Bangladesh has made significant gains in several areas of macroeconomic environment as well as in health and primary education, as noted in the World Economic Forum’s Competitiveness Report 2017-18. It has apparently facilitated our continuing growth despite many existing challenges.
Bangladesh’s competitive ranking has moved upwards, and we are now being ranked as 99th out of 137 countries -- a rise of seven notches from the last count. We have moved upwards and are now ahead of Pakistan, which occupies the 115th position. India (40th), tiny Bhutan (82nd), Sri Lanka (85th) and Nepal (88th) are, however, ahead of us.
It may be mentioned that the WEF, also known as the Davos Forum, has been publishing such rankings since 1978, on the basis of cross-country bench-marking analyses of several factors and in-depth study of institutions and infrastructures.
They use them to determine prospects of long-term growth and potential prosperity of countries.
Economic analysts have noted that compared to the previous situation, this progress in rating has been possible because of our improvement within the paradigm of institutions by 2.6% over the past year. In fact, according to the Centre for Policy Dialogue (CPD), Bangladesh has displayed movement forward on all 12 pillars related to assessment.
However, we appear to be still seriously lagging behind in terms of technological readiness. According to analysts, we are still at the “nascent stage” in matters related to creating an IT-enabled business environment.
This has been compounded through deterioration in matters of intensity of competition, reduced competitiveness regarding professional services and retail services, and poorer competitive networking.
Economists are of the opinion that if we are to progress in these facets, we need to ensure competition by implementing rules and regulations, including effective enforcement of the Competition Act.
It would be worthwhile to note here that Bangladesh has improved its position pertaining to innovation and sophistication factors -- the 11th and 12th pillars respectively of the global index. Some of the innovative factors that have apparently helped us include the establishment of economic zones and the introduction of one-stop services.
This is important, because it has direct implications for our foreign trade and investment -- both of which are directly involved in the creation of employment and wealth generation in rural as well as urban areas.
The CPD found that 51% of the respondents thought the monitoring and supervision of the central bank had deteriorated in 2016.
In addition, 29% of respondents felt that the capital market was still influenced by illegal activities. Another 45% expressed dissatisfaction with the pace of work on the fast-track projects.
Some said that this was unnecessarily adding to the cost of creating infrastructure. 58% of respondents also expressed their scepticism about the Special Economic Zones being able to meet the needs of the investors within the desired time frame.
These observations all need to be considered with great seriousness. We cannot, for example, overlook the fact that the bureaucratic mind-set is definitely contributing to the slow movement of decision-making. This, in turn, juxtaposed with lack of transparency, is affecting accountability and contributing towards corruption.
In this regard, it would also be appropriate to accept that the relevant authorities need to focus more seriously and make serious efforts to improve the quality of our educated workforce, particularly with regard to the use of technology and digitalisation.
This will help us to assist them in changing the way they work. We also need to address greater attention to infrastructure bottlenecks ranging from our highly congested seaports to the question of providing a continuous power supply to our industrial units. We know that the prime minister has herself reiterated on the importance of these two issues more than once. There has been some improvement, but there is scope for much more.
Next is the question of financial governance and the need to overcome the challenge of the rise in the number and volume of classified loans. It would be pertinent to note here that bad loans ate up 51% of the operating profits of banks in the first half of this year. This, according to bankers, is bound to bring down the dividends that share-holders can expect to receive at the end of the financial year.
It will also have an impact on the interest rate. A report published in The Daily Star on October 1 has pointed out that between January and June this year, the operating profit of banks edged up 11% to Tk10,355 crore but net profit slumped about 33% to Tk1,845cr, according to central bank statistics. The net profit of banks is calculated after deducting provisioning against bad debt and tax.
We cannot, for example, overlook the fact that the bureaucratic mind-set is definitely contributing to the slow movement of decision-making
Most of the state-owned banks are in bad shape, but some private banks are also proving to be vulnerable. An example of this is the Farmers Bank, which has registered a net loss of Tk13cr against the operating profit of Tk24cr.
The foreign banks have made operating profit of Tk1,228cr, and a net profit of Tk625cr. Nevertheless, it would be worthwhile to note here that the overall profit situation of most of the state-owned banks has improved this year, except for Sonali Bank.
The net loss of this bank was Tk1,257cr as opposed to the five other state-owned banks who made net profits ranging from Tk10cr to Tk127cr. Interestingly, the much-troubled BASIC Bank also made a net profit.
Both World Bank and ADB have singled out some reasons for their downward assessment in income growth. They have singled out a slowdown in income growth, both in agriculture and wage employment.
They have also taken into consideration the reduction in the volume of remittances received from abroad. In this regard, consideration has been given to the prevailing violence in Syria, Iraq, Yemen, Libya and also to uncertainties created because of the imposition of sanctions on Qatar by Saudi Arabia and three other Arab countries.
The assessment carried out by these two banks have also gained more credibility because of the destruction of infrastructure, housing, and agriculture, originating from the calamitous and severe monsoon flooding that has affected the lives of nearly 7.1 million Bangladeshis in different parts of the country.
Added to that now, most unfortunately, has been the unwarranted serious situation created by the entry into Bangladesh from the Rakhine state in Myanmar of more than half a million Rohingyas.
They will need not only health care and shelter, but also food and other things pertaining to humanitarian well-being. This will involve massive expenditure from the government exchequer without any return. Strong macro-structural policy reform, institutional and market reform, and private and public investment will be necessary for increasing productivity and employment.
This is a must if Bangladesh is to take advantage of the global recovery and sustain growth in the long term. This will help us to reduce poverty and boost shared prosperity.
Muhammad Zamir, a former Ambassador and Chief Information Commissioner of the Information Commission, is an analyst specialised in foreign affairs, right to information, and good governance. He can be reached at [email protected]