Why Bangladesh is experiencing an economic miracle despite the corona crisis
Skip to main content
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
The Business Standard
WEDNESDAY, MAY 18, 2022
WEDNESDAY, MAY 18, 2022
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
Why Bangladesh is experiencing an economic miracle despite the corona crisis

Interviews

Mathias Peer
11 January, 2021, 10:20 pm
Last modified: 12 January, 2021, 11:08 am

Related News

  • WHO: Covid-19 falling everywhere, except Americas and Africa
  • N Korea reports first Covid-19 outbreak, orders lockdown
  • 'If the govt can control 25% of the market, the influence of big importers will be reduced' 
  • CCS demands traders who stockpile edible oils be brought to justice
  • 34 volunteers chose to get covid. Here’s what scientists learned

Why Bangladesh is experiencing an economic miracle despite the corona crisis

As the economy is growing fast in Bangladesh, there are new opportunities for German companies

Mathias Peer
11 January, 2021, 10:20 pm
Last modified: 12 January, 2021, 11:08 am
German businessman Thomas Hoffmann. TBS Illustration
German businessman Thomas Hoffmann. TBS Illustration

It was difficult for Thomas Hoffmann to even find a buyer for his knitting machines in Bangladesh. At the time, labour was so cheap that it was hardly worth buying machinery, remembers Hoffmann who runs the local branch of the Baden-Württemberg mechanical engineering company, Stoll in Dhaka.

But the business situation has changed radically: Two years ago, Bangladesh, measured by the number of units sold, became the world's most important sales market for the company, which supplies its machines to more than 70 countries.

Hoffmann continues to see great potential: "I am sure that the market will continue to grow here in the years to come," he says.

The experience of the German manager contradicts the image of Bangladesh that has established itself in the West: Extreme poverty, low wages and natural disasters have long shaped the international perception of the South Asian state.

But the reputation as Asia's poor house is no longer true: Bangladesh has developed into a boom state in recent years. Even in the corona crisis, the country's economy is growing much faster than in other parts of the region. Good business with Germany is partly responsible for the upswing. Now the government in Bangladesh is targeting German investors.

Higher per capita income than India

With its most recent economic development, the country with a population of 165 million presents itself to international entrepreneurs as the best in its class: The International Monetary Fund (IMF) expects an economic growth of 3.8% in Bangladesh for the crisis year 2020 – by far the highest value in the whole of Asia.

Previously, the country's economic output had increased by more than 6% every year since 2011. In 2019 it was even more than 8%. As a result, the United Nations will recommend in February that Bangladesh be removed from the list of the least developed countries.

The development is causing a stir on the Indian subcontinent: According to data from the IMF, Bangladesh overtook India in per capita income in 2020.

"If an emerging country develops positively, that's obviously good news," commented the former chief economist of the World Bank, Kaushik Basu, who came from India. "But it's shocking that India, which was 25% ahead five years ago, is now behind."

There are many reasons for Bangladesh's successful race to catch up: the country benefits from around 10 million workers abroad, who, according to World Bank estimates, recently sent a total of around $20 billion back home. That corresponds to almost 7% of the total economic output.

In addition, investments in the social and educational system are considered essential factors for economic advancement. But an industry that has often been scolded also played a central role: Bangladesh's textile industry.

Bangladesh is the largest fashion manufacturer in the world after China. The industry recently employed around four million – mostly female – employees and represented more than 80% of Bangladesh's exports. With a share of more than 13%, Germany is the main customer – ahead of the USA.

The deliveries go to companies such as Kik, Aldi, Lidl and Tchibo. The companies have been criticized for years because of poor working conditions at their suppliers. The collapse of the Rana Plaza textile factory with more than 1,100 deaths in 2013 marked a low point.

Fashion industry in Bangladesh: More security

However, the pressure from European branded companies on factory owners has brought positive changes since then. "I think great progress has been made since 2013," said Dan Rees, who heads the International Labor Organization (ILO)'s Better Work program.

There is still a need for improvement. "The country's fashion industry is now a safer place than it used to be." However, the corona crisis has led to the loss of tens of thousands of jobs in the industry in recent months: manufacturers suffer from the fact that hardly any new customers in Europe and America are created during lockdowns to buy clothing.

In April 2020, the country's textile exports fell by more than 80% and in May by more than 60%. The second coronavirus wave in Europe gave the factories another job aggression.

Stoll manager Hoffmann is also feeling this: "We have hardly been able to sell any machines since April." But he is optimistic about 2021: After a long dry spell, customers have already shown interest in new machines again.

