We need to settle all existing challenges on a priority basis
Among 74 emerging economies, Bangladesh this year has secured the 34th position compared to the 36th position that they had last year in IMF’s annual index.
Analysts have interpreted this as reflecting quality of economic performance within Bangladesh. This has assumed importance as Bangladesh appears to have performed better than India, which is ranked at 62, Pakistan at 52, and Sri Lanka at 40.
Performance is mixed among BRICS economies — Russia (at 19) is ahead of China (at 26), Brazil (at 37), India (at 62), and South Africa (at 69).
The IDI according to economists is an annual assessment of 103 countries’ performance within 11 dimensions of economic progress in addition to GDP. That includes employment, labour productivity, house hold income, per capita income, net savings, life expectancy, poverty rate, wealth distribution, public debt, and eco-friendly initiatives.
The month of January 2018 has seen some very important functional, financial initiatives undertaken in Bangladesh. There have been efforts aimed at pro-active engagement and in identifying Least Common Denominators for the country to move forward within the socio-economic dimension.
The first revolved round the deliberations carried out during the two-day Bangladesh Development Forum (BDF) that took place on January 18 and 19. Development partners from abroad, government agencies, and representatives from local private sector bodies took part in the meeting organized by the External Relations Division of the Ministry of Finance.
The government, during meetings, called on foreign development partners to continue extending their cooperation even after Bangladesh graduates from the status of being a Least Developed Country.
Participants, quite correctly, laid emphasis on the need to strengthen good governance, ensure the rule of law, and create transparency in order to generate accountability. It was underlined that such measures would create sound public financial management systems.
It was also underlined that there was need to also have an effective judiciary supported not only through internationally acknowledged regulatory measures but also through the National Integrity Strategy and the Right to Information Act. Such an approach would also facilitate the achievement of the SDGs.
Some economic analysts also stressed on the need for improving domestic resource mobilization by raising tax collection and widening the tax net of the country.
This, it was underlined, would raise tax revenue and assist in tackling emerging challenges during the difficult period of transition that would follow the eventual graduation from the LDC group.
This reference to increasing funding through effective taxation was important because of recent reports of how private sector business is now using innovative tactics to dodge taxation through the doctoring of bank documents.
The Customs Intelligence and Investigation Directorate with the help of the Chittagong Customs House has unraveled that some importers have been tampering with Letters of Credit and changing the names, quantities, and prices of goods to dodge taxes. This was done to affect the assessment value of the imported items. Several consignments with forged documents have also been discovered. Such corruption cannot be condoned.
There was also reference to the need to strengthen infrastructure to improve connectivity. In this context, several participants underlined some useful points. They included the need to focus on lifecycle-cost, safety and resilience to unexpected natural disasters, and taking into account adequate environmental and social safeguards.
There was also reference to the need to improve the skills manpower base (which has assumed greater importance because of digitalization) and create better rural-urban connectivity.
Attention needs to be given to the banking sector as well as the taxation matrix
In this context, emphasis was also given on the significant role that women could play as entrepreneurs in the rural and urban areas due to gradual growth in functional literacy. This measure, it was agreed, would facilitate not only microeconomic development, but also growth in employment opportunities.
The BDF in their final communiqué, issued at the conclusion of the meeting, also agreed that strengthening social protection provision for the extreme poor, building human capital as a pre-requisite for growth, and poverty reduction were important factors that Bangladesh would have to continue to focus on even if they graduate from their LDC status in the near future.
In this regard, emphasis would have to continue on improving equity and efficiency of health care, and improvement in nutrition and education services, particularly in the rural areas.
The forum also highlighted other significant aspects and drew attention to the need for enhancing investment in agricultural development and also for taking pre-emptive measures to handle the steep internal migration of affected population from rural areas to urban centres, already suffering from high density and over-use of available water supply.
These suggestions need to be taken seriously if we are to attract greater foreign direct investment. There must be assurance that a country or a multi-national company participating within our economic dimensions will be able, if necessary, to recoup their investment and also gain from their investment in different areas. We need to remember that within the wider evolving world economy, there is competition, and investment will flow only towards the more acceptable paradigm.
The Policy Research Institute of Bangladesh, in a separate seminar, has also drawn attention to an important aspect that is holding back the expected dynamism in foreign investment.
They have referred to the continued high cost of doing business and the bureaucratic mind-set that creates delay in taking required decisions.
This has become evident through the World Bank’s ranking of “Doing Business” where Bangladesh has been ranked at 177 out of 189 economies in 2018 — down one notch from 2017. This view about Bangladesh needs to be addressed immediately. The National Committee for Monitoring Implementation of Doing Business Reforms needs to be operationalized for stronger oversight of the required reforms.
Attention needs to be given on a priority basis to the banking sector and streamlining of the tax laws, as well as the taxation matrix. E-filing and e-payment, both of them need to be adhered to and encouraged. This will create greater accountability.
We need to remember that Bangladesh is no longer solely dependent on foreign aid. However, at the same time, we need to be careful that our balance of payment does not deteriorate further.
We also have to note that the absence of required skilled manpower in the textile, the RMG sector, the pharmaceutical sector, and the leather sector have led to more than $4 billion having been repatriated from Bangladesh to India and Sri lanka through formal banking channels.
This has affected the growth in our foreign exchange reserve. This needs to be addressed with seriousness as we progress towards further diversification of products and export destinations.
On January 24, consistent with our efforts to build an economically prosperous Bangladesh, we have also convened the BEPZA International Investors Summit, 2018. BEPZA has achieved reasonable growth over the last nine years.
They might have been able to do even better if there was greater coordination among the different stake holders. They also need to look at the bigger picture. The available potential needs to be taken forward.
Non-resolution of outstanding issues related to the Korean EPZ facility in Chittagong is neither helping the image of Bangladesh nor encouraging other foreign business establishments to transfer their resources to our country.
The last nine years have seen our government move forward, but we also need to settle all existing challenges on a priority basis.
Muhammad Zamir, a former ambassador, is an analyst specialized in foreign affairs, right to information, and good governance. He can be reached at [email protected]