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How Does Blue Economy Work

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Bangladesh boasts maritime claims of an exclusive economic zone of 200 nautical miles that offers access to the ample resources of the Bay of Bengal. With the promise of economic benefits and scope of ocean management and development, these rights also bring the question of sustainability to the fore. And that’s where, ‘Blue Economy’, i.e. sustainable use of oceanic resources for economic contribution, comes in.

A Blue Economy Cell has been set up by the Bangladesh government only last year and it has yet to make any groundbreaking move to unlock the staggering potential of Blue Economy. International organizations like World Trade Organization (WTO) and World Economic Forum (WEF) have policies, agendas and recommendations in place that promote ocean management formally and also informally. However, Blue Economy in itself is not directly and meticulously explored, given its novelty.

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Secondary research was carried out into relevant documents, reports and prose endorsed by the previously mentioned global bodies to strategize recommendations for Bangladesh to sustainably reap benefits. The report contains recommendations for most, if not all, business areas related to Blue Economy.

Blue economy refers to using the resources of the ocean in a sustainable manner for economic contribution, betterment of livelihoods and employment, while keeping the ecosystem of the ocean healthy. The term ‘Blue Economy originated’ in June 2012 (Singh, 2017). The commercialization of oceans will play a vital role in the provision of food and energy for humans. The major industries that constitute the Blue Economy are shipping, fisheries, aquaculture, tourism, energy, biotechnology and submarine mining (Alam, 2014). Blue Economy falls under Sustainable Development Goal (SDG) 14.

Objective: To understand the concept of Blue Economy and its implication on Bangladesh.

Specific Objectives:

  • Read the relevant WEF and WTO reports
  • Explore Blue Economy initiatives taken by Bangladesh
  • Provide recommendations for Bangladesh based on other countries’ practices

Methodology: The report is based on a literature review of WEF and WTO policies and outlooks published between 2016 and 2018. Other relevant materials were also reviewed to gain a basic understanding of areas that affect the Blue Economy: technology, geopolitics, current practices and opportunities.

Limitation: Since Bangladesh has recently started utilizing the Blue Economy, there is not enough information available and hence, limited recommendations were provided.

Discussion of WEF and WTO reports

The International Centre for Trade and Sustainable Development (ICTSD) launched the E15 initiative in 2011 to bring together experts and institutions to establish strategic recommendations for governments, organizations and civil bodies, based on analysis.

In a paper for “Trade Policy Options for Sustainable Oceans and Fisheries” (Sumaila, 2016), in collaboration with the ICTSD, the E15 Expert Group on Oceans, Fisheries and Trade Systems, remarked on the rise of sustainable aquaculture and how it goes on to become viable food source for the future. The paper also discussed the ramifications of IUU (illegal, unreported and unregulated) on fishing and offered recommendations as to how to utilize these subsidies to bring about proper fisheries management. The impact of IUU was also discussed in the Fourth Industrial Revolution for the Earth Series: Harnessing the Fourth Industrial Revolution for Oceans (World Economic Forum, 2017), which discussed the concept of Blue Economy while keeping the Fourth Industrial Revolution (4IR) in mind. Here, the solution offered was dynamic management and rigorous enforcement to ensure sustainable fishing, and also mentioned the role of technology in being a plausible facilitator, to prevent problems such as bycatch. Biotechnology was also offered as a solution to reduce the effects of pollution, which in itself is a burning issue for Bangladesh and other countries.

Another crucial issue that was explored in this paper was protecting habitat and different species of plants and animals alongside the coastal areas. Other crucial aspects the paper covers with regards to business is the emphasis on attaining real-time predictive information on oceans through sensors and trackers, as well as blockchain technology, which will allow proper monitoring of different activities like fishing, mining, etc. Technology, ushered in through the Fourth Industrial Revolution, also offers different solutions of managing coastal communities, using smartphones and apps to track boats, for instance.

