Between April and June of last year, Bangladesh attracted over $53 million in new Chinese investments, with almost $30 million directed towards the textile sector. More than twenty clothing factories in the country are now backed by Chinese funds, either through newly established facilities or by leasing existing ones from local owners facing capacity constraints. This strategic move by Chinese manufacturers is driven by economic considerations rather than altruism. Faced with tariff challenges in major markets, they are opting to relocate their production hubs. The key question remains whether Bangladesh is adequately positioned to capitalize on this shift.
In 1990, both Bangladesh and Vietnam had similar export figures of around $2 billion each. Fast forward to today, Vietnam’s annual exports have soared to $270 billion, while Bangladesh lags behind at approximately $40 billion. Despite both nations initially having advantages in cheap labor and garment manufacturing, Vietnam’s success can be attributed to its comprehensive infrastructure development encompassing logistics, product variety, and digital systems facilitating global trade outreach.
My recent research delves into the impact of basic online presence, like having a website or social media page, on export capabilities of manufacturing firms. Analyzing data from the World Bank Enterprise Survey covering multiple countries, including Bangladesh, India, Pakistan, and Sri Lanka, reveals a significant positive correlation between online presence and export performance, with Bangladesh showing the most pronounced effect. Interestingly, Bangladesh records the lowest online presence rate among the surveyed countries, hinting at a vast untapped potential for local manufacturers to attract international buyers simply by establishing an online presence.
However, Bangladesh faces challenges in digital infrastructure and connectivity. With an internet penetration rate of around 53%, the country trails behind others in the region like Bhutan and the Maldives. Rural areas, where a significant portion of manufacturing activities are concentrated, suffer from even lower connectivity rates. Moreover, international payment gateways like PayPal or Stripe are absent in Bangladesh, leading to additional costs and delays for cross-border transactions, putting local businesses at a disadvantage compared to counterparts in countries like India and Vietnam.
The government’s proposed “National Artificial Intelligence Policy (2026–2030)” outlines a strategic roadmap towards enhancing digital infrastructure and fostering a conducive environment for enterprises to thrive. Despite having a significant number of small and medium enterprises (SMEs), Bangladesh’s SME contribution to GDP pales in comparison to countries like Vietnam, largely due to the lack of robust systems linking entrepreneurs to finance, verification, and markets at scale. The challenge lies in translating policy objectives into tangible tools accessible to grassroots entrepreneurs.
To propel industrial growth and diversification, Bangladesh needs to expand broadband and mobile internet coverage to manufacturing hubs beyond Dhaka, focusing on coastal and riverine regions for logistical advantages. Addressing payment bottlenecks and enhancing digital platforms catering to micro and small enterprises are imperative steps to accelerate economic progress. With competitors like Vietnam, Cambodia, and India actively pursuing similar strategies, Bangladesh must act swiftly to leverage its current advantages and establish a solid foundation to capitalize on emerging opportunities in the global market.
