23 Mar, 2012

Bangladesh & Entire Region Will Benefit if Myanmar Reforms Progress – Ambassador Kazi Hussain

Imtiaz Muqbil

BANGKOK – The opening up of Myanmar will generate ripple-effect benefits for neighbouring Bangladesh, facilitate linkages between Southeast and South Asia and potentially contribute to the emergence of new development paradigm in the Asian Century, Bangladesh Ambassador to Thailand Kazi Hussain said.

In an interview, Mr. Hussain said the significance of the changes in Myanmar should not be underestimated. If all goes well, the improved regionwide sea, air and land connectivity will allow economic progress to reach the inner regions of Bangladesh, open up more port-access for the northeastern regions of India and benefit southern China, Bhutan and Nepal.

Mr. Hussain said Bangladesh saw the opening of Myanmar as being both a competitive challenge as well as a complementary advantage. At the same time, given this critical juncture in Asian and global history, Mr. Hussain said it required an effort to mainstream social and economic development philosophies that had so far been seen as being only on the fringe.

Gains for Bangladesh

According to the Ambassador, Myanmar has tremendous potential as a source of energy and resources as well as a bridgehead for the entire region. Its membership in two major regional organisations – ASEAN and BIMSTEC – enhances its role as a natural partner in development. If the reforms proceed well, Myanmar will be able to play its rightful role in the progress of the entire region.

“The changes in Myanmar also give us an incentive to change, especially in addressing common challenges. We cannot be complacent about what is happening in our neighbouring countries. Both our countries share a common interest in uplifting the livelihoods of our people within the framework of democratic traditions.”

The Ambassador noted the broader context of changes in the economic profile of Bangladesh, whose 160-million strong population makes it one of Asia’s most populous countries. Over the past few decades, it’s primary economic earners have been remittances from migrant labour, textile and garment exports and agriculture, mainly jute. But now, new economic models are needed, and that means enhancing connectivity with the rest of the region.

In the past, he said, readymade garments were the biggest exports. The sector employed three million workers, of whom 90% were women. This certainly provided a greater degree of women empowerment, gave them a voice in the family and boosted female education, especially in the remote villages. About 70 to 80% of garments were exported to North America and Europe, thanks to the GSP privileges. Asia did not figure very highly, and certainly not Thailand which was more of a source country for imports, such as machinery for garment production, technical know-how and accessories.

The ambassador cited Thailand as an example of a country that had taken full advantage of its geographical location at the heart of the Association of Southeast Asian region. “I believe Thailand is a gateway to Southeast Asia, a regional hub for many regional organisations and corporate headquarters. So, the linkage between the two business communities (Thailand and Bangladesh) has been natural.”

Travel & tourism has benefitted. Thailand, being only two hours flight away, gets a large number of Bangladeshi tourists, especially medical tourists. As Bangladeshis have become richer, those who can afford foreign treatments have shifted from India to Thailand.

Regional Benefits

Because Myanmar is located directly between Thailand and Bangladesh, its opening up will further link all three countries. In the global context, Asia is rising. Mr. Hussain said that Bangladesh being a Muslim-majority country, also had good grounds for stronger relations with Malaysia, Indonesia and Brunei in ASEAN. Singapore is also a strong trading partner as a supplier of electrical and electronic products.

So far, Mr. Hussain said, Asia has been a manufacturing base, with the region’s smaller economies supplementing the larger economies. However, the Asian financial crisis in 1997 and the 2008-09 financial and economic crisis in the West has led to serious policy-shifts to look more within the region. The U.S. and EU markets are shrinking but “because we can’t stop production, the question now is how can we create wealth in our own backyard. With the emergence of China and India, this production base is now transforming into a consumption base. And the moment you create a bigger demand, there is a multiplier effect.”

The Ambassador noted that ASEAN is preparing for the ASEAN Economic Community era which will lead to free movement of labour, capital and services to, from and within the region. This creates great opportunity to forge stronger connectivity between both ASEAN and SAARC.

The eight SAARC member countries, including Bangladesh, comprise one fifth of the global population. India, the largest of the South Asian countries, provides a powerful industrial and intellectual base. Countries such as Pakistan and Bangladesh can also complement India to some extent, followed by the smaller countries as Afghanistan, Nepal and Bhutan (all landlocked) and the Maldives and Sri Lanka (sealocked).

“SAARC’s human resources offer a huge advantage for having a self-reliant production base as well as a consumption base. On the production side, the SAARC region can offer competitive labour costs. The region also has no shortage of educational institutions, especially in India, which churns out a huge number of professionals. Many Indian expatriates abroad are also returning home to work in India.”

Said the Ambassador, “The key is to start making products which can be consumed in both ASEAN and South Asia. If a complementary linkage can be forged, both South and Southeast Asia will come to fore.”

Connectivity Benefits

Improved connectivity will provide better access to markets as well as lower costs through elimination of bureaucracy and red tape. For Bangladesh, this will go a long way towards alleviating poverty, diversifying the economic base and generating new export-markets. “My country now has a clear opportunity to develop transit and trans-shipment routes for the north for the northeastern provinces of India and beyond to Bhutan and Nepal. Already, we have opened up Chittagong and Mongla port for business and internal freight to these countries. This connectivity could also lead into the southern parts of China up to Kunming. China with its huge resources and consumer populations can become a big potential market for entire SAARC.”

