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Dependency Of Bangladesh

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Autor:  anton  24 January 2011
Tags:  Dependency,  Bangladesh
Words: 2616   |   Pages: 11
Views: 529

1. Trade Dependency:

Bangladesh is dependent on many countries of the world for a lot of commodities and this dependency arises out of the local incapacity to produce these goods. Some of the areas in which Bangladesh is dependent are food items, petroleum, capital goods, mineral products, different kind of chemicals, raw materials for the textile industry and the pharmaceutical industry, plastic products etc.

1.1 Food Dependency

In the year 2003-2004 the total amount of food imports amounted to Tk.58,713,105 (in thousands). Food items include live animals, grains, edible fruits and vegetables, sugars, dairy products.

Live animals, e.g. cow are a major sector of dependency in particular time of the year (Eid-ul- Adha). Large numbers of cows are imported from mainly India to meet the excess demand at that time. India is our largest supplier of edible fruits and vegetables, sugar and dairy product. In 2003-2004, crops worth Tk.6,693,978(in thousands) and, sugar worth Tk. 1,650,323(in thousands) were imported. It can be easily said that for food items Bangladesh is dependent to a large extent on India.

It is quite unnatural that Bangladesh, being an agriculture-oriented country still has to import a large amount of food items. This is due to the mounting difficulty for the domestic crop producers to satisfy the needs of the increasing population. It can also be said that the dependence for food items depends on particular situations. For example, in the summer large quantities of mango are imported from India, in times of flood or drought rice, sugar and other staple foods have to be imported.

There are also a number of luxury food items that are imported e.g. coffee, cereals. These items are not produced locally. Due to increasing demand for these items, they are imported.

1.2 Petroleum and Capital Goods Dependence

Bangladesh is 100% dependent on other countries for petroleum or crude oil. Bangladesh imports crude oil from a number of sources, the main one being Saudi Arabia. This is one of the major sectors of dependency as crude oil is needed for almost every sector in the economy.

Bangladesh is also dependent on the western world countries for various types of capital machinery and equipment. The machinery used in agriculture, different factories and industries are all imported. All medical apparatus and equipment are also imported. The main reason for this dependence is the lack of technological know-how needed to produce these goods.

1.3 Mineral and Chemical Dependencies

Mineral products and other chemicals are needed for various industrial processes. They are used as either raw materials or other processing materials. In the year 2003-2004 Tk.66,843,822(in thousands) were imported and the major countries of dependence were India, China, and Indonesia etc. Our reason for dependence in this sector lies in the fact that mineral products and other elements required to make chemicals is not present in adequate quantities in Bangladesh.

Leather and pharmaceuticals are two of the fastest growing industries of Bangladesh. Products from these two sectors have gained considerable competitiveness in the international market. But the unfortunate part is that the raw materials for both these industries are imported from India and China. If Bangladesh could overcome dependence in these sectors, these industries’ products could become far more competitive in the international market as the cost of production would reduce significantly.

1.4 Textiles Goods and Miscellaneous

Among all the individual sectors, textiles & textile articles has been the biggest contributor for the last few years. The bulk of these huge imports in textile is due to cotton yarn, threads and cotton fabrics of Tk. 7380 crore, which is the biggest single item in terms of cash imports. Other than that, textile articles like silk, wool, woven fabrics, man made filaments and staple fibres, ropes, knitted fabrics and carpets are also imported. Consumer items like footwear, headgear, artificial flowers & umbrellas, which are mostly luxury goods, add a small amount to the total. Cement, asbestos, plasters, ceramic products, stone articles and glassware constitutes nearly Tk. 266 crore of imports.

Rare & Luxury items like natural pearls, stones, precious metals, imitation jewellery are imported in very small amount. But other metals like the base metals push the imports totals higher (Tk. 2826 crore). This includes iron, steel, copper, nickel, aluminium, zinc & their articles such as tools and cutleries.

1.5 Transportation Dependency

Another important segment where Bangladesh consumes in a very large scale depending completely on foreign imports is the transportation sector. The number of vehicles imported each year is increasing every year in such a way that most of the city roads are not enough to contain so many vehicles. But Bangladesh still doesn’t have any manufacturing plant to roll out vehicles and stop this huge bulk of local currency from moving away. The total value of all vehicles imported during the year, including aircraft, vessels and associated transport equipment stands at over Tk. 3144 crore. The same situation prevails in the shipping as well as CNG driven vehicle industries.

