Predicting the future is rarely an easy task – however even partial indications of what would happen can you give you significant strategic edge. Hence, we are always excited to launch the Business Confidence Index which gives you a sneak peak what the private sector of Bangladesh is thinking – which industries are the businesses most optimistic about? Which sectors might face difficulties? How do they feel about the profitability of their own enterprises? Where do they see the opportunity space for Bangladesh and what are the greatest challenges?
To understand these sentiments better we surveyed 102+ CXOs and members of the leadership team across 20+ different sectors clubbed into primary, secondary and tertiary. Using harmonized business confidence index we calculated sentiment scores across different industry verticals and an overall confidence score.
The overall business sentiment is “Cautiously Optimistic” with an index of +43 – on a scale of -100 to +100; Industry representatives cited increased investment in power generation, green revolution and mechanization in the agriculture sector, higher disposable income and consumer spending, growing health awareness, and the government’s particular interest in the ICT sector as factors contributing to their optimism for Bangladesh as an investment destination.
However business leaders were cautious due to need for financial sector reform (fault lines have been created by the classified loan conditions), bureaucratic red tapes in commencing and operating businesses, slump in apparel prices, infrastructure issues such as port congestion and problems related to transportation and logistics.
However, if we are to summarize the sentiments – the future of economy will hinge on three key themes.
Accelerating the discovery of the 3rd Engine: Our forex reserve is dependent on our two twin engines – remittance and export of RMG industry (making up ~80% of our total export basket). However, as we move forward to need to figure out our third engine.
Agriculture is the new Tech: Ag-business were on the top six last time and in the latest confidence survey has moved onto number 2. While government budget allocation plays a role, growing demand for processed consumer foods coupled with rise in per capita income, rise of disposable income of cities all around the country (the number of middle income cities to rise to 33 from 10 by 2025) and opportunities to use Ag-tech to boost productivity have pushed optimism. Mechanization is already playing a critical role and ODA (overseas development assistance) is also focusing on migrating technologies starting from high yielding Ag-inputs to funding private satellite imaging for better crop management. Additionally, innovative financial instruments via agent banking and even impact investments have started finding its way into the sector. Accelerator and incubation programs which were once only part of the ICT/Tech industry has started for Ag-SMEs as well with Spark, Unnoty, Open Accelerator being early in the field.
Talent at our Core: While we have grown with 6%+ GDP over a decade with a growing demographic bulge the country faces an absence of ready to use talent. While ICT/ITES stands at the top of potential sectors – the potential would stay un-met if we cannot develop our talents at the same pace with up-to-date skills. Stronger industry-academia linkage is needed to develop talent pipelines and create industry complementary expertise. At the same time the curriculum has to reflect more critical thinking and communication components geared towards to setting up small businesses that would accelerate employment creation.
Bangladesh is at a cross-roads waiting to drive into the highway leading to advanced economies. Hence it’s imperative we optimize our resources and strategic intent so that we focus on the right verticals and position ourselves as the “heart of Asia”.
This article was originally published in The Daily Star on March 16, 2018.