Dhaka Reaches out to the Neighbours: Economic Development and Resilience amid COVID-19

Not very long ago Bangladesh was carrying a baggage of skepticism behind her future and development trajectories. The “basket case” analogy might not be there since the early 2000s; however, the salience of the achievements she made were not taken in arms in a moment. As great minds say – every crisis can be a blessing, the COVID-19 pandemic has somehow given Bangladesh the opportunity to manifest her economic rise. And, spoiler alert, Bangladesh handled it aptly.

Dhaka has made her inroads into economic prosperity for a while. The two pieces of big news that caught everybody’s eyes were the latter news has already produced the odds of comparison between the two considering there had been a love-hate relationship between them since the independence of Bangladesh. Definitely, any analyst would be cautious while predicting the future of the rise of this “small state.” Bangladesh, nevertheless, managed to balance this archetype of economic rise and made a positive diplomatic shift when it comes to the pandemic.

Not to forget, India was Bangladesh’s primary (and, for a while, the only) source of getting COVID-19 vaccines. Some of these came as a part of New Delhi’s Vaccine Maitriinitiatives as cross-country gifts; the rest were bought from the Serum Institute of India (SII). Unfortunately, India halted vaccine export as she was facing challenges to cope up with the new wave of the pandemic in the early April of 2021, given the infection rate multiplied up to seven times than the usual. The initial thought was that the situation might deteriorate Bangladesh-India relations since Bangladesh was looking for alternative options from China and Russia, particularly when India has an unremitting competition with China within and beyond the geopolitical frontiers of the region.

Surprisingly, Bangladesh not only kept her own vaccination process rolling but also provided aid to India twice. On the first week of May, Dhaka sent 10,000 Remdesivir vial. On the third week, 2672 boxes of anti-viral drugs were also handed over. Along with the injectable and oral anti-viral medicines, there were 30,000 personal protective equipment (PPE) kits and thousands of vitamin C, zinc and calcium tablets. India’s North-Eastern states, namely, Meghalaya, Manipur, Sikkim, Tripura, Arunachal Pradesh, Nagaland, Mizoram, and Institutes like the North Eastern Indira Gandhi Regional Institute of Health and Medical Sciences (NEIGRIHMS) were the ones that directly received the entire consignment of remdesivir.

On the other hand, beyond the COVID-19 specific donations, Bangladesh also weighed in on supporting Sri Lanka’s economic crisis following the 2019 Easter Bombings and the subsequent outbreak of the pandemic. Bangladesh’s agreement to provide a US$200 currency swap facility to Sri Lanka is supposed to make a generous contribution Sri Lanka’s US$3.7 billion worth of foreign debt.

The question hence comes: How did the small state of Asia do it? And how she is still doing so, when the pandemic is hitting hard every country in the world, including the ones in South Asia?

Bangladesh’s turnabout from “the helped” to “the helper” didn’t come out of smog. The country has followed a steady development graph keeping its best bargaining chips under diplomatic cellophane. For around three decades, Bangladesh maintained a GDP growth rate higher than the world’s average GDP growth. Dhaka also shifted its pattern of production, imports and exports based on the necessity and relative competitiveness. The contribution of the manufacturing sector to the GDP doubled since the 1980s making it Bangladesh’s lucky-strike. Bangladesh is also among the top ten remittance receivers of the world. With around US $21 billion remittances and US $40 billion annual exports, Bangladesh has been dubbed to be the world’s “economic darling” at this point. Analysts too have pointed out Bangladesh’s excellence in utilizing the European Union’s Generalised Scheme of Preferences (GSP) programme and other trade benefits.

These advancements helped Bangladesh exerting diplomatic image as well. While sending the second consignment to India, the Prime Minister of Bangladesh, Sheikh Hasina, directly mentioned “Bangladesh’s support to stand by her closest neighbor India during their critical time…” and “…readiness to offer support in every possible way.” The counterpart also responded with due recognition following tweets form the Indian High Commission stating its gratefulness to the solidarity and prayers for overcoming the pandemic together.

With US$45 billion foreign reserves in its hand, Bangladesh is now able to help countries like Sri Lanka during their own pitfalls while, at the same time, being able to fund her own imports for long six months. This currency swap mechanism also helps Bangladesh to avail the London Interbank Offered Rate (LIBOR) plus 2% interest (and 2.5% if the repayment delays to six months). The rate currently stays at 0.14% and .18%, respectively for a three-month and a six-month loan.

Interesting to note that, although the Sri Lankan President Rajapaksa requested for US$1.1 billion currency swap from India in May 2020, it was Bangladesh that mobilised the funds within two months. India, however, is yet to approve the request.

On another dividend, Bangladesh’s progress has been acknowledged by another critical neighbour Pakistan as well. The Prime Minister of the country, has stated, “…It was unthinkable, 20 years back, that Bangladesh’s GDP per-capita in 2020 would be almost twice that of Pakistan. Bangladesh could be an economic powerhouse in 2030 if it grows at the same rate as in the past.” The New Royal Bengal Tiger of Asia has also donated US$7.7 million to a debt-ridden Sudan and a package for full debt-relief for Somalia.

Bangladesh has undoubtedly shown her resilience through economic development. Now, the question comes, how steadily it can sustain the rise. If Bangladesh continues to maintain the balance between diplomatic decorum and economic rise, it can maintain its own growth while becoming the new regional economic hub. This has been clearly pronounced in the Vision-2041 goals underpinned by the government of Bangladesh. The future seems promising; the rest is better to observe than predict.

M.D. Amin
M.D. Amin
M.D. Amin is a Bangladesh-based journalist and independent researcher. He is also working as a Consultant to Shokoler Jonno Sushashon (Good Governance to All), a civil society organization. He has completed his graduation and postgraduation in cultural anthropology.