Bangladesh shines as a beacon of economic promise in the region. Despite limited resources. the nation has made remarkable strides in its economy and society since independence. This triumph celebrates the tough spirit of Bangladeshis. Bangladesh's GDP has grown at an impressive six percent average since the early 2000s. It is now 35th in the global economic rankings. 

Projections say it will be the 28th largest economy by 2030. Yet, the path to wealth has many tough challenges. These include ending poverty, closing the income gap, reducing high inflation and external debt, attracting foreign investments, improving resource mobilization, fixing foreign exchange deficits, fighting corruption, and making the financial sector stable.

In pursuit of progress, Bangladesh has invested in large projects including Metro rail, Padma Bridge, rail, road connectivity. This led to a big increase in annual debt payments—a major part of the government’s budget. Data from the Bangladesh Bank shows that the nation’s total debt hit about $100 billion by the end of June 2023 . These investments could help in the long run. But, they now challenge the government's fiscal management due to pressing debt payments. Each year, Bangladesh must repay foreign debts ranging from $2-2.76 billion, a figure expected to increase soon. The finance ministry expects that by 2025-2026, repayments on foreign debt, including interest, will soar to $4.5 billion. This uptrend in external debt servicing is exerting pressure on the nation’s foreign exchange reserves.

Debt payments are taking away money from important areas like healthcare, education, social welfare, and infrastructure. Although the current debt-to-GDP ratio doesn’t ring alarm bells for experts, it’s not a carte blanche for unchecked borrowing. Decision-makers must carefully choose projects with feasible payback periods. This is essential to avoid fiscal snares and ensure borrowed capital is used well. This will maintain the economy's vitality amid challenges.

Investments, both local and international, are crucial in catalyzing economic expansion, elevating the local workforce’s capabilities via technological knowledge transfer, and spurring job creation, which in turn boosts income levels and living standards. To elevate Bangladesh to a high-income nation status, it’s essential to increase the investment-to-GDP ratio to approximately 40-44%. Unfortunately, private investment has stagnated, lingering around 23-24% of GDP over the last decade, as per the Bangladesh Bureau of Statistics (BBS). The country also trails in drawing foreign direct investment (FDI). Despite a 4% increase in FDI to Asian developing nations during the pandemic year of 2020, reaching $535 billion as reported by UNCTAD, Bangladesh fell short of its FDI goals. According to Bangladesh Bank’s 2023 data, the nation garnered roughly $3.2 billion in FDI, with the FDI inflow rate in Bangladesh standing at merely about 1% of GDP, one of the lowest across Asia.

For foreign investors, the ease of conducting business is a pivotal factor in their investment decisions. The simplicity of business operations and a nation’s competitive edge are crucial determinants of their investment strategies. Investors evaluate many elements. These include policy transparency. They also include the trustworthiness of government officials, tax rules, and compliance with laws. Most importantly, they include the protection of their investments.

In Bangladesh, however, investors are often met with bureaucratic obstacles that hinder seamless business activities. These hurdles are administrative. They include not enough socio-economic and infrastructure development, spotty energy supplies, corruption, immature financial markets, and a complex tax system. They also include slow decision-making. Moreover, the hidden expenses associated with processes, policies, legislation, and infrastructure considerably elevate the overall cost of business operations.

Amidst these economic challenges, it is vital to enhance investment inflows by adapting policies promptly. The government must dismantle barriers contributing to high investment costs and take swift action to upgrade public amenities and services, such as transportation, electricity, gas, water, and sanitation systems. Furthermore, the government should enact policies that are conducive to business, protecting the interests of companies, workers, consumers, the environment, and above all, ensuring a stable political climate to attract both local and international investments.

Bangladesh’s export landscape is predominantly driven by its ready-made garments (RMG) industry. In the fiscal year 2022-2023, the nation’s total exports reached $55.56 billion, with the RMG sector accounting for $46.99 billion, representing 85% of the total exports, mainly to the European Union and the United States. The RMG sector has been instrumental in transforming the economy, job market, and income levels. However, the sector is currently experiencing a slowdown due to global geopolitical tensions, rising energy costs, and domestic political unrest. To maintain its growth momentum, Bangladesh must diversify its export portfolio and explore new markets.

Bangladesh’s economic landscape is ripe with potential in diverse sectors such as pharmaceuticals, bicycles, shipbuilding, leather goods, fisheries, home textiles, furniture, and agriculture. These industries could flourish and contribute significantly to exports if they receive the same level of government support as the ready-made garments (RMG) sector.

Remittances, a crucial artery for Bangladesh’s economy, have seen a worrying decline despite the growing diaspora workforce. In September 2023, remittances plummeted to a mere $1.34 billion, the lowest since April 2020, as reported by Bangladesh Bank. Despite incentives offered for banking channels, a substantial portion of remittances still flows through informal means like hundi, attributed to the disparity between official and market exchange rates, high transaction costs, and cumbersome banking procedures. With the nation grappling with a dollar shortage and consequent import restrictions, there’s an urgent need to realign policies to encourage the use of formal remittance channels.