As transportation is a capital intensive exercise, development partners and multilateral institutions will play an important role. The Ambassador said three sectors are receiving highest funding priority in Bangladesh – power, infrastructure and agriculture. However, the country also has to deal with side-effects, such as the ever shrinking landmass — one percent of agricultural land is being lost every year to urbanisation. This is a chicken and egg dilemma; as more villages become accessible by roads, the more it contributes to rural-urban migration.

Nevertheless, the ambassador said, the country’s strategy is to provide road linkages to the key border-crossings with its neighbours through the capital, Dhaka. For example, the road network that links Southeast Bangladesh, on the border with Myanmar, with Dhaka, is being expanded from four to eight lanes. The same with the road from Northwest Bangladesh to the capital, thus providing a linkage right across the country from the southeast to the northwest.

Just as Dawei port in Myanmar will be developed so, too, will it spur the development of Bangladesh’s own key ports, such as Chittagong and Mongla. Because Bangladesh is also home to the deltas of some of South Asia’s major rivers, the building of bridges is essential. One such bridge, the Padma, is considered to be one of the largest infrastructure projects ever undertaken in Bangladesh.

In terms of power generation, the three main sources of power in Bangladesh are coal, furnace oil and natural gas. Although Bangladesh has also excellent quality of coal, it is not enough, and has to import electricity from India and Bhutan. It hopes to become at least self-sufficient by 2015. Energy sufficiency will also require tapping offshore resources of natural gas in the Bay of Bengal. A maritime dispute with Myanmar is holding up exploration but ongoing talks are expected to reach a deal by the end of March 2012.

The most critical issue will be water, which involves relations with India, an upper riparian country through which South Asia’s most important rivers flow before entering the Bay of Bengal through deltas in Bangladesh. The Ambassador said that India and Bangladesh both face huge water supply problems, which makes it a survival issue as well as a political issue. Recent rounds of high level talks have seen both governments expressing clear commitments to resolve the issue in a mutually beneficial way.

“Water is crucially important. An equitable sharing formula has to be worked out. It is a long-drawn and emotive process in both countries. However, much progress has been made in the last three years. As long as there is goodwill and commitment, a mutually beneficial arrangement will be worked out.”

New Development Models for an Asian Century

The Ambassador said that as the emergence of Bangladesh and Myanmar contributes to an Asia Century, the region will need to explore new development models such as the Grameen Bank and its concept of micro-finance. Grameen Bank, whose Bangladeshi founder Muhammad Yunus won a Nobel Prize for Peace in 2006, has provided food for thought for financial managers globally.

Bangladesh is the birthplace of microfinance, the Ambassador said. Many of the vulnerable groups have come out of poverty, groups which were considered unworthy of getting institutional credit. One can argue about how much microfinance has contributed to socio-economic development but there is no doubt that if credit is made available to this segment of society, they will be able to fend for themselves, benefitting society as a whole.”

Mr. Hussain acknowledged some recent internal controversies over what he referred to as “different interpretations of the existing regulations.” However, he said, this had not affected the core philosophy of the bank, nor the development model itself.

Over the long-term, microfinance is one of five development philosophies that could allow Asia and indeed the world to chart a more sustainable future. The other four are the sufficiency economy of Thailand’s King Bhumibhol; the Gross National Happiness philosophy pioneered by the former King of Bhutan, the need-not-greed model of Mahatma Gandhi and the entire interest-free philosophy of Islamic Finance.

The Ambassador said that combined, these five strains of development had the potential to create a whole new path of sustainability that would address both poverty alleviation as well as resource consumption. It would also have a direct benefit for society’s most vulnerable people, including those both politically and economically vulnerable.

“There is no doubt that conventional economic development models need a serious rethink, beyond the pursuit of materialism,” he said. “If money could bring happiness, the so-called developed countries would be full of happy people. But clearly that is not the case.”

On the other hand, the alternative philosophies remove a very destructive element of development efforts which is greed. “So far, greed has defined development to mean the right to acquire more and more. But it never drew a line on where to stop. This is what Gandhi tried to address. The Islamic finance strategy takes away interest charges, which makes the repayment process much less coercive. The Thai King’s sufficiency economy means that people can all live decently but not extravagantly.”

He said that regional institutions such as the UN Economic and Social Commission for Asia and the Pacific (UNESCAP) and the Asian Development Bank (ADB) need to start mainstreaming these models of human progress as part of the development agenda. If they cannot or will not, and prefer to maintain business as usual, other institutions should fill the gap, such as the Asian Institute of Technology, based in Bangkok.

“These new philosophies have not been mainstreamed and articulated to the extent they deserve,” the Ambassador said. “They need a lot more debate to enlighten the policy-makers and make them part of the development planning process. I believe that will start happening sooner or later due to the global financial upheavals and the vulnerabilities it has created for the populations around the world, especially at the grassroots level.”

Mr. Hussain said Asia now has a golden opportunity to create a truly Asian Century. “One thing we have not yet lost in Asia is our family values. Across Asia, such traditions as respect for elders, still exist. These have helped us face many problems because families do come together in times of trouble. Similarly, countries must get together to offer each other a helping hand. Times change. Just as a father holds the son’s hand when he is young so too a time comes when the son has to hold the father’s hand. Those who have, need to extend a hand to those have not. In the long run, this will create a win-win situation for all.”