The Fourth Industrial Revolution (4IR) sits apart from previous industrial revolutions. Whereas steam power, electricity and information technology created the first three industrial revolutions, 4IR is characterised by parallel technological breakthroughs within and across the digital, biological and physical spheres. It is unprecedented in its speed, depth and breadth, offering both promise and challenges as it transforms nearly every industry. Emerging technologies that characterise the 4IR era, such as artificial intelligence (AI), blockchain, internet of things (IoT) and drones, are poised to play a crucial role in not only keeping societies functional but also providing much-needed productivity gains that will help countries achieve their long-term development targets.

Bangladesh in the second and third industrial revolutions

As a newly born nation in 1971, Bangladesh had a delayed start to the second industrial revolution. The formative years of the country were spent rebuilding from the damage caused by the Independence War and creating a conducive environment that would eventually set Bangladesh up as a stronger industrial base. It was not until in the boom of the apparel industry that Bangladesh began to reap the rewards of the second industrial revolution. As countries like South Korea moved up the value chain, the low-margin and low-skill apparel industry gradually shifted to countries like Bangladesh. The apparel industry, which has spearheaded Bangladesh’s growth story, has allowed the country to absorb a large portion of its workforce, particularly women, into the formal sector. It also created the impetus for policy-makers to embark on an industrialisation strategy that aimed to maximise the benefits of its demographic dividend.

If circumstances delayed Bangladesh’s entrance into the second industrial revolution, lack of vision and foresight in the early 1990s played a critical role in delaying the country’s entry to the third industrial revolution. It was not until the country’s aspirational Digital Bangladesh agenda of 2009, which looked to transform Bangladesh into a knowledge economy by 2021, that there was impetus for policy-makers to understand the power and the benefits of technology. The programme allowed for the creation of a network of digital centres across the country, reformed the pension system and started deepening financial inclusion. The benefits would have never been so evident had it not been for the covid-19 pandemic, which has disrupted the regular way of life in Bangladesh, as elsewhere.

Covid-19 and digital transformation

The covid-19 pandemic has accelerated the digital transformation transition in some areas – driving the adoption of digitally enabled ways of producing goods or providing services in a world where physical interaction has become less possible. It has also exposed the flaws of regulatory systems that have not kept pace with innovation, hindering the adoption of new ways of doing things.

Fortunately for Bangladesh, the investment behind Digital Bangladesh programme helped digitise the government’s services. It provided the necessary foundation to take on the mammoth task of implementing virtual classrooms for universities as well as creating 35,000 multimedia classrooms for primary and secondary pupils during the covid-19 pandemic. While technology may not have been at the top of every country’s pre-pandemic agenda, 2020 has shown how important, pervasive and critical it can be to help economies stay resilient.

Building on this foundation and seizing the opportunity presented by the covid-19 pandemic, policy-makers in Bangladesh will have to continue to harness new technologies to ensure key opportunities are realised. Unfortunately, this comes with its own set of challenges. While technology has the potential to drive enormous socio-economic breakthroughs, it may also lead to adverse consequences. New technologies and business models of the 4IR era do not fit easily into the traditional framework that regulators use to supervise markets. For example, in the Bangladeshi context, which regulatory body will be responsible for piloting a blockchain letter of credit transaction? Will it be the responsibility of the central bank, the Bangladesh Bank, or will it fall under the jurisdiction of Bangladesh’s ministry for Information Communication and Technology (ICT) affairs? For technologies such as drones and IoT, where there are concerns around privacy, it is difficult to ascertain which government agency will be best equipped to regulate them.

In addition to the fundamental question around governance, most discussions around 4IR in Bangladesh focus on the threat of job losses for conventional sectors such as readymade garments. A 2019 study on 4IR by a2i, Bangladesh’s specialised agency for citizen-centric public service innovation, highlighted how, under a baseline scenario, Bangladesh stands to lose nearly 5.5 million jobs. Therefore, an essential consideration for governments, particularly in a country like Bangladesh, is how these technologies can be governed to maximise benefits and mitigate risks.

How to move forward?

Investing in skills of the future

The most important task in hand for policy-makers in Bangladesh is to acknowledge that any advancement in embracing 4IR technologies will require addressing the way skills development policies are formulated. It is widely recognised that 4IR will create job losses. However, according to the World Economic Forum’s Future of Jobs Report 2020, many companies across the world have embarked on a reorientation of their business model. The transformation of production has consequently given rise to new professions and new ways of working. It will eventually pave the way for greater prosperity despite initial job displacement. As such, the WEF’s report estimates that, by 2025, 97 million new roles may emerge to offset the 85 million job losses from the traditional industries. This will create a net job number of 12 million by 2025.

