Bangladesh has surpassed India and Pakistan in terms of sustainable trade on the back of better performance in economic and social areas, says the Economist Intelligence Unit (EIU).
However, the ranking in the environmental aspect is poor for Bangladesh due to worsening deforestation and air and water pollution, according to the EIU's latest Sustainable Trade Index 2020 commissioned by the Hinrich Foundation.
The country jumped five places up in the index scoring 49.3 out of 100 and ranked 12th among 20 Indo-Pacific economies, while India and Pakistan scored 47.1 and 43.9 respectively.
The Economist Intelligence Unit (EIU) is the research and analysis division of the Economist Group providing forecasting and advisory services.
The index measures a country's capacity to participate in the international trading system in a manner that supports the long-term domestic and global goals of economic growth, environmental protection, and social capital development.
The index is based on 27 indicators and 20 sub-indicators under three pillars – economic, environment and social.
Bangladesh experienced the highest improvement in social development (9th), but ranked at the bottom in labour standards.
On the economic front, the country ranked at the top in the economic growth indicator and performed better in the export market concentration, gross fixed capital formation and growth in the labour force.
But a poor show in trade costs, foreign direct investment, foreign trade and payments put Bangladesh at the 12th place in the index.
Although the country improved its ranking in the environment pillar to 16th, the scores fell to 36 from 36.8, placing it behind India and Pakistan.
In the two previous editions – 2016 and 2018 – India was ahead of Bangladesh in the index. Pakistan also stood ahead of Bangladesh in 2018. Another South Asian country, Sri Lanka ranked 9th this year with a score of 50.5.
According to the index, there was a tie for the first place between Japan and South Korea this year, both receiving overall scores of 75.1 in 2020.
According to the International Monetary Fund's recent forecast, Bangladesh's per capita GDP is set to surpass that of India in the current fiscal year.
Agreeing with the country's improvement in sustainable trade as evaluated by the index, Shams Mahmud, president of Dhaka Chamber of Commerce and Industry (DCCI), said "Our economic growth has always been sustainable riding on the government's supportive policies."
For instance, the government's stimulus packages and social protection programmes in this time of Covid-19 have helped keep the country's economy afloat, he added.
The Bangladesh Export Processing Zone Authority has been working on optimising the supply chain by bringing all industries together in economic zones, thus contributing to the sustainable trade, Shams Mahmud pointed out.
Replying on Bangladesh's poor show in environmental compliance, he said it is still a distant dream for a developing country like Bangladesh with a huge population to operate industries fully complying with environmental guidelines.
Nevertheless, the government has taken some initiatives like penalising polluting factories, which, to some extent, helped to reduce industrial pollution, he said adding that environment will get more focus once the economic zones are developed.
He suggested taking precautionary measures to stop possible environment degradation caused by the under-construction coal-fired Rampal power plant adjacent to the Sundarbans.
The DCCI president said it was necessary to be careful about any harm to the environment by the transportation of goods through the inland water transit with India.
Dr Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), said this index cannot be called a global index as the ranking has been made based on only 20 countries. Particularly, the countries which have greater trade relations with the United States were included on the list.
"We are doing better than other countries in terms of education attainment. We have relatively less child labour and gender discrimination. Political stability is also playing a part to put the country ahead of eight countries in the social pillar," he added.
But the country's position should have been better in the economic aspect as its macro-economic condition was stable before the Covid-19 hit.
"There is still room for improvement in some indicators which will help us stand among the top 10 countries in the economic index," said Dr Moazzem.
It is possible to easily increase foreign direct investment, the investment to GDP ratio, and minimise non-tariff barriers to do better on the economic front, he added.
"We can improve our performance in economic area with long-term technology infrastructure and more export diversification," Dr Moazzem mentioned.
Focusing on improvement in the environment pillar, the CPD research director also said, "We need to adopt long-term initiatives to stop the environmental degradation."
Strengthening legal provisions and monitoring enforcement, building awareness among entrepreneurs and industrialists, and introducing different environmental taxes can improve the country's performance in environment, he added.
"In many cases, we sacrifice the environment for economic development. Policymakers should consider the environment as an equally important issue," the CPD research director said.