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Bicycles can boost Bangladesh's exports

Nadeem Rizwan's picture
Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall
Bicycles are the largest export of Bangladesh’s engineering sector, contributing about 12 percent of engineering exports. Credit: World Bank
This blog is part of a series exploring new sources of competitiveness in Bangladesh

Did you know that Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall?

Bicycles are the largest export of Bangladesh’s engineering sector, contributing about 12 percent of engineering exports.
 
This performance is in large part due to the high anti-dumping duty imposed by the EU against China.
 
Recently, the EU Parliament and the Council agreed on EU Commission’s proposal on a new methodology for calculating anti-dumping on imports from countries with significant market distortions or pervasive state influence on the economy.
 
This decision could mean that the 48.5 percent anti-dumping duty for Chinese bicycles may not end in 2018 as originally intended. China is disputing the EU’s dumping rules at the World Trade Organization.
 
As the global bicycle market is expected to grow to $34.9 billion by 2022, Bangladesh has an opportunity to diversify its exports beyond readymade garments. Presently, Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall.
Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall
EU27 bicycle imports in 2016 (Million $). Bangladesh is the 2nd largest non-EU exporter of bicycles to the EU and the 8th largest exporter overall. Source: UNComtrade through WITS

However, if the EU anti-dumping duty against China is reduced or lifted after 2018, Bangladesh’s price edge might be eroded.
 
Bangladeshi bicycle exporters estimate that without anti-dumping duties, Chinese bicycles could cost at least 10-20 percent less than Bangladeshi bicycles on European markets. And Chinese exporters can ship bicycles to the EU market with 35-50 percent shorter lead times.
 
So, how can Bangladeshi bicycles survive and grow?

Six reasons why Sri Lanka needs to boost its ailing private sector

Tatiana Nenova's picture
 Joe Qian / World Bank
A view of the business district in Colombo. Credit: Joe Qian / World Bank

Sri Lanka experienced strong growth at the end of its 26-year conflict. This was to be expected as post-war reconstruction tends to bring new hope and energy to a country.
 
And Sri Lanka has done well—5 percent growth is nothing to scoff at.  
 
However, Sri Lanka needs to create an environment that fosters private-sector growth and creates more and better jobs. To that end, the country should address these 6 pressing challenges:

1. The easy economic wins are almost exhausted

For a long time, the public-sector has been pouring funds into everything from infrastructure to healthcare. Unfortunately, Sri Lanka’s public sector is facing serious budget constraints. The island’s tax to growth domestic product (GDP) ratio is one of the lowest in the world, falling from 24.2% in 1978 to 10.1% in 2014. Sri Lanka should look for more sustainable sources of growth. As in many other countries, the answer lies with the private sector.
 
2. Sri Lanka has isolated itself from global and regional value chains 

Over the past decades, Sri Lanka has lost its trade competitiveness. As illustrated in the graph below, Sri Lanka outperformed Vietnam in the early 1990s on how much of its trade contributed to its growth domestic product. Vietnam has now overtaken Sri Lanka where trade has been harmed by high tariffs and para-tariffs and trade interventions on agriculture.


Sri Lanka dropped down by 14 notches to the 85th position out of 137 in the recent  Global Competitiveness Index.
           
3. The system inhibits private sector growth

Sri Lanka’s private sector is ailing. Sri Lankan companies are entrepreneurial and the country’s young people are smart, inquisitive, and dynamic. Yet, this does not translate into a vibrant private sector. Instead, public enterprises are the ones carrying the whole weight of development in this country.
 
The question is, why is the private sector not shouldering its burden of growth?


From the chart above, you can see how difficult it is to set up and operate a business in Sri Lanka. From paying taxes to enforcing contracts to registering property, entrepreneurs have the deck stacked against them.
 
