An article was floating around the other day suggesting Bangladesh will benefit from the current economic turmoil. It reminded me of the early days of the dot-com crash, when Sun's upper management were going around saying, effectively, "We will come out of this slowdown [it was not a crash yet] ahead of, and better than, our competition because bla bla bla." But of course Sun suffered heavily - for a host of reasons, lack of execution being a big one (but that's what happens when the Process Police takes over, no?) But Sun's management had not foreseen that, had they? You never know what strikes you in these situations.
I am not predicting impending doom for Bangladesh, but I cannot disregard the possibility that this country will be affected sooner of later. I spoke with the owner of a large export-oriented business last night. Some of his customers are cancelling or renegotiating contracts, and slowing down the buying. I also read about several Garments owners complaining about order cancellations. But maybe garments will be spared the worst. As another friend pointed out, "Americans are not going to start walking around naked!" According to him, this turmoil will give the buyers another chance to squeeze their Bangladeshi vendors a little more for lower prices.
The Taka being pegged to a resurgent dollar will not help our exports, for sure. But on the other hand, since most garments factories buy much of their raw material from abroad, their materiel costs (in Taka) will go down. Your head spinning yet? Mine is.
Banking in Bangladesh seems reasonably healthy. Much of this, I am told, has been because of the very strict regulating oversight of Bangladesh Bank (which, in turn, is influenced by World Bank.) Whatever the reasons, the banks in Bangladesh have not gone into the business of those crazy products and practices that have gotten the Western banks into trouble.
When I was chatting with a senior, respectable banker the other day, he pointed out that two years ago, some young, hot-shot, western-type bankers had given him and his colleagues a lecture on Securetization, Mortgage-Backed Securities, and other instruments that had become fashionable to the Western banks. At the end of the lecture, my friend had said, "But how can we go into this business? I still don't understand what you are talking about!" He might have felt bad about saying those words then, but today he is not losing a lot of sleep over toxic assets.
While banking appears on solid ground, remittances from overseas workers is a different, unpredictable matter. Some are saying that the drop of oil prices means the Middle Eastern countries will be starting fewer construction projects, and so will hire fewer people from here. The other side I heard was that the Middle Easterners are now so addicted to our cheap labor that they will keep on recruiting no matter what. Who knows?
Finally, real estate. When you have 150 million people squeezed into 55000 square miles, land is expensive. Two words: population pressure. Some, specially those who are in the business, don't see much effect on real estate prices. They argue that many of the buyers are local who have accumulated their wealth in Taka and are ready to spend on flats and land. Others say that real estate will have to slow down because the remittances and exports will slow down. Who knows?
On final reckoning, the market turmoil in the West does seem very far away from the average Bangladeshi, because that person is struggling so hard just to make ends meet and take care of those who depend on him or her. The optimist in me says being so close to tbe bottom of the barrel means that the Bangladeshi will not have to bear a heavy brunt of this storm, while the pessimist says that in times of crisis the worst hit are often those at the bottom of the heap. Who knows? Only time will tell.
sistunes
Saturday, October 25, 2008