Gearing up for the Future of Manufacturing in Bangladesh

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00:00 For two decades,

00:01 Bangladesh has achieved impressively high rates of economic growth.

00:06 The success is mainly due to the ready-made garment sector,

00:09 where access to a large pool of workers

00:11 has helped the industry become globally competitive.

00:13 But the level of growth can't last indefinitely.

00:16 As Bangladesh becomes an upper middle income country,

00:19 labor costs will rise,

00:21 buyers will move to places where goods are produced more cheaply,

00:24 and a lack of skilled managers,

00:26 designers,

00:26 and other technical experts will further limit the country's appeal.

00:31 The COVID-19 pandemic has only made this outlook worse.

00:35 So what can Bangladesh do to sustain its economic growth?

00:39 A recent World Bank report suggests a range of measures.

00:42 The country must switch from competing on the basis of low wages

00:46 to competing on productivity.

00:48 It must improve technology usage across the entire manufacturing sector.

00:53 An important step will be adopting better industrial technologies,

00:57 including more energy efficient machines,

01:00 but that won't be enough.

01:02 To improve business operations,

01:04 firms must adopt better digital technologies.

01:07 At present,

01:08 more than 4 out of 10 Bangladeshi firms still use handwritten documents.

01:12 75% still practice manual quality inspections.

01:16 Firms must adopt more advanced managerial technologies,

01:19 for example,

01:20 better planning and performance tracking,

01:22 and the use of incentives.

01:24 But many firms don't believe they need to improve.

01:27 Others don't know how.

01:29 This is where government can help.

01:31 New policies can improve the three C's capability,

01:35 connectedness,

01:36 and complementary markets.

01:38 Capabilities of firms.

01:40 In Bangladesh,

01:41 when managers have a college degree,

01:44 technology use can increase by 10%,

01:46 but half the country's manufacturing firms

01:49 are run by people without college degrees.

01:52 Policies must support education

01:54 and upskilling.

01:56 They must help firms access cost-effective advisory services

02:00 and make them aware of available technologies.

02:03 Connectivity to international markets.

02:06 On average,

02:06 firms working with multinational companies use

02:09 technology more than those working locally.

02:12 Competition is cited as the main reason for buying new hardware and software.

02:16 Restrictions on international trade and foreign

02:19 direct investment must be reduced.

02:22 Firms outside the RMG sector too must be allowed to import duty-free raw materials

02:27 to benefit from import competition

02:29 and have access to special bonded warehouses.

02:33 Special economic zones will also help.

02:36 Complementary markets.

02:37 Half of all small and medium firms claim

02:40 the main barrier to adopting technology is financing.

02:43 They're also concerned about the cost of complying with regulations

02:47 to make it easier for firms to borrow for their technology needs.

02:51 Government must strengthen the financial sector.

02:53 Unnecessary costs of business regulation should be reduced.

02:57 On the three C's are implemented.

03:00 Businesses will begin to adopt

03:01 cost-effective and locally appropriate technologies.

03:04 They'll be in a better position to compete globally.

03:07 Bangladesh's manufacturing sector will be ready for the future.

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For two decades, Bangladesh has achieved impressively high rates of economic growth. The success is mainly due to the ready-made garment sector, where access to a large pool of workers has helped the industry become globally competitive. But the level of growth can't last indefinitely. As Bangladesh becomes an upper middle income country, labor costs will rise, buyers will move to places where goods are produced more cheaply, and a lack of skilled managers, designers, and other technical experts will further limit the country's appeal. The COVID-19 pandemic has only made this outlook worse. So what can Bangladesh do to sustain its economic growth? A recent World Bank report suggests a range of measures. The country must switch from competing on the basis of low wages to competing on productivity. It must improve technology usage across the entire manufacturing sector. An important step will be adopting better industrial technologies, including more energy efficient machines, but that won't be enough. To improve business operations, firms must adopt better digital technologies. At present, more than 4 out of 10 Bangladeshi firms still use handwritten documents. 75% still practice manual quality inspections. Firms must adopt more advanced managerial technologies, for example, better planning and performance tracking, and the use of incentives. But many firms don't believe they need to improve. Others don't know how. This is where government can help. New policies can improve the three C's capability, connectedness, and complementary markets. Capabilities of firms. In Bangladesh, when managers have a college degree, technology use can increase by 10%, but half the country's manufacturing firms are run by people without college degrees. Policies must support education and upskilling. They must help firms access cost-effective advisory services and make them aware of available technologies. Connectivity to international markets. On average, firms working with multinational companies use technology more than those working locally. Competition is cited as the main reason for buying new hardware and software. Restrictions on international trade and foreign direct investment must be reduced. Firms outside the RMG sector too must be allowed to import duty-free raw materials to benefit from import competition and have access to special bonded warehouses. Special economic zones will also help. Complementary markets. Half of all small and medium firms claim the main barrier to adopting technology is financing. They're also concerned about the cost of complying with regulations to make it easier for firms to borrow for their technology needs. Government must strengthen the financial sector. Unnecessary costs of business regulation should be reduced. On the three C's are implemented. Businesses will begin to adopt cost-effective and locally appropriate technologies. They'll be in a better position to compete globally. Bangladesh's manufacturing sector will be ready for the future.

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worldbank/Future of Manufacturing - English

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title

Future of Manufacturing English

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Future of Manufacturing English

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