Militancy and the economy
Countries which lost their citizens on that horrifying night - Japan, Italy and India - are all important partners of Bangladeshs development. Japan is the largest bilateral donor for Bangladesh and has continued to be the
largest development partner since the birth of our nation
Masihul Huq Chowdhury
Bangladesh is a role model for the developing economies. Though the country is second largest manufacturer and exporter of apparels and service sector is faring very well, still more than 50 percent of the country population is still engaged in farming and agricultural related activities. The economy has grown at a healthy pace of over 6 percent,the country is in the vicinity of breaking the 7 percent growth rate despite global recession. The major challenges to graduate to middle income country, the increase in investments, improvement in human capital, increase in productivity, inclusive and sustainable economic policy and overall massive reformation. These require socio political stability, rule of law, transparency in governance. The recent global turbulence in the form of terrorism have destabilised the socio political environment which seriously impedes the economic growth of any country. The recent incident which happened in A Gulshan restaurant causing the death of 22 people included 17 foreign nationals from three very important development and business partnering countries including Japan, Italy and India. The fear of further ramifications have created a kind of helpless attitude both among the locals and foreigners, specially the foreigners who are seriously contemplating various options. The travel advisory, the related precautions, the places to avoid etc are very new phenomenon as a result of the Gulshan incident.
Economic development of Bangladesh is apprehended to bear the brunt of this incident. Countries which lost their citizens on that horrifying night - Japan, Italy and India - are all important partners of Bangladeshs development. Japan is the largest bilateral donor for Bangladesh and has continued to be the largest development partner since the birth of our nation. In 2015, the country disbursed USD366 million as foreign aid. Recently, Japan signed its 37th Official Development Assistance Loan Package for Bangladesh, which amounts to USD 1.65 billion, the largest ever in the history of Japans ODA to Bangladesh, at an interest rate of 0.01 percent and repayment period of 40 years, including a 10-year grace period. Japan International Cooperation Agency has successfully helped Bangladesh in the different areas.
Other than technical cooperation, ODA loan and grant aid, JICA provide training programs and volunteer activities.About 230 Japanese companies have invested in Bangladesh, Mostly in export processing zones; the investment amount is equivalent to USD 250 million. Japanese support and investment are in sectors such as disaster management, infrastructural development including power plants, deep sea port and metro rail. Tragically, the seven Japanese who were killed during the Dhaka terror attack were working for Bangladeshs road communication related development project. Bangladeshs exports to Japan were worth USD 615 million in 2015, of which the share of RMG was USD 448 million.s Italy, is one of the important export destinations for Bangladeshi products, particularly readymade garments. In 2015, Bangladesh exported goods worth USD 1,170 million, of which USD 1,070 million constituted of apparels. Italy is also a source of remittance for Bangladesh. Italy occupies second position in terms of remittance made by expatriate Bangladeshi workers which stood approximately USD 235 million in 2014 and growing at a healthy pace. On the other hand, the historical relationship between India and Bangladesh is of immense importance. We share a 4,096-kilometer-long international border, the fifth-longest land border in the world, including 262 km in Assam, 856 km in Tripura, 180 km in Mizoram 443 km in Meghalaya and 2,217 km in West Bengal. The Land Boundary Agreement to simplify the border was ratified by both India and Bangladesh on 7 May 2015. The common boundaries result to sharing of water of common rivers, trade, culture so hence so forth. The Indias aid disbursement amounted to about USD 93 million, while exports from Bangladesh to India were worth USD 542 million in 2015. The FDI flow from India to Bangladesh in order in order to close the trade imbalance of around USD Six Billion is also getting the require momentum. Under this context, the brutal incident in Gulshan may impact despite the assurance of the prime ministers of the respective countries to work together towards counter-terrorism is the recognition of the fact that terrorism is now a global phenomenon which kills people across the globe Dhaka, Istanbul, Paris, Nice, Iraq.
The leaders of BGBA said this at a press conference held recently focused on the present status of RMG sector following the terror attack in Gulshan that killed 20 people including 17 foreigners. We apprehend that Bangladesh RMG sector will lose orders for the next season as our buyers are unwilling to visit Bangladesh for security reasons, said KI Hossain, president of BGBA. Terrorist activities are happening across the globe, but businesses did not come to a halt. Like the government of other countries, we hope our government will take comprehensive measures to keep business functions going.The months of July and August are the time when work orders are placed by the buyers and brands that collect products for summer and Autumn season, he said, adding that the shipment of these orders are executed in November and December.