Trading across borders is particularly challenging for Sri Lankan businesses. Trade facilitation is inadequate to the point of stunting growth and linkages to regional value chains. The chart explains just why Sri Lanka is considered one of the hardest countries in the world to run a trading business. Compare it to Singapore–you could even import a live tiger there without a problem.

Bangladesh corridor vital to India’s ‘Act East’ policy

Sanjay Kathuria's picture
India-Bangladesh land border crossing, Photo by Sanjay Kathuria
India-Bangladesh land border crossing. Credit: Sanjay Kathuria

Deepening connectivity and economic linkages between India and Bangladesh will be critical for the success of India’s ‘Act East’ policy.

Here are five priority areas that have the potential to change the economy of Northeast India:

1. Transport Connectivity

After 1947, Northeast (NE) India has had to access the rest of India largely via the “Chicken’s Neck” near Siliguri, greatly increasing travel times. Traders travel 1600 km from Agartala (Tripura) to Kolkata (West Bengal) via Siliguri to access Kolkata port. Instead, they can travel less than 600 kms to reach the same destination via Bangladesh, or even better, travel only 200 km to access the nearby port of Chittagong in Bangladesh.

This is set to change as close cooperation between Bangladesh and India (including various ongoing initiatives such as the transshipment of Indian goods through Bangladesh’s Ashuganj port to Northeast India, expanding of rail links within Northeast India and between the two countries, the BBIN Motor Vehicles Agreement) can dramatically reduce the cost of transport between Northeast India and the rest of India.

The resultant decline in prices of goods and services can have a strong impact on consumer welfare and poverty reduction in the Northeast. Such cooperation also opens up several additional possibilities of linking India with ASEAN via Myanmar.

Moving forward, expanding direct connectivity between NE India and the rest of India via Bangladesh, while giving Bangladesh similar access to Nepal and Bhutan via India, is critical.

2. Digital Connectivity

Broadband connectivity of 10 gbps is now being provided from Bangladesh’s Cox’s Bazar to Tripura and beyond, to help improve the speed and reliability of internet access in NE India. Bangladesh has the capacity to provide more.

Sri Lanka, you have a right to know!

Idah Z. Pswarayi-Riddihough's picture
Sri Lanka's Right to Information act (RTI) can help citizens hold governments accountable and encourage citizens to participate actively in their democracy.
Sri Lanka's Right to Information act (RTI) can help citizens hold governments accountable and encourage citizens to participate actively in their democracy.


Today, the world marks the International Day for the Universal Access to Information. Fittingly, we in Sri Lanka, celebrate 7 months since the Right to Information (RTI) Bill was enacted.  

The product of a slow and steady reform process, RTI is a milestone in Sri Lanka’s history.

Yet how many citizens know about its benefits?

As open access to information takes international center stage today, I’m hoping Sri Lanka’s Right to Information Bill, one of the world’s most comprehensive, will get the attention it deserves.

There is indeed much to celebrate.

Civil society organizations and private citizens are putting Sri Lanka’s RTI to the test. Diverse requests have been filed, from questions relating to how investments are made for the Employees’ Provident Fund (EPF) to how soil and sand mining permits have been allotted in districts like Gampaha.

Interestingly, people living in rural areas are more aware -- and vocal -- of their rights to know than people in urban areas.

The government is making steady progress. In the last six months, more than 3,000 information officers have been recruited. An independent RTI Commission enforces compliance and acts on those who do not follow the law. If, for example, an information officer refuses to release information pertaining to a citizen’s life, they must provide a valid reason or face legal penalties.

In the next few years, the Sri Lankan bureaucracy faces the huge task of revamping its record management, including its land registration system. This reform is an opportunity to live up to RTI’s ambitions of open governance and help citizens access land title information and records that give them a legal title to their property.

Reforms Sri Lanka needs to boost its economy

Idah Z. Pswarayi-Riddihough's picture
 Joe Qian/World Bank
The Colombo Stock Exchange. Credit: Joe Qian/World Bank

Many Sri Lankans understand the potential benefits of lowering trade costs and making their country more competitive in the global economy. The majority, however, fear increased competition, the unfair advantage of the private sector from abroad and limited skills and innovation to compete.

