The Protifolon series is brought to you by Bangladesh Online Research Network (BORN) www.bdresearch.org an information and knowledge intermediation initiative of D.Net in colloboration with Institute of Development Studies (IDS), University of Sussex, UK. (visit http://blog.masumbillah.net for more)

1. Welcome to D.Net’s
Protifolon, a new policy
briefing series that highlights
cutting edge thinking on the
emerging issues affecting
Bangladesh. This first
edition examines the Global
Financial Crisis (GFC) in the
context of trade, exports
migration and remittances
and summarises
recommendations for policy
makers.
01
Overview Additionally the Bank has extended period. Trade, migration
taken measures to stabilise the and remittance are the most likely
Since the collapse of the
exchange rate, provide extra sectors to be impacted as 43.3%
United States sub prime mortgage
liquidity to the financial sector and of Bangladesh’s openness is
market and the subsequent
raised the limit on private foreign
international global crisis, many related to trade and 10 % to
borrowing. It has also relaxed the
developed and developing remittance. Overseas
conditions for opening fresh
countries have been plunged into Development Assistance (ODA)
letters of credit (L/Cs).
deep recession. Bangladesh
and Foreign Direct Investment
though has found itself in a slightly In February 2009, the Finance (FDI) may also be vulnerable in the
different position. Its economy is Minister AMA Muhith admitted
longer term but to a lesser extent
not so dependent on international that the global financial crisis was
due to only 3.2% integration with
capital and foreign investment, having an impact on trade in
which has helped to lower the the global economy (CPD and
Bangladesh. In April the
immediate impact of the crisis. ILO, 2009).
Government announced their
Despite this the Bangladesh stimulus package with 65 million Whilst the longer term nature
government has formed a dollars directed to assist exports. of FDI commitments has kept the
high-level technical committee This though falls short of the 877 net inflow of investment relatively
and taskforce to monitor and million dollars needed according
stable, the sluggish growth of rich
advise on the crisis, and ministries to industry experts (Yahoo news,
countries may eventually slow it
and financial institutions have 2009).
taken several precautionary down. Aid receipts (excluding
During 2008, 57% of
measures. Importantly in October dollars) are providing less in local
Bangladesh’s economy was
2008 Bangladesh Bank withdrew currency due to unfavourable
involved in the global economy
90 % of its total investment from exchange rates and future aid
and this is increasing. This
foreign banks which has helped to
commitments from donors may be
indicates that the country might
further shield the economy, so that
in jeopardy if the downturn
it is only now that the affects of the be progressively more affected
continues.
crisis are being felt. should the crisis continue for an

2. Impact on trade Within the RMG sector predictions
suggest that whilst overall RMG
The health of Bangladesh’s
orders may decline it may not all
economy depends significantly on
be bad news. Consumer cost
foreign trade. Almost 90% of
cutting in the developed countries
exports are targeted to United
may actually increase demand for
States, European Union and other
lower priced products (the
developed countries. Rising
so-called Wal-Mart effect) – a
unemployment, the subsequent
section of the market well suited
decline in disposable income and
The
to Bangladesh producers. phase of being
declining consumer confidence in
indifferent and complacent
Demand for workers has
these markets could have serious
remained steady in the RMG is over. From the indications
impacts on export potential.
sector because of the positive that we are receiving from
Although exports showed robust
growth in the second half of last
the exporters, from the
growth (19.4%) during
year. However stimulus packages
migrant workers, and also
July-December 2008, they
in competing countries are
registered negative growth from the production sectors,
beginning to impact the demand
(-1.4%) during October- we think that there are signs
for labour in the textile sector. For
December 2008, (Bangladesh of some slowdown. It would
example 12 spinning mills
Bank, 2009) – the worst figures in reportedly closed as be smart for us to take some
recent history. All other sectors manufacturers began procuring steps in order to address the
also registered negative growth yarn from India at lower prices.
emerging concerns.
(CPD, 2009)
during this period. The World Bank
forecasted that due to slower Dr. Mustafizur Rahman
Policy makers and other
02 Executive Director, CPD
activity in the export sector institutions are being urged to
services growth will fall to the consider the following measures
For complete interview visit:
to limit damage to the trade sector
range of 5.8% to 6.7% in http://www.bdresearch.org.bd/gfc
[BIDS, 2009 and CPD, 2009]: /interview.htm
FY2008.
closely monitor the RMG
In Bangladesh Ready Made
sectors particularly order
Garments (RMG) makes up about provide cash subsidy and
volume, export trends, export
three quarters of total exports. incentives to support affected
prices and composition of
Other major exports include industries and workers
exported products
frozen foods and leather goods.
consider a low-interest credit
facility to affected frozen food
firms
provide cash incentives for a
limited period to finished
leather producers in order to
be competitive with China,
Morocco and India
withdraw duties and VAT
(Value Added Tax) on inputs
and machineries
increase the efficiency of
customs, ports, and
Source : Freefoto.com
infrastructure