All the relevant financial data on import payments presented here has been taken from details of imports under cash as reported to the Bangladesh Bank by the banking sector. Total import payments of Bangladesh, including imports of EPZ, during 2003-2004 amounted to Tk. 64256 crore (US $ 10,903 million), reflecting a 12.9% increase in dollar terms.

2.0 Foreign Aid

External assistance has, over the years, bridged the savings – investments and exports – import gaps in the economy of Bangladesh. Thus it has played a significant role in the economic development of Bangladesh. Since the country’s independence in the year 1971, till 30 June 2004, the donors committed a total of about US$ 50.57 billion of external assistance. The foreign aid disbursed is either in the form of grants or loans and mainly in three sectors – food, commodity or project, as food aid, commodity aid, and project aid.

2.1 Food Aid

Bangladesh has been a food deficit country. Although food productions has increased and recently near self-sufficiency have been achieved, the need for food aid continues in times of occasional supply shortages caused by natural calamities like floods, cyclones, and unfavorable weather conditions. Food aid is, therefore, an important item in the import program of the country.

Some of the major food item on which grants and loans have been passed over the years from 1971 to 2004, are rice, wheat, and sorghum. Graph, showing the amount of the grains granted as aid over the years, is added in the appendix.

Bangladesh has so far received a total of US$ 6.14 billion of food aid by 2004. This is about 14.7 percent of total foreign aid on a cumulative basis.

2.2 Commodity Aid

Commodity aid is also an important element in the total aid package. Bangladesh has been experiencing deficit in its balance of payments since independence. Commodity aid extended by development partners has been used to meet the balance of payments gap and also for generation of local currency for financing projects. Bangladesh has so far received commodity aid worth about US$10.88 billion.

2.3 Project Aid

The major portion of foreign aid comes in the form of project aid. Theses aides are meant mainly to finance the projects included in the Annual Development Program. A total of US$ 24.75 billion was disbursed as project aid since independence, till the year 2004. The project aides are of tied nature, and there conditionality and cross-conditionality of the development partners.

Technical Assistance

Technical assistance is an important component of project aid. It constitutes about 4 percent of total aid disbursement over the period.

A table of total committed and disbursed grants and loans on food aid, commodity aid and project aid is included in the addenda.

2.4 Other Assistances

Other assistances include the special borrowings by Bangladesh Shipping Corporation, Bangladesh Biman, Bangladesh Petroleum Corporation and Defense. Thus, from transportation network to the very defense of the country, everything runs on foreign assistance!

NGOs and also the private sectors have received assistances. Foreign assistance made available through NGO Affairs Bureau composes of grants and loans of huge amounts.

Bangladesh Petroleum Corporation (BPC)

Bangladesh has a huge reserve of natural gas. But still, can Bangladesh be called self-sufficient in energy? Unfortunately, though Bangladesh has the natural resource, it is incapable of extracting it yet. It’s like having a tool, but not knowing how to use it!

The terms and conditions in the Production Sharing Contract, between the foreign countries extracting gas and Bangladeshi government, makes Bangladesh buy its own gases from these companies in exchange of huge amount of money! This portrays that we are dependant on others for our own resources!

3. Intellectual Dependence

Having money is not enough; one has to know how to use it. That is what the condition of Bangladesh is. Nature has bestowed Bangladesh with many things all of which is not possessed by even some of the richest countries of the world. But, could Bangladesh make the most out of it?

Bangladesh is completely intellectually dependent on the rest of the world for its survival. We are dependent to such an extent that we can’t even resolve our own internal, political problems. We need interference of foreign leaders for it. Bangladeshi police and intelligence department can’t find the source of series bomb attacks in the country. We need Interpol for that. We are so dependent, that our patients have to go abroad for treatments. We are so dependant that we need foreign technicians to construct a flyover, or a bridge in the country. We need foreign administrators to run the five star hotels of the country. Our level of dependence is such that in the graduate and postgraduate level, there is no single textbook of Bangladeshi author. We are so dependent that, foreign powers have to tell us that our country’s defense is not enough in proportion to our population. In short, despite having eyes, we can’t see, despite having ears we can’t hear because we are intellectually paralyzed nation. We are completely intellectually dependent!

4. Other Sectors of Dependence

Bangladesh has fertile land, but there are no capital machineries to maximize yields out of those lands. Bangladesh is a country of rivers; but the water of major rivers like Buriganga and Padma is controlled by India. India, by the mercy of the Farakka Dam, can even cause floods in Bangladesh! Bangladesh has reserves of natural gas. But it doesn’t know how to extract it. Bangladesh has a huge human resource. Unfortunately, this human resource doesn’t have the technological know how, the knowledge to take the country forward.

