion and the stunning Bangladesh China Friendship Exhibition Centre in Dhaka are prime examples – she is still paranoid about India, which virtually surrounds Bangladesh territorially.

The geographical encirclement is nothing less than a stranglehold and strategic vice-like grip on the small nation.

https://www.thequint.com/voices/opinion/bangladesh-pm-sheikh-hasina...

India wields more influence in Bangladesh than the Security Council’s five permanent members put together. The Research and Analysis Wing (RAW) is the most dreaded outfit in the neighbouring country surpassing even the brutally unforgiving RAB. Hasina lives in mortal fear of RAW. She knows that she will be toppled if she displeases India. So she has adopted the policy of pleasing India to retain power at any cost.

Hasina has adopted a two-pronged policy to keep New Delhi happy.

Firstly, protect Bangladeshi Hindus comprising 9-10 percent of the population. The Citizenship Amendment Act (CAA) – and the ruthlessness with which anti-CAA protests were suppressed – has made Dhaka realise how important Bangladeshi Hindus are for the Modi government.


Secondly, pay obeisance to Modi. Hasina understands the importance of kowtowing to Modi who likes a head of state bowing to him. And currently, Hasina is the only obsequiously submissive leader left in South Asia who doesn’t miss an opportunity to pay homage to Modi.

Hasina’s greed for power also drove her to patronise the Hefazat-e-Islam (HeI), or Protectors of Islam, the hardline Islamist group, which went berserk during Durga Puja and opposed Modi’s visit. She was on excellent terms with HeI founder, Shah Ahmed Shafi, who famously said: “Women are like tamarind. They make men’s mouth water."

In 2017, Hasina fully reposed her faith in Shafi – who headed the largest network of Madarsas [Islamic seminaries] – to win the 2018 elections. He hailed her as the country’s “supreme political leader” and she called him the “nation’s spiritual head”. Hasina gave HeI and Shafi legitimacy by conceding three demands.

The compromise with secularism was criticised but Hasina was hell-bent on playing the Muslim card.

An End to the Cozy Arrangement
Hasina won a landslide victory in December 2018 general elections, bagging 288 out of 300 seats. The outcome was dubbed “rigged” and “farcical” across the board but New Delhi immediately congratulated Hasina for her third successive win.

Hasina did not stop pandering to Shafi. His plus-point was that he was not anti-India, which suited Hasina to the hilt. He was a product of the Deoband seminary in Uttar Pradesh and pampered equally by the governments of India and Bangladesh. When he fell ill during a visit to Deoband, he was flown by a special plane to New Delhi for treatment at the All India Institute of Medical Sciences (AIIMS).

[Riaz Haq]

BNP: Seeking India’s help to stay in power against Bangladesh's interests, dignity
Rizvi says the government has been indulging in a plot against the country’s independence and sovereignty

https://www.dhakatribune.com/bangladesh/2022/08/21/bnp-seeking-indi...

BNP on Sunday said Foreign Minister AK Abdul Momen’s plea to India to keep the Awami League government in power is against the interests and dignity of an independent and sovereign country.

Speaking at a press conference at BNP’s Nayapaltan central office, Senior Joint Secretary General Ruhul Kabir Rizvi said the foreign minister just created a ground for Prime Minister Sheikh Hasina to seek India’s favour during her visit to New Delhi next month to prop up her government again without voting.

He also said the government has been indulging in a plot against the country’s independence and sovereignty.

“Bangladesh is an independent sovereign state, not an organ of any other state. It depends on the desire of people whether or not the government of the People's Republic of Bangladesh remains in power,” the BNP leader said.

Earlier at a Janmashtami program in Chittagong on Thursday, FM Momen reportedly said that he urged the Indian government to back Hasina so she can stay in power.

Rizvi said the foreign minister’s remark has exposed the government’s knee-jerk foreign policy.

In the wake of the ministers’ different comments on his statement, the BNP leader said the foreign minister reaffirmed that he did not say anything wrong and he took the responsibility for what he said.

