A growing number of Bangladeshi businesses are becoming concerned about protectionism worldwide despite maintaining a positive outlook on global trade for the coming years, according to a survey of HSBC.
The local firms are also increasingly becoming anxious about the emergence of smart manufacturing and artificial intelligence, fearing the loss of their comparative advantage with the rise in automation, the survey found.
Released last week, the findings were part of the latest HSBC Navigator survey conducted on 8,650 businesses in 34 markets worldwide.
Global banking giant HSBC conducted the survey from July to September 2018.
According to the research, almost 94 per cent of respondents in Bangladesh say that they have a positive outlook on global trade and a slightly higher proportion are confident about succeeding in the current international trading environment.
The only country in the survey, which has a higher level of optimism than Bangladesh, is India where 96 per cent respondents expressed a positive outlook on global trade.
Some 93 per cent of Bangladeshi respondents also feel that foreign governments are becoming more protective of their domestic businesses.
This result is higher than the global average of 63 per cent and reflects a sizable increase of 17 percentage points from HSBC's last navigator survey conducted in 2017.
When it comes to digital challenges, the top three challenges identified by Bangladeshi business entities are smart manufacturing (49 per cent), artificial intelligence (49 per cent) and 3D printing technology (42 per cent).
"This is perhaps not too surprising given Bangladesh's comparative advantage in low-cost labour-intensive manufacturing, as improvements in manufacturing automation or more cost-effective 3D printing (especially in the garment industry) would have a negative impact on the industrial growth in Bangladesh," the report noted.
"Improvements in artificial intelligence would also reduce the demand for IT-outsourcing services from Bangladesh," the report cautioned.
When asked what were the top three markets their business would look to expand in the next three-five years, Bangladeshis mostly chose China (27 per cent) and India (20 per cent) followed by Japan (16 per cent).
Views regarding the impacts of regulations are, however, more diverse in Bangladesh, the HSBC survey found.
While almost half (47 per cent) of respondents believe that regulations increase the value of their business, 31 per cent of firms believe that regulations reduce their competitiveness.
When it comes to compliance with regulations in the major export destinations, 80 per cent of respondents in Bangladesh reported that they have already complied with applicable data protection regulations.
"It appears that respondents are well aware of how to leverage these new rules to their advantage when doing business in the European Union," the report said.
General Data Protection Regulation was identified by a majority (59 per cent) of respondents in Bangladesh as likely to help their business prospects over the next three years.
Similarly, the European Union's political and regulatory environment was also generally viewed favourably by Bangladeshi respondents (53 per cent).
When it comes to business strategy, respondents from Bangladesh have put an increased emphasis on short-term growth, the survey found.
At the same time, they have also frequently cited a desire to become more entrepreneurial and focus on upskilling their workforce.
The HSBC research also showed that business entities in Bangladesh are increasingly leveraging data protection as a comparative advantage.
Some 88 per cent of the respondents in the country reported using data to optimise performance, out-performing the 75 per cent global average.
Sustainability apparently ranks highly in the business decision in Bangladesh as no firms in the services sector and only a small minority of firms in the goods sector (1.0 per cent) reported that sustainability is not a focus for them.
Firms in both sectors (44 per cent goods, 42 per cent services) report that they are currently planning measures to improve sustainability outcomes in their supply chains.
Meanwhile, at the global level, the HSBC survey found that 77 per cent of the businesses in Asia have a positive outlook on trade - roughly in line with the global figure of 78 per cent.
"Businesses remain positive about their trade outlook," the report said, while cautioning that "clouds are gathering on the horizon".
"The upsurge in protectionism comes at an inopportune time for the global economy, as world trade appears to have slowed in recent months", the HSBC report said.
"While there is so far limited evidence that protectionism fears have significantly dented the global economy, the recent announcement of further US tariffs on imports from China, and China's retaliatory actions, signal a marked escalation of their trade conflict," it said.
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