The banking sector, marred by malpractices, remains a significant concern. It’s widely acknowledged that the sector has been plagued by scandals and irregularities, including the misappropriation of loans to well-connected individuals who often flout repayment rules. The lack of accountability has led to a staggering amount of defaulted loans, reaching Tk 156,040 crore at the end of FY 2022-23. Addressing these issues is critical for restoring confidence in the banking system and securing the economic stability of Bangladesh.

Banks serve as the cornerstone of the economy, and it’s crucial for regulators to proactively manage the current challenges to prevent further deterioration. The banking sector urgently requires a blend of robust policy reforms and governance enhancements. This includes taking legal measures against intentional loan defaulters, strengthening banking regulations and oversight, addressing sector vulnerabilities, implementing stricter loan rescheduling criteria, and refining legal frameworks to expedite loan recovery. With these reforms enacted sincerely, Bangladesh can set forth on a journey towards a more resilient economy.

Despite a decade of remarkable economic growth, the benefits have not been equitably distributed across Bangladesh’s population. The affluent have reaped the majority of the rewards, leading to a stark increase in income inequality. Currently, the wealthiest 10 percent control 40 percent of the national income, while the bottom half holds a mere 19.05 percent. This disparity stems from unequal access to education and employment, low-paying jobs, rampant corruption, and systemic flaws, including those that facilitate banking scams, tax evasion, and money laundering. Bridging this wealth gap is imperative not only for sustainable growth but also to mitigate the risks of social and political discord. Policymakers must pivot towards equitable treatment for all, aiming for inclusive growth and implementing social policies that foster fairness and equality. A society that is content, equitable, and just is invariably more peaceful and prosperous.

Inflation has significantly impacted the daily lives of Bangladeshis, with the cost of essentials like eggs, chicken, onions, potatoes, sugar, and oil on the rise, defying global trends. A World Bank report highlights that 71 percent of families are affected by escalating food prices, indicating that nearly 2.91 crore out of 4.10 crore families face food insecurity. If inflation continues unchecked, the threat of increased poverty looms large. Experts attribute the high food inflation rates to flawed government policies, inadequate market management, and the monopolistic practices of certain business syndicates. To combat this, the government must devise and implement a comprehensive action plan to tackle the root causes of food inflation.

Bangladesh’s commitment to education and skill development is pivotal for its economic future. Despite efforts to modernize the educational framework, there remains a disconnect between the curriculum and the demands of the modern workforce. Global education systems are increasingly focusing on soft skills such as teamwork, problem-solving, and communication, yet Bangladesh’s approach requires a forward-thinking overhaul.

The business sector’s struggle to find skilled local talent often results in the hiring of foreign professionals, which not only impacts the domestic job market but also strains the nation’s foreign currency reserves. With only about two percent of GDP allocated to education, the lowest in South Asia, it’s imperative that Bangladesh prioritizes the development of human capital to meet the needs of an evolving job landscape. A robust education system is essential to drive innovation and attract high-value investments.

Moreover, 52 years post-independence, the state of healthcare in Bangladesh is concerning. The tendency of citizens, including public figures, to seek medical treatment abroad signals a crisis of confidence in the domestic healthcare system. While personal health choices are private, the pattern among national leaders and politicians is troubling, as it underscores the need for a healthcare system that inspires trust and meets the needs of all Bangladeshis. Building a strong healthcare infrastructure is not only a matter of national pride but also a cornerstone of economic growth and social stability.

The transformation of the healthcare landscape in Bangladesh is an urgent necessity, not only to safeguard the nation’s hard-earned foreign currency reserves but also to uphold its international reputation. It is incumbent upon the government to ensure that all citizens have equitable access to quality healthcare services. The current state of healthcare, if left unaddressed, risks undermining the significant economic progress made by Bangladesh. A concerted effort is required to shift the paradigm, making the healthcare system a beacon of reliability and pride, thereby negating the need for citizens to seek medical care abroad.

Corruption remains a pervasive global challenge, and Bangladesh, ranked 147th out of 180 countries in the 2022 Corruption Perceptions Index, is not immune. However, it is essential to acknowledge that this does not reflect the integrity of all Bangladeshis, as the majority are indeed honest and upright. Yet, the reality is that corruption persists within critical sectors, undermining trust and justice. Despite claims of zero tolerance, accountability for the powerful is often lacking, leading to a culture of complacency and impunity. To restore public trust and democratic integrity, it is crucial to hold the corrupt accountable and enforce stringent anti-corruption measures.

The fight against corruption requires more than just punitive action; it demands a holistic strategy encompassing legal reforms, institutional fortification, and heightened public awareness. These steps are not only crucial for continued economic prosperity but are also key to enhancing Bangladesh’s global standing. It is time for a renewed commitment to eradicating corruption and fostering a culture of transparency and justice.