Economic revolution of Bangladesh: With diversified sectors at the heart of it

In the wake of its hard-fought liberation in 1971, Bangladesh's incredible transformation into an economic powerhouse is a testament to its solid spirit. Emerging from the shadows of conflict, the nation embarked on a mission to establish itself as a thriving force.

The initial steps were rooted in tea and jute exports, but the challenges posed by flooding and the ever-shifting global demands soon highlighted the vulnerabilities of such reliance.

However, amid these trials, a game-changing force emerged -- the readymade garment (RMG) industry. Starting to serve the nation in 1978, it rapidly claimed a remarkable 80 percent share of export earnings for almost 30 years.

This transformation underscored the crucial lesson of diversification learned from the struggles of the jute sector. The RMG industry became the foundation of Bangladesh's balance of payments, ensuring sustainability by reducing dependence on a single sector.

Yet, the realisation that leaning solely on traditional industries carried risks led to the rise of many sectors, such as information technology (IT), pharmaceuticals, agriculture, agro-processing, jute, leather goods and tourism.

This strategic diversification was pivotal in safeguarding the economy against external shocks and contributing to steady growth.

History shows that relying heavily only on a particular sector instead of growing more industrial avenues makes our economy vulnerable to fluctuations in global demand and changing commodity prices.

Diversification ensures stability and economic growth, especially in the face of recurring downturns. New industries promise higher value-added products and services, which might increase export earnings and ensure trade balance.

Bangladesh has set a goal of achieving developed country status by 2026. While coming out of the least developed country (LDC) category brings pride, it also brings the challenge of adapting to a changing landscape.

Trade facilities could shrink, foreign grants might decrease and opportunities for concessional loans could reduce.

Notably, sectors like RMG and pharmaceuticals will also feel the strain due to the loss of Generalized System of Preferences (GSP) benefits and Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement concessions.

Studies suggest that in the post-LDC period, we could potentially lose 14 percent, or $5.73 billion, in annual export earnings, primarily due to the GSP facility's expiration.

This could impact various aspects of our economy, including employment, exports and forex reserves, creating additional pressure on our growth. The adverse effect will be most felt in the RMG sector, which alone contributes 81 percent of the total exports; unless the industry switches to manmade fibre that could help the country bring diversification within the sector.

Thus, it is important to explore new wings to keep pace with the growing development. Innovating tirelessly, our private sector rose to the occasion by diversifying our export basket, aligning with the government's agenda.

From manufacturing high-tech gadgets to assembling cars for global brands, we're pushing the boundaries of manufacturing excellence.

According to the newly established dream of Smart Bangladesh consisting of four core pillars -- Smart Citizen, Smart Government, Smart Society and Smart Economy -- by 2041, some sectors are coming into play, where digital commerce plays a vital role in stepping into a cashless society.

Diversifying beyond traditional sectors and embracing e-commerce as a growth pillar is a strategic move. It insulates us from the risks of overreliance on specific industries, making us more resilient to global economic fluctuations. This diversification brings increased foreign investments as well as export earnings that push economic development.

E-commerce is not merely a saying; it is a transformative force. According to the CPD, the size of the local e-commerce market is likely to grow by $4 billion in four years and is projected to reach a $10.5 billion value in 2026, which was $6.6 billion at the end of 2022.

Aligning with the broader goals, we need a robust policy framework to develop the e-commerce industry. The government policy support for e-commerce and platforms will stimulate innovation, technology advancement, and entrepreneurship.

In this ecosystem, employment opportunities abound and most importantly address unemployment concerns and societal stability development.

Notably, more than 2,000 e-commerce companies are in operation in Bangladesh. Prominent companies like Daraz, Chaldal, Foodpanda, Pickaboo, Othoba and Rokomari play vital roles in shaping this industry moving forward.

Moreover, a significant legislative decision made in June 2023 to include the definition of online marketplace in the country's VAT regulations further sets the stage for a new era of growth and innovation in Bangladesh's e-commerce sector, which is a key driver for the nation's digital economic growth.

Furthermore, as our e-commerce landscape encompasses both domestic and international markets, it enhances our global competitiveness as well. This, in turn, leads to bigger foreign exchange earnings, positively impacting our balance of payments.

In essence, government patronage of the growing e-commerce sector creates a virtuous cycle of economic diversification, prosperity and long-term flexibility.

As Bangladesh steers towards inclusive and sustained growth, e-commerce is slowly but surely taking centre stage. With a dynamic vision and data-backed strategies, we are not just embracing change, we are shaping it.

The author is a marketing specialist