Is Bangladesh ready to face the post-corona world?
The world was unprepared for the novel coronavirus which struck with deadly swiftness across the world. Even as it peaks and hopefully plateaus, as May nears, much talk is about coping with the economic devastation that it will leave in its trail.
International financial institutions have already declared that the world is into recession. Many traditional economies have slipped behind with Europe taking an unprecedented hit. The US has been deeply damaged as well, which together impact on global consumer demand for goods including oil. That means the Middle Eastern economy will be particularly hit. All this is bad news for Bangladesh as well.
The price of complacency
The world had become very complacent with the way things were and was hardly expecting such an all consuming crisis. The result was the sudden shutdown and exposure of socio-economic and management vulnerability. The West, caught in various economic policies and tariff arrangements, suddenly found that many of the “taken for granted” factors were not working.
The same goes for Bangladesh where its dominant remittance, export to the West and infrastructure based economy faces a severe crisis it hasn’t seen in a long time. No matter how well it copes in the future (it will eventually), the intervening period may see large scale suffering in the lower and middle classes. Bangladesh will need to rethink its governance priorities because no part of life, not just the economic, is going to be free from trouble.
Health sector investment
Bangladesh shows very little investment in the public health sector. It has a structure that is unable to cope with sudden surges and demands such as those made by the coronavirus pandemic. It is true that nobody was prepared for such a global pandemic, but the low prioritization of the health sector which serves the poor shows that policies can cause unprecedented damage to all. Now everyone needs the health sector but it’s capacity is limited.
This issue is not just about the COVID-19 management, but health management in general. Clearly, the system has been unable to reassure the people that everything is in order. Confidence in the health system is at an all-time low.
That testing kits were not available is obvious but there was no emergency plan to take care of the vulnerable. Ventilators and other sophisticated equipment were obviously missing not to mention Personal Protection Equipment (PPE). Most importantly, no emergency plan existed for such a crisis.
Ina country where ministers and senior officials go abroad for medical treatment, the public health sector basically serves the poor. It would actually have been shocking had things been better.
BGMEA’s shocking behavior
The decision by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) to open their factories amidst the crisis saw thousands of workers pour into Dhaka from their homes in the villages. Following this, under pressure, the BGMEA shut down the factories till April 14. The workers were stranded and had to return to their homes
Till a day before, the Ready Made Garment (RMG) sector owners were loudly opposing the demand for shutting down, using abusive language on social media. But being the most favored group of rich people (which includes ministers, and one mayor) with great clout, it is being given large scale economic bailout packages. The matter became messier because government orders were unclear.
Losing global demand
Although the RMG factories were shut down till the 14ththe situation is unclear. The BGMEA, never popular but always powerful, has peaked in infamy as a body which cares more about money than even the political convenience of the ruling party. That the pandemic has changed the way the world does business has not touched the richer part of the ruling class as much as it should have leaving a gap that is dangerous for Bangladesh.
The RMG sector will inevitably be hit as western economies, its main consumer, is facing loss of demand. The foreign exchange value of lost orders runs into billions. The world faces a serious economic lockdown but whether the RMG factory owners, largely pampered as the main foreign exchange earners, can handle such a crisis is a question that arises. Bailouts have been announced but the crisis runs deeper as the RMG sector is not a robust sector as events now show. It is flawed by very short term thinking.
In this crisis, the biggest hit will be taken by the workers. These rural migrants who are largely women, face unprecedented misery. They have no fallback option and no social insurance. As they are thrown into a “no pay no work” scene which could be on for another two months or more, just about anything can happen.
Also Read: Snapshots from corona-hit Dhaka
The worst -hit sector will be the remittance economy which is dependent on the Middle East and Malaysia primarily, but also Europe and the US. Most host countries have already asked Bangladesh to take back undocumented workers. The corona crisis was itself brought in by migrant workers from Italy and other places. So the mixing of national life with the migrant population is obvious. They also number in millions.
With a contractor/infrastructure based economy, in which industrial investment is missing, the economic crisis is multi-dimensional. The millions of returnees face not just an economic crisis but social problems also.
The good news is in the pharma sector, but that’s limited. Some RMG entrepreneurs may shift to disaster management products but that will be on a limited scale. By focusing more on a network based service economy rather than a production based industrial one, some of the crisis is in the economic structure as a whole.