“Sheikh Hasina has entrusted him (Momen) with the responsibility for lobbying in this regard. Sheikh Hasina is going to India in September to curry its favour to remain in power. Abdul Momen has created the ground for it,” he observed.

Slamming the ruling party leaders for their comments that Momen is no one of the Awami League, Rizvi said the foreign minister became the MP from Sylhet city seat with the party ticket as he is the No-1 member of the Awami League’s Sylhet city unit. “He (Momen) did not give his statement personally as he did it using the position of the foreign minister.”

[Riaz Haq]

India Is Backing Sheikh Hasina's Autocratic Govt for Own Interest: Ex Bangladesh Chief Justice
In a telephonic conversation with The Wire, Justice Sinha, in exile in the US, says India should meet its obligations. "If there is no rule of law, if there is no democracy in neighbouring countries, it will certainly affect Indian politics too."

By Tasneem Khalil

https://thewire.in/south-asia/india-bangladesh-modi-sheikh-hasina


For years, Surendra Kumar Sinha was a member of the ruling order in Bangladesh, seen by many as a key ally of Sheikh Hasina and her regime. That was until he was put under house arrest and then forced into exile in late 2017. One year on, Sinha, former chief justice of Bangladesh, is speaking out against the “autocratic government” in Dhaka that is backed by New Delhi.

In his newly published memoir, A Broken Dream: Rule of Law, Human Rights and Democracy, Justice Sinha appears as the whistleblower many Bangladeshis have been waiting for. The chief justice once seen as a loyal insider is now revealing jaw-dropping details about a ruthless regime and the techniques of oppression and manipulation it deploys.

He is unrelenting in his criticism of the regime, and part of the criticism is directed at its main international patron: India.

“People cannot be ruled with the help of security forces consistently violating the civil rights of the citizens. No autocratic government can rule the country for an indefinite period,” Justice Sinha writes in his self-published memoir, which is already a bestseller on Amazon Kindle. “Unless democracy and rule of law are established, the sentiments of the people will keep rising against the tyrannical government and it will go against India as well because India is seen to be propping up an autocratic government for its own interest.”


As Justice Sinha tells me during a telephone interview, he took his criticism to the highest level of the Indian government when he met Prime Minister Narendra Modi during a trip to India in October 2015. “Actually, I questioned the prime minister of India when I met him – I questioned him. I said rule of law and democracy are not in existence in Bangladesh, you should not support this fanatic, autocratic government. I also explained to him that unless there is rule of law, I cannot administer justice because there is interference.”

What was Modi’s response?

“He said he is sorry about what is going on – he has limitations.”

“India supported our liberation struggle, [sacrificing] over 25,000 soldiers for the liberation of our country. We are not enemies, rather we are friends,” Justice Sinha wants me to know where exactly he is coming from. “[As a regional superpower], India has some obligations. If there is no rule of law, if there is no democracy in neighbouring countries, it will certainly affect Indian politics too.”

His worst fear? Bangladesh becoming another version of a dysfunctional Pakistan, where the writ of the constitutional state is ceded to rogue security agencies and jihadi groups.

[Riaz Haq]

India’s growing control over Bangladesh worries experts
Kushiyara agreement termed unfair, diesel import through pipeline to strengthen India’s control

https://www.newagebd.net/article/181366/indias-growing-control-over...


India’s control over Bangladesh is growing thanks to the latter’s decision to unnecessarily increase dependence on its neighbour, speakers at a press conference organised by Sarbojonkotha, a Bangla quarterly journal, observed on Saturday.

The latest agreement over sharing of the Kushiyara river water is not fair, they said, expressing surprise at the necessity of seeking India’s permission when Bangladesh has its own rights to lift the river water that is inside Bangladesh.

India has already built 12 irrigation projects and power plants in the upstream along the river even without bothering to ask for permission from Bangladesh in the downstream, they noted.