One of the highlights of this paper is the use of Fourth Industrialization Revolution to usher in a new era of conducting business, one where there is “…radical transparency combined with robust traceability” (World Economic Forum, 2017). However, despite the overwhelming possibilities brought on by the Fourth Industrialization Revolution, there are several risks and challenges that make smooth execution difficult: Source: World Economic Forum. (World Economic Forum, 2017)

The 4IR can bring about various benefits and boost the economy of Bangladesh. Despite the shortcomings, i.e. lack of infrastructure, capital and skilled manpower, the various stakeholders have certain challenges that they need to address themselves to ensure that the oceans’ ample but diminishing resources are used sustainably. The following are suggestions by WEF for different stakeholders: Source: (World Economic Forum, 2017)

In the Global Competitiveness Index (World Economic Forum, 2018) for the year 2017-2018, Bangladesh has been ranked 99 out of 137 economies with index components of 4.1, 3.7 and 3.3 for “Basic Requirements”, “Efficiency Enhancers” and “Innovation and Sophistication” factors, respectively, which were evaluated based on an opinion survey carried out by the WEF. This is an improvement from previous years, as Bangladesh has moved up seven places, and is also reflective of the overall improvement in the region (i.e. South Asia) in terms of global competitive index. However, the progress in terms of technology has “stagnated” compared to other regions globally.

The support for building capacity for trade in developing countries was a focal point of discussion in the Committee for trade and development, a part of Aid For Trade organized by the WTO (World Trade Organization, 2018, p. 13). In August 2017, the WTO and the ICC (International Chamber of Commerce) launched the Small Business Champions initiative to help SMEs participate more fully in global trade. Other policy recommendations and agendas taken by WTO and WEF that directly or indirectly affect blue economy:

Another informal group that has been brought together by the WEF is the New Vision for Ocean, which comes under the Ocean Action Agenda, which is striving to work towards improving Ocean Health and ensure effective and sustainable ocean management:

Blue Economy practices

Innovative strategic economic mechanisms like a debt swap deal between the Seychelles government and the Paris Club creditors have contributed towards financing Blue Economy initiatives. As part of the USD 30 million debt buyback, the government expanded Marine Protected Areas (MPAs) to cover 30% of the EEZ. Seychelles has explored the idea of using green bonds to finance national projects in sectors like aquaculture (Bodere, 2015).

In 2004, Vezo fishers closed off part of their octopus fishing grounds. Upon re-opening, they discovered a massive increase in the size of their catch. This prompted a spree of closures with 250 temporary closures, spanning two to seven months, across 450 km of coastline.

Inspired by the success of short-term closures, these fishing communities established MPAs or Locally-Managed Marine Areas (LMMAs). The LMMAs are under the management of communities who divide these areas into different zones. Some of these zones are set aside for temporary closures while others allow communities to pursue fishing on a regular basis. Key habitat areas are permanently protected from any fishing or extraction.

60,000 people are now directly involved in the network of LMMAs. The success of LMMAs has driven the Government of Madagascar’s Sydney Vision which aims to build a greater network of community-managed MPAs and expand the area of protected marine habitats (Cripps, 2015 ).

Geopolitical aspect

A strategic policy paper aimed to analyse Blue Economy opportunities and provide recommendations to maximize sustainable economic prosperity for Bangladesh while ensuring healthy inter-regional ties with partner nations. Historically, the Bay of Bengal has been characterised by a sever lack of regional integration (Mohan, 2018).

The Maritime Silk Road (MRS), along with Silk Road Economic Belt (SREB), is part of China’s larger One-Belt-One-Road (OBOR) Initiative that aims to connect China’s regional neighbours and bring them under a single network of massive infrastructure projects. The strategic objectives China made are: diversifying energy and export portfolios, securing the Persian Gulf route as a steady supply of energy resources from the middle-east and Africa and fostering economic and political interdependency in the region to solidify China’s regional security and trade agenda. MRS signifies the importance China attaches to marine linkages to both its regional neighbours as well as distant trading partners. China has invested heavily in countries that lie around important seas routes to realize the MSR initiative. As part of the China-Pakistan-Economic-Corridor (CPEC), it is expected that Chinese companies will be investing a total of USD 45.6 billion, 11.8 billion of which is dedicated for development of transport infrastructure, while the rest will be spent for infrastructure development of electricity supply. Pakistan’s Gwadar port is a sea-port near the Strait of Hormuz, providing strategic access for China to the Persian Gulf shipping routes. China has invested or has planned to invest in other sea ports in various countries including in Hambantota (Sri-Lanka), Chittagong (Bangladesh) and Kyaukpyu (Myanmar). This strategy of implanting Chinese investment in key port/shipping lines has been touted as the “String of Pearls”. Uncertain of India’s enthusiasm to the entire initiative, China has bypassed directly partnering with the India with the effect of raising concerns for New Delhi that the MSR and the overall OBOR initiative is but a disguised strategy of Beijing to expand Chinese influence in the Indian Ocean (Chung, 2017). This fragile situation led India to explore avenues to form its own regional partnerships with its neighbours: Bangladesh, Myanmar, Sri Lanka, Nepal and Thailand.

