The Bangladesh Investment Development Authority (BIDA) recently organised a remarkable investment conference. BIDA Executive Chairman Chowdhury Ashik Mahmud Bin Harun’s eloquent speech in English drew widespread praise.
Some remarked that this was the first time they had heard such a speech about Bangladesh’s bright future. Others said the country is now destined to become developed. Some even suggested, “Keep them in charge for five years.” Discussions have even begun about his biography, “Who is Ashik Chowdhury?”.
The government has granted him the status of a state minister, even though the rank of the governor of the central bank remains below the cabinet secretary. All in all, even in these challenging times, the government’s image has been bolstered. The advisers present at the conference were visibly delighted and proud.
Seeing the advisers so proud made me feel proud too, even from abroad. Special thanks to the head of government, who managed to bring back such a talented expert like Ashik Chowdhury from abroad.
Professor Yunus has shown what it means to value merit. Unlike the Awami League government, he did not fill institutions with scores of retired bureaucrats. The previous government ensured loyalty by doing so but failed to foster innovation. As a result, the quality of institutions gradually dipped.
In fact, the Prime Minister’s Office was made a parallel secretariat by appointing retired bureaucrats in most of the positions of the former Prime Minister’s advisory council. The incumbent interim government has shunned that practice and included many expatriate experts in national service. The appointment of Mr. Ashik Chowdhury is such an example.
More than 500 foreign participants joined the recent conference, where Ashik Chowdhury spoke of Bangladesh’s immense potential. He claimed that by 2035, Bangladesh would become - or be well on its way to becoming - like Singapore or Thailand.
However, he did not explain the specific economic pathway through which Bangladesh would achieve this transformation in the next 10 years. It’s unclear whether this involves some kind of magic. His speech seemed largely like a marketing gimmick. Despite being a finance expert, he didn’t do justice to the principles of financial analysis.
Ashik Chowdhury has an MBA but skipped over a proper SWOT analysis - Strengths, Weaknesses, Opportunities, and Threats - all of which are essential. Weaknesses, if addressed properly, can also be turned into opportunities
He showed return on equity (ROE) figures ranging from 56 per cent to 80 per cent, which appeared exaggerated. If the returns are really that high, why haven’t investors rushed in? As the saying goes: “Bees will follow the honey.” It would have been more balanced had the BIDA chief also presented Return on Assets (ROA). Investors don’t jump in based on ROE alone.
Let’s say there’s a company called “Boston” with assets worth Tk 100. In developed countries, around 30 per cent of those assets are funded by debt, and the remaining 70 per cent is equity. If Boston makes a profit of Tk 14, its ROA is 14 per cent, and its ROE is (14/70) = 20 per cent.
Now imagine that in Bangladesh, someone named Himmat Ali runs a similar company. He becomes an MP by funding the ruling party and receives “permission on political consideration” to embezzle bank funds.
As bank loans are practically “free,” his capital structure involves Tk 90 in debt and just Tk 10 in equity. If Himmat’s company earns only Tk 10 in profit, its ROA would be 10 per cent, which is lower than Boston’s. But its ROE would be (10/10) = 100 per cent, five times higher. Yet the company is extremely risky and could collapse anytime. That’s why smart investors look at both ROE and ROA.
According to data from The Global Economy, Bangladesh ranks 53rd out of 136 countries in terms of ROE - a fairly decent position. Over 21 years, the average has been 13.85 per cent. However, in the ROA rankings, Bangladesh drops to 96th, with an ROA of just 0.96 per cent, which is lower than India, Nepal, Bhutan, Sri Lanka, and Pakistan.
Ashik Chowdhury has an MBA but skipped over a proper SWOT analysis - Strengths, Weaknesses, Opportunities, and Threats - all of which are essential. Weaknesses, if addressed properly, can also be turned into opportunities.
When the conference encouraged foreign companies to bring their brands to Bangladesh, at the same time there were incidents of vandalism targeting outlets of foreign brands like Bata, Coca-Cola, and KFC. This intolerant mob culture sends the message: “Foreigners, leave this country.” What a paradoxical version of pluralism! Ashik Chowdhury was reportedly furious. Possibly for this reason, the home adviser finally took some visible action against the mobs who have long operated with impunity. But just days earlier, The New York Times described Bangladesh as a risky country.
Despite this, Ashik Chowdhury has outlined a roadmap for Bangladesh’s advancement, envisioning it as a regional manufacturing hub. However, it seems he left out the current state of regional relations in his calculations - or perhaps he didn’t consult with the foreign adviser.
The previous government played more ceremonial drums than it actually pursued development. We’ve heard claims that Bangladesh will become a “developed country” by 2041. It’s said that this date came from one or two “Dr.” officials in the Prime Minister’s Office, not economists. When I was at Bangladesh Bank, I faced reprimand for expressing doubts in terms of mathematics about the feasibility of that projection.
Now Chowdhury has gone further by envisioning Bangladesh turning into Singapore within just 10 years - a claim even more far-fetched. According to the World Bank, in 2023, Bangladesh’s per capita income was $2,551, while Singapore’s was $84,734 - 33 times higher.
The good news is that Bangladesh’s growth rate of 5.8 per cent is significantly higher than Singapore’s 1.1 per cent. So theoretically, catching up is possible. But at that pace, it would take 77 years. To achieve it in just 10 years, Bangladesh would need to maintain an annual growth rate of over 33 per cent—something no country in the world has ever done.
The BIDA chief organised an economic investment summit without proper economic calculations. According to him, this vision and imagination began just eight months ago—a claim made by a segment of the interim government. But hadn’t anyone before ever dreamt, envisioned, or planned for Bangladesh?
Investment is not a magical blessing; it requires long-term consistency. Bangladesh already has that. Investment has driven GDP growth, and GDP growth has, in turn, encouraged more investment. Foreign investment doesn’t come by dreams alone. In the 1980s, Bangladesh’s average growth rate was 3.54 per cent, rising to 4.71 per cent in the 1990s, 5.6 per cent in the 2000s, and peaking at 6.6 per cent in the 2010s.
Only Bangladesh and India have shown this kind of growth acceleration in South Asia. That is the most compelling argument for investment.
Mr. Chowdhury may have dared to dream big, but his economic reasoning did not hold up. More importantly, foreign investment only grows when there is political stability. Over the last eight months, foreign investment has dropped by 20 per cent. The government must acknowledge this reality and urgently seek a solution.
* Dr. Birupaksha Paul is a professor of economics at the State University of New York at Cortland. His recent books include Crisis-Time Economics and Economic Reforms in Bangladesh