‘Bangladesh’s dependence on India is being unnecessarily increased. The dependency may be useful for the government but does not appear to benefit ordinary people,’ said Sarbojonkotha editor Anu Muhammad.

He said that Bangladesh planned to increase electricity import from India despite having excessive installed generation capacity.

‘India’s control over Bangladesh is strategically beneficial to a vested quarter in India and Bangladesh,’ said Anu Muhammad.

He demanded that border killings by the India’s Border Security Force be probed independently through the UN mediation.

Dhaka University teacher Moshahida Sultana presented a keynote paper at the virtual press conference held in the morning.

The keynote paper said that electricity import from India would soon contribute 16 per cent of the overall installed power generation capacity of Bangladesh.

‘Once the trans-border under-construction pipeline is established, Bangladesh will become dependent on India for meeting more than 20 per cent of its energy demand,’ she said.

The dependency is destined to strengthen India’s control over Bangladesh, she said, potentially opening a window for India’s interfering with Bangladesh’s internal affairs.

Bangladesh can save about $11 by refining imported crude oil in its own refineries but prefers instead to rely on India for refining oil through the construction of tarns-border pipeline which is said to save $2, said Moshahida.

The agreement for withdrawing water from the Kushiyara river in downstream was described as unfair by Md Khalequzzaman, who teaches geology at Lock Haven University in Pennsylvania in the United States.

India filled up canals and other infrastructures along the Barak River in the upstream, he said, reminding its adverse impacts on downstream.

Bangladesh recently reached an agreement with India for lifting 153 cusec of water from a Barak tributary, Rahimpur canal, which flows inside Bangladesh.

‘The agreement sets a bad precedent,’ he said, asking, ‘Why is there a necessity to seek permission from India for lifting water from a canal inside Bangladesh?’

Benefits of the Kushiyara agreement have been exaggerated, he said, adding that the water Bangladesh has permission for lifting from the river can irrigate maximum 3,750 hectares of land.

[Riaz Haq]

India’s growing control over Bangladesh worries experts
Kushiyara agreement termed unfair, diesel import through pipeline to strengthen India’s control

https://www.newagebd.net/article/181366/indias-growing-control-over...


India has been lifting Kushiyara water apparently even without asking Bangladesh for a long time, Khalequzzaman said while presenting his keynote paper.

Dhaka University teacher Mohammad Tanzimuddin Khan in his keynote paper highlighted border killing by the India’s Border Security Force citing an issue of the US-based Foreign Policy magazine listing Bangladesh-India border among the 13 most dangerous places in the world.

In the years between 2015 and 2022, 161 Bangladeshis were killed by India’s Border Security Force. Another 45 people have been murdered along the border in other incidents in 2020 alone, the highest number of such murder in a decade.

‘Reality does not reflect friendship that the two governments enjoy bragging about,’ said Tanzim.

Experts also called for basin-wise river management, advising Bangladesh to rectify the UN watercourses convention and get a right share of water from trans-boundary rivers in exchange of giving transit to India.

Bangladesh should regularly publish data on stream flows on trans-boundary rivers, they said, reminding that India did not release agreed amount of water through the Farakka Barrage at 65 per cent of the time despite having a treaty.

[Riaz Haq]

Shoaib Daniyal
@ShoaibDaniyal
"Hasina’s internal problems are linked to external dependencies. Politically reliant on New Delhi, she is finding it increasingly difficult to manage the ramifications of India’s turn towards Hindu nationalism..." -
@PaliwalAvi

https://twitter.com/ShoaibDaniyal/status/1547304109115469824?s=20&a...

The ground under Sheikh Hasina’s feet is shifting

With elections in 2023 and debt repayment schedules kicking off in 2024, it seems only a matter of time for the veneer of stability to lose its sheen. The risk of dislocation of this so-called house of cards has only been rising in recent years.


Bangladesh’s foreign minister AK Abdul Momen arrived in India last month to fight political 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 management of big power rivalries, is a parallel potent reality of Prime Minister Sheikh Hasina’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”.

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