Technological aspect

The emergence of 4IR is bringing rapid changes to the above scenario. Use of drones, robots and advanced sensors are opening doors to extensive data about the sea. The data collected can be turned into useful patterns of information with the assistance of analytical tools including artificial intelligence and machine learning. This new trove of information is referred to as ‘digital ocean’ and also enables real-time monitoring.

Comparative analysis

The following SWOT analysis aims to provide guidance in choosing potential partners in maximizing benefits from the Blue Economy. The broad dimensions considered include: technology, political stability, manpower resources, trade interests with Bangladesh, international economic and political relations with other nations.

Practices by Bangladesh and Sectoral Recommendations

Bangladesh Marine Area:

Bangladesh has acquired a total of 118,813 square kilometers of the Bay of Bengal, which includes both the territorial sea stretching Cox’s Bazar and the Exclusive Economic Zone (EEZ). It has the widest shallow shelf region extending more than 100 nautical miles (185km), higher than the global average of 65km (Hossain, Chowdhury, & Sharifuzzaman, 2017).

About 475 species of fish can be found in the EEZ area including crabs, shell-fish, snails, etc. Although this region constitutes around 20% of total fish production and about 8 million tons of fishes are caught every year, Bangladeshi farmers retain less than 10% of the production (Rashid, 2018). Bulk of it is sold to Myanmar, India, and Thailand. The major transport mediums for fisheries include industrial steel body trawlers, which have limited fishing capability (Akash, 2017).

Recommendation: There are five main reasons that affect fish production- overfishing, loss of predator, pollution, climate change and habitat destruction (Akash, 2017). To tackle these problems, stringent laws and policies need to be enforced to restrict entry of smugglers and fish pirates. Carbon emission needs to be managed to keep pollution away from coastal area. Real-time information can be used to know location of deep water species.

Ports, Shipping, and Marine Transport:

Current value of Bangladesh’s export-import stands at USD 67 billion and are transported by 2,500 foreign ships (Alam, 2015). Every year, about 600 ships arrive in the two major ports- Chittagong and Mongla. Recent trend in globalization has made external freight trade more important and currently, as much as 90% of Bangladesh’s freight trade is seaborne. As of 2014, there are only 74 registered Bangladeshi merchant ships, which are not enough to carry the required amount of cargo.

Recommendation: Bangladesh should allow local shipping companies to take part in the shipping industry. This will increase the number of ships in the existing fleet which, in turn, will allow more cargo to be transported. Participation of local companies will thereby increase GDP earned from this sector.

Countries with coastlines are fortunate for the ocean provides a gigantic trove of resources. The WEF and WTO along with other councils and forums have stepped up to make sure the oceans are utilized properly. The E15 initiative for Sustainable Oceans and Fisheries works to formulate trade policy regarding oceanic trade. WEF’s report on what 4IR means for the oceans provide valuable insights.

Bangladesh has done nothing significant after the win over India and Myanmar regarding maritime boundary. Immense improvements have to be made in sectors such as aquaculture, marine transport and tourism. Few countries that Bangladesh can use as role models for oceanic activities include Seychelles and Madagascar. Bangladesh has much to gain from the One-Belt-One-Road (OBOR) initiative. Also, from the above comparative SWOT, Japan seems to have emerged as an undisputed potential net technology provider as well as a key knowledge partner for Bangladesh’s Blue Economy agenda. The contrasting population dynamics of these two nations opens possibilities of co-operation in the human resource front as well. It is important to maintain strong political cooperation with superpowers like India and China, countries that fund most of Bangladesh’s developmental projects. It is also crucial to maintain a diplomatic stance to ensure Bangladesh does not become a puppet for either superpower and alienate other key partners like the United States and Japan. The geology and proximity make it impossible to overlook relations with Myanmar. Bangladesh should partner with countries whose economic and geopolitical goals are similar to its own.

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