3. Impact on migration
and remittance
Bangladesh is the fifth highest
remittance-earning country in the
world and is the second largest
sector in the country which is
integrated with the world
economy. About 1.7 million
workers left Bangladesh in search
of jobs during 2007 and 2008 and
about five million Bangladeshis
are currently working abroad,
mainly in Saudi Arabia, Kuwait and
Malaysia.
Source : Centre for Policy Dialouge (CPD)
In 2009, it is predicted that the
number of workers going abroad the Middle East have drawing on varied research,
will be significantly lower with accumulated large reserves of oil, shows the impact that remittance
UAE, Saudi Arabia, Malaysia and migrant workers will still be in can have in reducing vulnerability,
Singapore already struggling with demand, but a World Bank report providing financial safety nets and
slow economic growth and suggests Bangladesh needs to improving areas such as access to
declining demand for construction create an additional one million education and household debt.
and other services [CPD and ILO, jobs for the people likely to lose The IOM report suggests that
2009]. Overall remittances during jobs at home and abroad (Asian the dependency on this income
2008 were 37.3% higher than the 03
Tribune, 2009). Any downward can create serious issues when
previous year but since August trend is likely to create issues for the political or economic
2008 they showed a decreasing the receiving families. circumstances in the destination
trend as did the number of
countries change and that “the
A 2005 International
workers travelling overseas
importance of remittances for the
Organization for Migration (IOM)
[Bangladesh Bank, 2009]. receiving family cannot be
report examines the utilisation of
Bangladesh Bank suggests that underestimated.”
remittance in Bangladesh and,
because the oil rich countries of
For the migrants working
abroad as well, economic crises
can exacerbate already difficult
conditions as their host countries
become more constrained.
Concerns include inadequate
access to decent living and
working conditions, cuts in social
service provision, fear of
xenophobic attacks and restricted
access to worker rights (IOM,
2009). Whilst evidence for this in
relation to Bangladeshi workers is
difficult to find, it is important in
the growing turmoil to safeguard
against human right violations.
So what measures can be
Source : IRIN News introduced to protect migrant

4. workers and their families? Whilst Qatar through diplomatic
Recommended readings
Bangladesh Bank have sought to intervention
1. Macroeconomic Management in
improve the efficiency of examine further alternative the Face of Global Challenges,
transferring remittance, the Centre for Policy Dialogue,
migrant destinations including
March 2009.
Bangladesh Government has Iraq, Bahrain, Mauritius,
http://cpd.org.bd/downloads/M
devised a seven point strategy Sudan, Libya, and South Africa acro-Management.pdf
which includes extending existing
seek technical and financial 2. Global Financial Crisis and
manpower markets and exploring
Bangladesh, Bangladesh
support from the ILO and
new host countries in Europe. Institute of Development
initiate memorandums of Studies, March 2009.
However in April’s emergency
understanding (MOUs) http://www.bids-bd.org/images/
stimulus package remittances
pre_GFC_16Mar09_Ahsan.pdf
between Bangladesh and the
were absent (New Age, 2009). To
3. Navigating the Global Financial
destination countries of the
protect migrants abroad and to try
Storm: Challenges for
migrants. These MOUs could
and retain remittance levels the Bangladesh, Bangladesh Bank,
contain basic rights such as full November 2008.
Government need to prioritise this
http://www.bangladesh-bank.or
wages every month and safe
issue.
g/research/policypaper/pp0903.
working conditions
pdf
Recommendations include:
For returning migrants 4. Impact of the Global Economic
agree steps with Saudi Arabia
provisions should be put in place Crisis on the Employment and
and Kuwait to protect
Labour Market of Bangladesh,
to assist in their repatriation,
Bangladeshi’s working there
Centre for Policy Dialogue,
reception and reintegration and January 2009
ensure good relations are
Official Development Assistance http://cpd.org.bd/pub_attach/o
maintained with existing
p80.pdf
(ODA) could be increased to
migrant destinations such as
04 5. Global Financial Crisis: Impact
create employment opportunities.
UAE, Malaysia, Oman, and
on Bangladesh, D.Net
Bangladesh, October 2008
References:
http://www.bdresearch.org
Asian Tribune (2009) World Bank suggests Bangladesh to create 1 million additional jobs for people
likely to lose jobs at home and abroad URL: http://www.asiantribune.com/?q=node/16786
6. National Policy Responses to
Bangladesh Bank (2009) Bangladesh Bank Economic Trends; URL: the Financial and Economic
http://www.bangladesh-bank.org/pub/monthly/econtrds/econtrds.html
Crisis: The Case of Bangladesh,
Centre for Policy Dialogue (2009) Macroeconomic Management in the Face of Global Challenges;
ILO, January 2009
URL: http://www.cpd.org.bd/downloads/Macro-Management.pdf
http://www.ilo.org/wcmsp5/gro
Centre for Policy Dialogue and International Labour Organization (2009) Impact of the Global
ups/public/---asia/---ro-bangko
Economic Crisis on the Employment and Labour Market of Bangladesh; URL:
k/documents/meetingdocument
http://www.cpd.org.bd/pub_attach/op80.pdf
/wcms_101570.pdf
International Organization for Migration (2009) IOM (2009) The impact of the global financial crisis on
migration; URL:
7. Bangladesh Economic Update
http://www.iom.int/jahia/webdav/shared/shared/mainsite/policy_and_research/policy_docum
ents/policy_brief_jan2009.pdf world Bank, 2009
New Age Business (April 2009) Stimulus fails to satisfy exporters; http://www.adb.org/Documents
URL:http://www.newagebd.com/2009/apr/20/busi.html
/Economic_Updates/BAN/2008/
Yahoo News (2009) Bangladesh unveils 500-mln-dlr stimulus package; URL:
QEU-Dec-2008.pdf
http://news.yahoo.com/s/afp/20090419/wl_sthasia_afp/financeeconomybangladeshstimulus_
20090419113815;_ylt=AtvG3srd4SYuAbp9zGMHy4AAS5Z4
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