PERISCOPE – October 2018
What is your take on the latest “big” news on Walmart and Amazon starting operation in Bangladesh?
In my view – This may bring benefits to the consumer side, but will have serious negative implications for local businesses (hence, on the economy).
These global giants strive to offer best services at the best price to their customers. That sounds good for the consumers, of course. But the local businesses will suffer as that level of service or price they will not be able to offer due to their limitations in economies of scale, supply chain efficiency and other factors.
These giants increasingly employing automation, which means a lesser need of humans in their operations. They pay the minimum to their low end staffs to begin with. In a country with a very large population and high unemployment, this might be alarming.
As foreign entities, the profit they will make, eventually will find its way outside the country. In contrast, local businesses reinvest and grow within the country.
The corporate giants also have greater lobbying power in manipulating tax rules in their favour, which not necessarily coincides with the well of masses of the country.
The damage would be lower if they source their products primarily from local sources. Furthermore, it would be a good deal if these giants use (to greater extent than existing) Bangladesh as a source of their products that they sell in other countries as well. For now, nothing confirms any commitment on these.
Mezbah Uddin Ahmed