Yet, Sri Lanka’s aspirations cannot be realized in the current status quo.  

While changes in trade policies and regulations will undeniably improve the lives of most citizens, I’m mindful that some are likely to lose. However, many potential gainers of the reforms who are currently opposed to them are unaware of their benefits.

Implementing smart reforms means that government funds will be used more effectively for the people, improve access to better healthcare, education, basic infrastructure and provide Sri Lankans with opportunities to get more and better jobs. Let me focus on a few reforms that I believe are critical for the country.  First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.    

First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services.

How does Bhutan’s Economy Look?

Tenzin Lhaden's picture
Bhutan Economic Update
Bhutan has maintained solid economic performance to date in 2017 but delays in hydropower construction may affect its economic outlook with growth expected to slow to just under 7 percent in 2018. 

Bhutan is one of the smallest, but fastest-growing economies in the world. Its annual economic growth of 7.5 percent on average between 2006 and 2015, placed the country 13th of 118 countries, compared to the average global growth rate of 4.4 percent.

This growth has been shared by a majority of Bhutanese, with extreme poverty dropping from 25 percent in 2003 to 2 percent in 2012, based on the international poverty line of $1.90 a day (at purchasing power parity). This is among the rate in South Asia and compares favourably to the regional poverty rate of 19 percent. Equally impressive improvements were made in access to basic services such as health, education and asset ownership.

The recent developments on strong lending growth, inflation, exchange rates and international reserves show that Bhutan maintains a solid and stable growth in the first half of 2017. Gross international reserves have been increasing since 2012, when the country experienced an Indian rupee shortage. Reserves exceed $1 billion, equivalent to 10 months of imports of goods and services in mid-2017 which makes the country more resilient to potential shocks. This is also very much in line with the requirement spelled in the 2008 Constitution which outlines minimum reserve requirements. The Bhutanese ngultrum, pegged to the Indian rupee, have been stable or slightly appreciating against the U.S. dollar.

Despite recent solid growth and macroeconomic stability, we need to carefully monitor its Development. According to the latest Bhutan Economic Update, the hydropower construction and the implementation of the 2016 Economic Development Policy are expected to support this solid growth during the next few years. However, with confirmed delays in the completion of two hydropower projects, the contribution of the hydropower sector to growth will be lower than the originally projected. Therefore, the World Bank revised down its growth forecasts in 2019/20 by a few percentage points to 7.6 percent, still among the fastest in the world.

How can digital technology transform lives and improve opportunities in Bhutan?

Yoichiro Ishihara's picture
Tech Park
The recently opened Thimphu tech park – Bhutan’s first IT park -

The Kingdom of Bhutan is a landlocked country located high in the eastern Himalayan mountain range with its population 760,000. Up until about 20 years ago, the country was isolated from the world; Bhutan’s first ever television broadcast occurred in 1999. Since then, information communications technology (ICT) has made rapid advancement. Mobile subscriptions increased from 0.4 per 100 people in 2003 to 87 in 2015. The proportion of people using the internet have increased from 0.1% in 1999 to 40% in 2015. Today, all 20 districts and 201 (out of 205) sub-districts are connected through fiber optic cables.

The World Bank’s 2016 World Development Report on “
Digital Dividends” argues that digital technologies have boosted growth, expanded opportunities, and improved service delivery. Use of ICT for development is especially applicable to small states with populations of less than 1.5 million. Another report, “World Bank Group Engagement with Small States” finds that ICT investments can help reduce economic isolation, lessen barriers to trade, promote tourism, and improve mobility. These messages are highly relevant to Bhutan today.