"If only half of these deals are realized, I'm already satisfied," says Hoffmann. The economic upswing in the country is still noticeable even in the difficult corona year: "There is no corner in Dhaka that is not being built," he says. "Every year the streets get fuller with the cars of the growing middle class."

A large part of the vehicles are imported. With the aim of diversifying the business model in her country, the government of Prime Minister Sheikh Hasina has long been trying to attract plants from foreign automobile manufacturers – and is also negotiating this with German companies.

The head of government's economic policy advisor, Salman F Rahman, said in early December that he had spoken to Volkswagen about opening an electric car factory in Bangladesh. In order to win such a prestigious project, the government would obviously want to be generous, as Rahman emphasized: Volkswagen would get the land for the factory for free.

This interview was originally published in German financial magazine Handelsblatt.

Economy / Top News

Economic miracle / Coronavirus / crisis / Thomas Hoffmann

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Social safety budget to stay same despite inflation rise
    Social safety budget to stay same despite inflation rise
  • RMG makers worried over move on power tariff hike
    RMG makers worried over move on power tariff hike
  • A packet of US five-dollar bills is inspected at the Bureau of Engraving and Printing in Washington March 26, 2015. REUTERS/Gary Cameron
    Dollar hits Tk100 mark in open market

MOST VIEWED

  • :Wholesalers as well as retail shop owners withdrew edible oil from the market in the hope of more profit. Photo: Mohammad Minhaj Uddin
    'If the govt can control 25% of the market, the influence of big importers will be reduced' 
  • Though the highways are being widened, the quality of the journey deteriorates as the day passes. Photo: Collected
    'More lanes will not solve the problem, we need to improve the operational condition of highways'
  • Dr Khondaker Golam Moazzem. Sketch: TBS
    ‘Subsidies are facilitating the concentration of exports, not diversification’
  • Dr Zaidi Sattar. Sketch: TBS
    ‘The protection of import-substituting industries is creating an anti-export bias’
  • Syeda Rizwana Hasan. TBS Sketch
    ‘Why don’t the police have sensitivity towards environmental conservation?’
  • Nurul Afsar, deputy managing director at Electro Mart. Illustration: TBS
    Haiko to become next big brand with Konka, Gree

Related News

  • WHO: Covid-19 falling everywhere, except Americas and Africa
  • N Korea reports first Covid-19 outbreak, orders lockdown
  • 'If the govt can control 25% of the market, the influence of big importers will be reduced' 
  • CCS demands traders who stockpile edible oils be brought to justice
  • 34 volunteers chose to get covid. Here’s what scientists learned

Features

Despite Bangladesh having about 24,000 km of waterways, only a few hundred kilometres are covered by commercial launch services. Photo: Saad Abdullah

Utilising waterways: When common home-goers show the way

11h | Panorama
Illustration: TBS

How Putin revived Nato

13h | Panorama
The reception is a volumetric box-shaped room that has two glass walls on both the front and back ends and the other two walls are adorned with interior plants, wood and aluminium screens. Photo: Noor-A-Alam

The United House: Living and working inside nature

13h | Habitat
Pcycle team members at a waste management orientation event. Photo: Courtesy

Pcycle: Turning waste from bins into beautiful crafts

14h | Panorama

More Videos from TBS

The first mosque in India was built Prophet Mohammad time

The first mosque in India was built Prophet Mohammad time

4h | Videos
After six decades ,the Archies is back

After six decades ,the Archies is back

4h | Videos
Exporters in discomfort, expatriates preferring Hundi

Exporters in discomfort, expatriates preferring Hundi

4h | Videos
Can your coworker be your closest friend?

Can your coworker be your closest friend?

14h | Videos

Most Read

1
Representative Photo: Pixabay.
Bangladesh

Microplastics found in 5 local sugar brands

2
Mushfiq Mobarak. Photo: Noor-A-Alam
Panorama

Meet the Yale professor who anchors his research in Bangladesh and scales up interventions globally

3
The story of Bangladesh becoming a major bicycle exporter
Industry

The story of Bangladesh becoming a major bicycle exporter

4
How Bangladesh can achieve edible oil self-sufficiency with local alternatives
Bazaar

How Bangladesh can achieve edible oil self-sufficiency with local alternatives

5
Govt tightens belt to relieve reserve
Economy

Govt tightens belt to relieve reserve

6
Impact of falling taka against US dollar
Banking

Taka losing more value as global currency market volatility persists

The Business Standard
Top
  • Home
  • Entertainment
  • Sports
  • About Us
  • Bangladesh
  • International
  • Privacy Policy
  • Comment Policy
  • Contact Us
  • Economy
  • Sitemap
  • RSS

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net

Copyright © 2022 THE BUSINESS STANDARD All rights reserved. Technical Partner: RSI Lab