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Wahab's Wealth Watch: May 2024 Gazette

Bangladesh on the World Stage


AI has the capacity to bridge the gap for the Global South, as evidenced by Bangladesh.

Artificial intelligence (AI) has the potential to reduce inequality and boost empowerment, especially in the developing world, if implemented responsibly. Predicted to contribute $15.7 trillion to the global economy by 2030, it's essential to ensure equitable distribution beyond major players like the US and China to prevent exploitation and increased inequality. Bangladesh serves as an example of effectively leveraging AI in healthcare and education. During the Covid-19 pandemic, AI algorithms were utilized via a national helpline to manage the disease efficiently. Innovations like a pregnancy monitoring app and the Noipunno education initiative have further enhanced services, reduced professional workloads, and fostered digital literacy, benefiting citizens across different sectors. AI provides a solution to digital literacy challenges in rural areas through voice-based interactions, simplifying tasks like document applications. This approach promotes digital inclusion for marginalized communities. For AI to benefit developing countries like Bangladesh fully, equitable access to technology is essential. Inclusive global discussions, like the UN's "Governing AI For Humanity" report, can support this inclusive AI development and foster AI literacy empowerment.

An objective assessment of Bangladesh's potential in the global semiconductor industry

Bangladesh is positioning itself in the global semiconductor industry, aiming to capitalize on its potential for significant growth. While challenges like skilled labour shortages and infrastructure gaps persist, the country's focus on chip design aligns with its comparative advantage. By prioritizing this sector and leveraging expertise, Bangladesh seeks to establish a foothold in the semiconductor market and drive economic development. However, careful planning and collaboration with industry experts are essential to navigate potential pitfalls and ensure sustainable progress.

Expanding the Market for U.S. Cotton in Bangladesh

After almost 50 years, Bangladesh has amended its import requirements for U.S. cotton, exempting it from mandatory fumigation due to boll weevil concerns. This change is a significant trade victory for American cotton growers, given Bangladesh's status as the fifth-largest export market for U.S. cotton, importing over $339 million in 2023. The USDA's Foreign Agricultural Service (FAS) and the Cotton Council International (CCI) played crucial roles in this achievement, providing evidence of the boll weevil's near-total eradication and facilitating high-level consultations and visits between the two countries. This success demonstrates over two decades of collaborative efforts among various U.S. agencies and the Government of Bangladesh to promote fair trade practices benefiting American farmers and businesses.

Bangladesh and Thailand are set to initiate talks for a Free Trade Agreement (FTA) this year

Bangladesh and Thailand have confirmed their commitment to begin negotiations for a Free Trade Agreement (FTA) by 2024. This decision follows the signing of a Letter of Intent (LOI) after a bilateral meeting between Prime Minister Sheikh Hasina and Thai Prime Minister Srettha Thavisin in Bangkok. The agreement aims to strengthen economic ties and boost trade relations between the two countries. During the meeting, additional agreements and three memorandums of understanding (MoUs) were signed, including visa exemption for holders of official passports, cooperation in energy, customs matters, and tourism. Prime Minister Sheikh Hasina encouraged Thai investment in Bangladesh's healthcare sector and extended invitations for investments in special economic zones and hi-tech parks.

Bangladesh: Economic Updates


Bangladesh's foreign exchange reserves exceed the $20 billion threshold once more

Bangladesh's foreign exchange reserves have exceeded $20 billion again, reaching $20.11 billion as of April 8, up from $19.45 billion on March 27, according to Bangladesh Bank data. This growth is attributed to increased export earnings and remittances during Eid-ul-Fitr. However, the reserves were higher at $31.20 billion during the same period last year. Recent reports also highlighted a rise in gross forex reserves to $26.17 billion on March 5, up from $25.16 billion on February 19, boosted by currency-swap deals with commercial banks.

The Basis for Bangladesh's Economic Collaboration Agreement with Japan

Bangladesh is negotiating an Economic Partnership Agreement (EPA) with Japan to maintain duty-free access for Bangladeshi products after 2026, when Bangladesh transitions from a least developed to a lower middle-income country. This agreement aims to enhance trade and investment cooperation between the two countries. The EPA's significance lies in supporting Bangladesh's export-oriented economy, ensuring competitive advantages in global markets, and preventing substantial duties on exports post-2026. The agreement will address various trade-related issues and accelerate foreign investment, benefiting both Bangladesh and Japan economically while strengthening their bilateral trade ties.

Migration and remittances play a crucial role in bolstering Bangladesh's economy

Migration has played a pivotal role in Bangladesh's development since its independence. Millions of Bangladeshis seek short-term employment abroad, contributing to a significant inflow of remittances, which amounted to $21.9 billion in 2023. Saudi Arabia is the largest source of these remittances. Despite the economic benefits, many migrants face challenges like unstable incomes and unsafe conditions, leading some to return to Bangladesh. The foreign-born population has grown, notably due to Rohingya refugees, but overall net migration has declined in recent years. Migration is driven by economic, social, and policy factors, with many seeking work abroad due to limited local opportunities. Bangladesh ranks sixth in migrant-sending and eighth in remittance-receiving globally. The Persian Gulf countries host the majority of Bangladeshi migrants, followed by Asian nations. Internal migration is rising due to urban employment opportunities and environmental challenges like natural disasters and river erosion.

The unseen challenges of payments within Bangladesh's expanding IT sector.

Bangladesh has transformed into a developmental model with a population of 170.279 million and a GDP per Capita of $2,470. Despite its success in freelancing and IT exports, the country faces challenges due to the absence of widely accepted online payment solutions like PayPal, Apple Pay, and Google Pay. This poses difficulties for freelancers and tech companies in receiving payments from global clients. Alternative solutions exist but may not always meet client preferences, leading to inconvenience and cancelled orders. Addressing this issue requires improving digital payment regulations, raising awareness, and enhancing interoperability as Bangladesh aims for a Smart Bangladesh.

Updated tariffs enhance the attractiveness of clean energy for Bangladesh

The Bangladesh government has increased power tariffs and revised natural gas prices to address revenue gaps in power generation costs. Despite potential inflationary pressures, these changes make clean energy investments more attractive to consumers. A survey by IEEFA reveals untapped energy efficiency potential in the industrial sector, emphasizing the need for waste heat recovery and efficient technologies. The tariff hikes are expected to motivate industries to invest more in energy efficiency. Additionally, the household sector, a major electricity consumer, could benefit from increased awareness and adoption of energy-efficient appliances to reduce energy consumption.

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