Interview with Mr. Shehzad Munim, Managing Director of British American Tobacco Bangladesh

Managing the Future of Farming



In 2013, you were the first Bangladeshi to become managing director of British American Tobacco (BAT) Bangladesh. What does that mean to you?

Leading BAT Bangladesh is certainly an honour, an honour that comes with an enormous responsibility. I never thought I would be the first Bangladeshi to be given this opportunity. BAT Bangladesh is not only a very successful business, it is also a significant revenue partner for the government, which is a shareholder of the company. Year after year, our company pays around US$2 billion in taxes annually.

In addition to sustaining the business, one of our biggest challenges is to grow the next generation of leaders of the company, ensuring that we continue to supply Bangladeshi talent to the rest of the group and society. BAT Bangladesh has consolidated a large pool of talent; if you take a look at some of the most important companies in the country, you often find ex-employees of BAT in the senior management. At BAT, we grow our own talent: over 90% of our promotions are internal — and I am very proud to be a product of this environment myself.

This company has been very supportive and given me a valuable international exposure to a wide range of markets, from Australia and New Zealand, to Pakistan and Sri Lanka. When I started in this company in 1997, there were not many Bangladeshi managers outside of Bangladesh. Today, we have around 50 Bangladeshi managers working in some of the 183 countries where BAT operates. As a policy, every time we have a new employee I have a cup of tea with them on their first day. In that short meeting, I share my experience and explain that they have the chance to aim high and develop in our company. Looking forward, I am convinced that we can become a powerful source of global Bangladeshi CEOs.

How is BAT contributing to the development of Bangladesh’s agricultural sector?

We are proud to say that we are close to the farmers and that makes us understand the rural economy well. In my opinion, the fact that we are engrained in the farming community is what makes us unique. Currently, we have between 35,000 and 40,000 contract farmers and we collaborate with the Ministry of Agriculture to follow the best practices in the industry.

Farmers are our partners; we go hand in hand with them throughout the entire growing process in order to improve their skills and ensure the quality of the product. As a case in point, we train our farmers to grow their crops in a sustainable manner, to use water efficiently and to reduce pesticides. Since farmers grow tobacco for us for just three months of the year, they can spend the remaining months applying the best practices to other crops.
On a different note, we help our farmers with their education and that of their children — today, we have next-generation farmers who are university graduates. One of the reasons behind the success of our relationship with farmers is the type of contracts that we follow. In Bangladesh, we buy the entire output of farmers at a fixed government-set price, although we usually show our gratitude for the quality of the product by paying more. It is worth noting that there are no cash transfers between the company and farmers, everything is done online and by bank. As a result, our farmers are integrated into the formal economy and have access to the benefits of the banking system.
All in all, thanks to the best practices they learn from us, our farmers are able to increase their overall productivity and living standards. As a result, we estimate they are among the wealthiest of the farming community in the country. I am convinced that the attention we pay to the early stages of the production process is one of the key success factors of the company.

How would you define the role of BAT Bangladesh within BAT?

I think that BAT Bangladesh will continue to play an important role within the group. Overall, Bangladesh is on a phenomenal journey. In our experience, rural areas are the real engines of this country and where the biggest changes are taking place. We are seeing this with people moving quickly to higher-quality products. In our case, I think that we are well positioned to make the most out of the agricultural revolution that we are experiencing, because we have put a strong focus on our distribution network.

If the economy and disposable income of the population continues to grow, Bangladesh will consolidate as one of the most promising places to do business in the world. However, at BAT Bangladesh, we not only grow tobacco for the domestic market, but also for export.

What is the position of the tobacco industry in Bangladesh?

As with the car industry, the tobacco industry is going through an inflexion point globally. For years, tobacco companies have strived to come up with products that are potentially less risky. As we speak, tobacco-heating devices are going from strength to strength in the US and parts of Europe. BAT is well placed with a range of potentially reduced-risk products — like tobacco- heating products and e-cigarettes. It already offers these next-generation products in 16 countries and plans to expand this further.

Tobacco-heating products and e-cigarettes are still emerging categories, and very small in a lot of markets, with Bangladesh being one of those. However, this doesn’t mean things can’t change. With growing consumer acceptance, the right regulatory environment and more scale, who knows what products, with potentially less risk than cigarettes, could be on offer to smokers in Bangladesh in the future.

You are also the president of the Foreign Investors Chamber of Commerce and Industry. How can investment into Bangladesh be increased?

Bangladesh is one of the most misunderstood — and probably the least advertised — markets in the world. If you ask a stranger about his thoughts on Bangladesh, he will probably talk about natural disasters, poverty and traffic jams. However, if you take a look at the Bangladeshi subsidiaries of big international companies, you will find that in many cases they are the star performers within their groups, both in terms of growth and return on investment.

Generally speaking, I would affirm that foreign direct investment in Bangladesh is quite low. However, I do not see any reason why levels cannot reach the figures of neighbouring countries such as Malaysia and Vietnam. Here, the private sector has to work hand in hand with the government to advertise Bangladesh internationally and spread the news about the business opportunities that we have. Every developing nation has its setbacks but, if you have the tenacity to overcome them, results will come.

Bangladesh is currently taking steps in the right direction despite various challenges and is on the way to becoming a middle-income country from a least-developed country. Moreover, players that are already present in Bangladesh are investing heavily in the country — which proves that there is a huge market potential.

Our region is full of examples of countries that, like India and Malaysia, used to have a bad image and successfully improved it. In this context, we have to find what we are good at and communicate it properly. Starting from being called the “land of rivers” to having extremely fertile land, Bangladesh is a country with many things to advertise.
The largest delta of the world covers around 80% of Bangladesh and the warmth given by this country’s people is not easy to find elsewhere. No matter where you go, Bangladeshis will receive you with a smile and offer you whatever they have, and, as a nation, we are very resilient by nature.As a country, these are some elements we should use for our benefit, to build a competitive advantage and to change the perception the rest of the world has of us.