The Government has enthusiastically adopted the use ICT to improve its services to its citizens as described in Bhutan ICT Roadmap and Bhutan E-Government Masterplan. The Government to Citizen (G2C) program, launched in 2005, provides a one-stop-shop for more than 100 services such as procuring a passport. The national ePayment Gateway Infrastructure, established by the Royal Monetary Authority (RMA), the central bank, has enabled citizens to pay for some public services online. Recently, the National Land Commission (NLC) launched eCitizen Portal - an online one-stop shop for transferring property titles online. This has reduced the number of days to transfer ownership of a property from 90 days to 62 days in the capital, Thimphu. More importantly, the NLC is reaching out to the private sector to seek feedback on how to improve its usability by piloting a feedback survey using an Interactive Voice Response (IVR) tool for the first time in Bhutan. The government has also introduced an electronic government procurement system (e-GP) to make optimal use of resources. Given the size of the budget (exceeding 30 percent of GDP), the adoption of e-GP will contribute to effective use of public resources. The World Bank Group has been supporting these efforts through various instruments such as the second Development Policy Credit: Fiscal Sustainability and Investment Climate, which helped get the eCitizen Portal off the ground.

How much should Bhutan worry about debt?

Yoichiro Ishihara's picture
Bhutan hydropower
Construction of the Dagachhu Hydropower Plant in Bhutan. Photo Credit: Asian Development Bank

In many respects, Bhutan has been a development success story. Its people have benefitted from decades of sharp reductions in poverty combined with impressive improvements in health and education. The country is a global model in environmental conservation. It is the first carbon negative country; Bhutan’s forests, which cover over 70% of the country, absorb more carbon dioxide than is produced by its emissions.

The Kingdom of Happiness also must grapple with the reality of managing budgets, creating infrastructure, and preparing its citizens to be able to create and take advantage of jobs of the future. To do that, we are working with closely with Bhutan to build the foundations for a more prosperous future through the cultivation of a vibrant private sector economy and supporting green development.

At the same time, Bhutan has invested generously in hydropower energy production to create a reliable and lasting source of green energy for its people. It also benefits from exporting excess electricity to neighboring India, whose energy needs continue to increase at a rapid pace with their growing economy.

In large part due to the hydropower investments, Bhutan’s public debt was 107 percent of the Gross Domestic Product (GDP) as of March 2017. Hydropower external debt was at 77 percent of GDP with non-hydropower external debt accounting for 22 percent of GDP. Questions have arisen on whether this level of debt is sustainable and what should be done to address it.

World Bank guarantees help Pakistan get cheaper, longer term loans from international market

Enrique Blanco Armas's picture
Dasu
Photo Credit: Pakistan's Water and Power Development Authority (WAPDA)

Compared to their investment needs, developing countries have very limited concessional financing available to them. International commercial banks are constrained in terms of the size and tenors of credits to Emerging Markets and Developing Economies. A key challenge therefore, is to channel large savings and capital into productive investments in developing countries, partly by ‘de-risking’ investments and borrowings.  Pakistan is at the forefront of these efforts, recently making use of two World Bank guarantees to access over 1 billion US dollars in two international commercial loan financings.

A $420 million IBRD Policy Based Guarantee (PBG) was approved by the World Bank Board alongside a $500 million IDA credit in June 2016. The PBG guarantee partially takes over the risk of a commercial bank’s loan to a government. The PBG and the IDA credit supported a program of reforms including the adoption of a new and more inclusive poverty line, efforts to broaden the tax base, enhanced transparency of State Owned Enterprises, improved debt management and a significant overhaul of the regulatory framework of the financial sector.  Improved access to international financing through the PBG will reduce the government’s dependence on domestic financing and free up resources for private sector investment. The guarantee also signals the World Bank’s confidence in Pakistan’s economic reforms program – a signal that is particularly important after the successful completion of the IMF program. The government used the US$420 million PBG to partly guarantee a 10-year US$700 million loan, extending tenor significantly and achieving cost savings.  

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