5. Solutions

5.1 Increasing Agricultural Productivity

Bangladesh has a comparative advantage in agricultural products, but still it imports huge quantities from neighboring countries. The main reason behind this is that production of agricultural products in our country is not sufficient to meet domestic demand. One way out of this problem could be to raise productivity of farmers and growers to achieve greater output.

Farmers in our country still use primitive manual methods for producing crops as majority of them don’t have access to any kind of machinery. If farmers were able to change their farming methods, productivity and resultant production would increase to a great extent. As the economic condition of farmers in our country is very poor it is quite impossible for them to buy machinery. A solution to this problem would be to provide micro credit or small loans to them, which would enable them to buy machinery.

5.2 Revising PSC

The Product Sharing Contract (PSC) should be revised. Instead of buying the gas, the Bangladeshi government should fix a moderate rate for the extraction of the gas. The foreign companies should work under the Bangladesh government, and not as an entrepreneur.

5.3 Treaty Between Bangladesh and India

The Indian and Bangladeshi government as to the fair division of the river water should sign a treaty.

5.4 Reducing Petroleum Dependency

Bangladesh spends a huge amount on crude oil import every year. Bangladesh also has to compete with all developed first world countries for buying crude oil, which has been on the rise since the breakout of war in Iraq. Thus its becoming increasingly difficult for the government to import oil and provide subsidies to general citizens, while its also proving too costly for the public in a country where most of the fuels gets burnt in traffic jams.

The only effective way of getting rid of this dependency is to utilize Bangladesh’s own gas resources. The Government can encourage car owners to use more and more CNG driven vehicles by providing incentives such as reduced road tax and yearly fees for car owners. More CNG refueling and conversion plants should be made, even in remote rural areas to sustain all CNG run vehicles. Lastly, few other companies should be given license to import and provide CNG run auto rickshaws to increase competition reduce prices and eliminate monopoly in present auto rickshaw sector.

5.4 Technological Advancement

The major area of dependence in Bangladesh is in the technological sector. In a world of technology this is a severe drawback. Bangladesh without any technological assistance would mean a country without even the basic infrastructures like bridge and flyovers, let alone cars and computers. The main solution to this problem is to increase the technological know-how of the Bangladeshi people.

Trainers along with Technicians

For different construction works under joint venture, technicians are hired from the foreign countries. When hiring these technicians, they should be contracted to train our technicians. This would produce local technicians, and would ensure that every time there is a problem, or for future projects, foreign technician doesn’t have to be hired.

Widening Educational Scopes

New departments on technology should be opened in the under and postgraduate level. Professional courses should also be introduced. Presently, the polytechnic institutes teach how to operate different machineries. Instead of this, the students should be taught the technology behind the machineries. If specialists in the field are not currently available in the country, then foreign specialists should be appointed.

Stopping Brain Drain

Bangladeshi students settling abroad are helping advancing technology of foreign countries, inventing new computer chips and flying cars, when their own country is immersed in darkness! If these brains of the country are brought back to the country after completing their education abroad, this would be a major step in the technological advancement of the country.

Having technological expertise alone cannot ensure domestic productions of the machineries. Setting up these industries would require huge fund. For this, foreign investments should be encouraged.

5.5 Encouraging Investments

Foreign investment can meet the requirement of huge fund for massive industrialization. But, the business environment in this country is very unfriendly. To foreign investors, Bangladesh is quite an attractive location for investment, as they can avail cheap labor, and other resources. So why aren’t we seeing investors coming to invest in this country?

The primary reason lies in the unstable political situation in Bangladesh, which puts investors in uncertainty. This uncertainty discourages both local and foreign investment. Corruption at every level and red tape bureaucracy is further aggravating the condition.

Since it is very natural to seek loans for any investment, reducing the interest rates on loans would encourage people to invest. But, while reducing interest rates could promote investment, it would be applicable only for modest projects and ventures. But this country needs massive investment, and while political instability and corruption exists at such an extent, it will be difficult to attain. As these problems are not to be solved immediately, reducing trade dependency can only happen in the long term.

Though government has the major role to play in reducing dependency, government or any power group alone cannot achieve it. Every citizen of the country has to contribute towards it. The most important criteria is to join hands and work together as one in making the dream come true of having a truly Independent Bangladesh!

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