‘Build brands, lift national image’
Bangladesh can ‘best use’ its relations with Korea to diversify its exports and grow, the South Korean ambassador in Dhaka has said.
“Five decades ago Korea was poorer than Bangladesh,” Lee Yun-Young said in an interview.
“Bangladesh may do well to gain from our experiences and the lessons we learnt,” he said.
When South Korea established its diplomatic ties with Bangladesh in 1973, it was an aid-dependent country.
In 2013 when it celebrated its 40 years diplomatic ties with Bangladesh, South Korea has become one of the largest economies in the world with its GDP pegged currently at $ 1.3 trillion.
“In 60s and 70s we used to export plywood, wig and thread of textiles. We did not have technologies,” Lee Yun-Young said.
“But then we realised the risk of focussing on light industry. It requires low investment and not much technology but can easily lose competitiveness. One can easily start the business, but if you lose competiveness, you lose business,” he said.
That is when Korea started to develop heavy industries.
“We selected five sectors –electronics, ship-building, steel, petrochemicals and automobiles, and started all these altogether. We borrowed money from abroad and also encouraged joint ventures”.
Things changed rapidly and we never looked back, he said.
By 1977, Korea started exporting its own small cars to US and Canada.
Bangladesh is Korea’s priority partner country when it comes to development cooperation. It is the second largest recipient of Korea’s overseas development assistance.
Korean companies were one of the early investors in Bangladesh in the late 1970s.
But due to lack of diversity in Bangladesh’s exports, the trade gap remains high – Bangladesh’s imports from Korea are worth $ 1.5 billion but exports were only $209 million in 2011-12.
The boom of Bangladesh’s ready-made garments industry, the current mainstay of the country’s economy, is credited to the initial training from Korean Daewoo Corporation in 1979.
The Corporation teamed up with Bangladesh’s Desh Ltd and trained its employees who later left Desh to start their own clothing businesses and flourished.
Korea is now building an exclusive Export Processing Zone in Chittagong, the first private EPZ in Bangladesh that expects to attract investment of $ 1.3 billion in diverse sector.
But the Korean Export Processing Zone (KEPZ) is facing problems to start its operations, because it is yet to get the entire land earmarked for the project.
The envoy said the KEPZ will try attracting investments in keeping with Bangladesh’s own industrial policy — so it was in Bangladesh’s interests to resolve the outstanding issues over the KEPZ.
“It is a win-win for Korean business and Bangladesh,” he said.
“Vietnam has diversified its exports in partnership with us,” envoy Yun-Young said. “Korea is the strategic partner of Vietnam”.
Last year Vietnam exported more than $ 21 billion worth mobile phones and spare parts, outstripping textiles that were its biggest traditional export.
Korea’s giants like Samsung Electronics contributed to Vietnam’s huge electronics exports.
“We have technologies,” he said.
Vietnam ‘rightly’ chose Korea as its ‘strategic partner’, Yun-Young said.
“Since we are not big countries like China and the US, we do not have any political interest”.
Vietnam poses a major challenge to Bangladesh’s garment exports.
Just when Bangladesh faces questions about its workplace safety and labour rights, Vietnam is trying to negotiate with the European Union for duty free access.
The European Union is the major market for Bangladesh’s ready-made garments.
“Bangladesh can study the Vietnam story,” the envoy said.
Vietnam has invited much foreign direct investment like Korea did in 60s and 70s.
“It gives whatever facilities a company needs to operate,” he said, “even companies need not to pay corporate taxes, if they invest that money for research and development (in Vietnam)”.
The envoy said depending only on garment exports would be risky for Bangladesh since it does not have its own brand.
“It’s an OEM type of economy in which Bangladesh just supply an order. If order stops, the business is gone. They don’t have market power”.
He said Taiwanese companies could not compete with Koreans since they never had any brands. “They supply for Apple, for instance. If Apple stops order, then they will lose the market. But Samsung (Korean giant) is a major brand, it has become a household name”.
“If you encourage foreign direct investments in any sector, it not only brings money, it brings technology, it generates marketing know-how and creates jobs,” he said suggesting liberalised measures to woo investors in Bangladesh.
The envoy appreciated the ongoing discussion on Bangladesh-China-India-Myanmar (BCIM) grouping, but suggested Bangladesh should try to become a member of the 10-nation ASEAN.
That may bring more benefits, he said.
“This new diplomacy will broaden your horizon of technology, market and also raise your power to a much higher level,” he said.
The envoy said Vietnam has gained hugely by joining the ASEAN and would benefit more when the ASEAN countries open their market to each other by 2015.
“Bangladesh should continuously knock the door (of ASEAN)”.
He, however, said Bangladesh can take the “central role” in BCIM’s connectivity negotiations since “geographically it is the key to the link between India and China.”
Yun-Young said Bangladesh should also have its “own internal connectivity plan” so that vehicles can move freely from one city to another.
“I found so far actually there is no highway in Bangladesh. Even Dhaka-Chittagong highway is not a highway,” he said. “Its (internal connectivity) is like the circulation of blood, which if blocked, will kill the body.”
“Lift national image”
The Korean envoy said it was time Bangladesh focussed in boosting its national image that has taken blows after the Rana Plaza tragedy and the political conflict.
He appreciated the government’s move to ensure building safety and workers rights in garment factories, but said more should be done to raise the country’s image globally.
He suggested extensive public diplomacy abroad using Bangladesh’s eminent personalities, civil society members, singers and artists.
“By any means it is important to raise national image (globally),” he said, “even France focuses on how to improve their image globally”.
He also stressed on skills training since he observed Bangladesh’s potentials to become “the next Bengal Tiger” due to its “huge young population, competitive labour costs and sizeable entrepreneurs”.
“We (Korea) always encouraged vocational training. During vocational Olympics in late 60s and 70s Korea was always top gold medallist country.
“When they (carpenters, electricians) came back to Korea after good performance (in vocational Olympic), our citizens used to give floral reception. Their welcome as heroes would encourage them” he said.