These new jobs will be in sophisticated industries. For Bangladesh, to capture this growth, the public sector needs to provide stronger support for reskilling and upskilling for at-risk or displaced workers. Bangladesh’s policy-makers will need to create incentives for investments in the markets and jobs of tomorrow; provide stronger safety nets for displaced workers during job transitions; and decisively tackle long-delayed improvements to education and training systems. In Bangladesh, efforts may need to focus on strengthening the quality of education in STEM (Science, Technology, Engineering and Mathematics). They will also need to ensure that soft skills are part of the skills development prescription. In Bangladesh, projects such as a2i’s current collaboration between Singapore Polytechnic and Singapore’s Temasek Foundation should be expanded and encouraged.

Develop agile governance methods

The second critical factor in 4IR is the need to create regulatory sandboxes to create performance-based regulations. This is an approach that many countries are adopting in framing regulations for emerging technologies. In Rwanda, for example, to unlock the potential of drone technologies, the Rwanda Civil Aviation Authority (RCAA) collaborated with the World Economic Forum to introduce a performance-based regulatory approach. Rather than set prescriptive rules, the RCAA determined acceptable thresholds of risk and required manufacturers and operators to demonstrate how they would meet its performance standards. This approach has enabled new businesses to provide services such as delivering medical products, infrastructure inspections, agricultural spraying, surveying of crops and land titling.

In Bangladesh, the pilots of a blockchain-based remittance system and blockchain-based letter of credit transactions have helped reduce the transaction cost and time. These approaches should be encouraged. Instead of regulating the use of blockchain from the top, the Bangladesh Bank can look to create a fintech regulatory sandbox, which would allow financial institutions to pilot these new technologies. Like in the Rwanda example, learning from these pilots, the concerned agencies in Bangladesh – the Bangladesh Bank in close collaboration with the Ministry of Finance and the Ministry of Posts, Telecommunications and Information Technology, – can develop a national blockchain strategy.

Enhance public–private cooperation

To benefit from the 4IR era, there has to be more public–private collaboration. While the private sector provides the necessary stewardship for new technologies, the government will need to protect the public from harm. This will require a higher degree of collaboration than under previous industrial revolutions. Because technology cannot be governed in a traditional way, it is extremely important for both public and private sectors to co-create regulations. In the case of Bangladesh, this precedence has already been created, during the introduction of ridesharing services such as Pathao and Uber. Even during the introduction of mobile financial services in the country there were the co-creation regulations.

To support this framework, Bangladesh can take a similar approach to Italy, which has introduced its Diritto a Innovare, or Right to Innovate, scheme. The legal provision allows start-ups and private sector companies to ask the government for permission to experiment, through a temporary derogation from statutory regulations. The relevant ministry (in the case of Italy the Ministry of Technological Innovation), in conjunction with other relevant authorities, evaluates factors including the feasibility of the proposal, the level of technological innovation and its potential economic, social and environmental impact. Successful proposals are granted the “right to innovate” for a specified period, with certain conditions. At the end of the experimentation period, if the trial has been successful, the ministry evaluates whether and how to introduce revisions to regulations once they are opened to all businesses.

Technology for good

Policy-makers and industry leaders need to break out from their respective silos.

Bangladesh has been highly successful in digitising the government. As the country looks towards 2041, with its aspiration to be a full-fledged knowledge economy, a significant amount of resources need to be invested behind the governance of the digitisation. Policy-makers and industry leaders need to break out from their respective silos. The pace and the scale of technological development render previous the policy-making process inadequate and obsolete. Governing these new technologies will require new principles, rules and protocols that promote innovation while mitigating social costs.

No one technology is going to solve all the country’s problems, and achieving Bangladesh’s 2041 vision will require innovation in government policies, corporate commitments and individual actions. It will of course need the addition of new technologies. Every tool available will need to be used. With 4IR becoming more powerful every day, the country should encourage policy-makers, innovators and entrepreneurs to use the emerging technologies to address societal challenges.

 

Photo ©️ Mahmud Hossain Opu
Ivy Huq Russell
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Ivy Huq Russell is the CEO of Maya. She is an entrepreneur and a financial analyst. She founded Maya, a technology-focused social enterprise, in 2015. She was an investment management professional at HSBC, GAM and Barclays. She pursued her graduate studies in Finance and Economics at the University of Warwick.
Sheikh Tanjeb Islam
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Sheikh Tanjeb Islam is Head of Government of Affairs at the Centre for the 4th Industrial Revolution Network, World Economic Forum. He is an economist. He worked at KPMG in Malaysia, the Policy Research Institute of Bangladesh and the Brookings Institute. He was Regional Lead for the Asia Regional Government Engagement Team and also a Global Leadership Fellow at the World Economic Forum, and an economist at the World Bank. His research focuses on rural and private enterprise, creation of market economy and South Asia. He pursued his graduate studies at Columbia University and the University of Sydney.