Natural disasters to threaten Bangladesh manufacturing

Natural disasters could deal a serious blow to Bangladesh's aspirations to become a manufacturing hub for investors leaving China after eight of its cities featured among the world's 100 cities most exposed to natural shocks.

Dhaka, the country's biggest manufacturing hub, came in at 35 of UK-based risk analytics company Verisk Maplecroft's annual list of 100 most exposed cities, which helps organisations identify and compare risks to populations, economies, business and supply chains.

But above it were Barisal, which came in at 24, followed by Chittagong at 27, Khulna at 28 and Narayanganj at 33, according to Jason McGeown, head of communications of Maplecroft.

The report said the strategic markets of Philippines, China, Japan and Bangladesh contain over half of the 100 cities most exposed to natural hazards; Philippines has 21, China 16, Japan 11 and Bangladesh eight.

The index ranks the combined risk posed by tropical storms and cyclones, floods, earthquakes, tsunamis, severe storms, extra-tropical cyclones, wildfires, storm surges, volcanoes and landslides on over 1,300 cities from 198 countries.

The cities were selected for their importance as significant economic and population centres in the coming decade.

Bangladesh is frequently mentioned by experts to be in prime position to gain investors planning to relocate their businesses from China for its escalating production costs.

For example, most Japanese firms operating in China chose Bangladesh as their second best investment destination after India due to lower production costs.

Natural hazards constitute one of the most severe disrupters of business and supply chain continuity, and also threaten economic output and growth in some of the world's key cities, especially for those located in the emerging markets, according to the research.

“As typhoon Haiyan in the Philippines and the tsunami in Japan showed us, natural hazard events can have far-reaching and long-lasting impacts on supply chains, business and economies,” said Richard Hewston, principal environmental analyst at Verisk Maplecroft.

“Understanding how, where and why those risks manifest is an imperative in managing potential shocks,” he said in a statement on the organisation's website.

Over the coming years, high-risk countries are expected to host increasingly large volumes of trade.

By the end of the decade, economic output is expected to increase by 49 percent in countries classified as “extreme risk” or “high risk”, compared to 30 percent in “medium risk” and “low risk” countries, according to the report.

With 66 percent of the world's population expected to live in cities by 2050, the resilience of urban areas to more frequent extreme weather events driven by climate change will determine the level of disruption to global trade.

With foreign investment continuing to flow into countries highly exposed to natural hazards, those which are unable to demonstrate robust resilience may lose an element of their competitiveness, Hewston said.

“Company decision-making over sourcing locations or market entry is increasingly influenced by issues such as strength of infrastructure and institutional robustness.”

Dhaka was named as the most vulnerable city in the world in the 2013 edition of the ranking.