Economists use various definitions and terminology for categorising the economic impact of terrorism. The two main categories are the primary and secondary economic impact of terrorism, also referred to as direct and indirect economic effects.
Primary economic impact of terrorism refers to the effects arising from the immediate aftermath of a terrorist event . These effects include the physical destruction of urban objects, and the human casualties (injuries and losses of human life). Primary economic impact of terrorism refers to the effects arising from the immediate aftermath of a terrorist event. These effects include the physical destruction of urban objects, and the human casualties (injuries and losses of human life).
There is not much available literature when it comes to the primary costs that households experience due to terrorism itself.
Surveys in France, the Republic of Ireland and the UK illustrate that terrorist attacks have a negative effect on reported life satisfaction.
Other empirical research found out that terrorism will produce more fear than other, more probable risks
Businesses and firms, especially the ones operating to or from insecure countries, are frequent victims of terrorist events. According to the German security economists Schneider, Brck and Meierrieks (2010), this is also due to the fact that public buildings are better protected in general. The actual direct losses of terrorism depend on the nature of the attack (property damage or ransom payments for hostages), but overall, Enders and Sandler (2008) conclude that most sectors recover quickly, given that the economy does not face sustained terrorist attacks, like in Israel and Northern Ireland. There is not much literature available on this subject. The costs arising from physical destruction from small-scale terrorist events are not structurally measured, except for major events like 9/11 and the terror events in London and Madrid. Costs for the public sector arise whenever public infrastructure or buildings are destroyed (including military structures and equipment), but are generally considered to be relatively small. Moreover, terrorism forces local and national authorities to spend billions on the prevention of terrorism and the detection, prosecution and punishment of terrorists.
Due to a terrorist event, these economic agents suffer from impact through losses in physical and human capital, and, at the same time, they themselves may influence the economy through their immediate responses to the violent shock that occurred. In general, the direct economic losses of terrorism do not bulk very large, with an exception for the unprecedented magnitude of the 9/11 attacks. Terrorism in general, and especially in Europe, can, according to Schneider et al. (2010), be characterized as small scale, but frequent events, more focused on objects with a symbolic or political value and not so much on economic symbols like the World Trade Centre in New York.
Terrorism will not only cause primary economic impact, but will also produce considerable secondary (or indirect) impact. This secondary economic impact is the result of an interdependent economic system in which terrorist attacks cause the disruption of economic entities which have not been direct targets of the attack. A survey review by the Swiss economists Frey et al.(2004) describes the following indirect economic aspects of terrorist events:
Terrorism systematically influences tourists choice of destination and can, therefore, substantially negatively affect a host country.The American economists Enders and Sandler (1991), for example, conclude that a typical terrorist act in Spain scares away over 140,000 tourists. Moreover, the effect is long-lasting and has also an impact on the demand for tourism in neighbouring countries. Enders and Sandler (1996) also found out that countries like Spain and Greece saw their foreign direct investments(FDI) decrease in the period 1975 - 1991 due to a series of terrorist events. The impact on FDI in three larger European countries (France, West-Germany and Italy), however, was zero, implying that the impact of structural terrorism on FDI also depends on the size of the economy.
Consumption and saving rates, may be affected by terrorism, but according to Frey et al. (2004), it is still unclear if this effect is positive or negative.
The shocking revelation of the terrorists social background has prompted us to reflect on our education system, particularly that of the private universities where some of these terrorists studied. Run like private banks, some of these universities have made education a commodity, through which they can mint money. Many of these universities do not have a registrar or a proctor, and the Vice Chancellor has no say at the board room. Several of these universities have mushroomed through high profile connections without any plans for human resources and curriculum. This creates a situation whereby the local supply of talents to be involved in the foreign owned companies very challenging one. This will impact the overall balanced growth of human resource which is required for the overall development of human resource index. This in turn will help the productivity growth. The example of Singapore, a natural resource starved country marred with poverty has developed as a knowledge based economy becoming the most productive country under the able visionary leadership of former Prime Minister Lee Kwan Yew.
A wholesale combined approach towards curbing of terrorism requires a careful planning and strategy to be formulated to arrest the negative image thus created by Gulshan tragedy. We need to work on the areas of social justice, political stability and real check on the virtual world as what not to subscribe for the audience specially the youth. Hopefully with the pragmatic and courageous stance of the policy makers by involving the people will make us win over and continue the growth momentum.
The writer, a banker by profession, has worked both in local and overseas market with various foreign and local banks in different positions
