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Making reforms meaningful

  • Published at 12:00 am March 15th, 2019
Transform
Change is coming BIGSTOCK

We need our reforms to be long-lasting and less nebulous for the common people

I was a little intrigued when I recently heard a former secretary to the government saying Bangladesh has not seen meaningful reforms in the financial or revenue sector over the last decade. I was further surprised when other former finance or cabinet secretaries, advisers, and even a finance minister nodded with him. We are supposed to have a new government every five years, and now we have a government for more than ten years -- yet no meaningful reforms?

Even the harshest critic would not deny that Bangladesh has achieved visible progress in the last few years. Investments into large donor-funded and government-funded projects, entry of large mobile network operators, impressive growth in power generation, establishment of reputed hotel chains, Biman and other private airlines buying ever wider aircrafts, AliPay and Shanghai/Shenzhen Stock Exchanges making equity investments, and MFS operator, Japan Tobacco International (JTI)’s acquisition of a local tobacco producer, along with large foreign equity investments in the power, cement, and textiles sectors, have made Bangladesh a talking point in the global investment community.

Be it IFC, CDC, or AIIB -- all are eager to be more identified in Bangladesh’s growth story.

Because of the size of these investments, interest from the global FMCG community to acquire a stake in the local ever-expanding domestic consumer market has been quite noticeable. Increasing consumer-spending and steady growth in per capita income have made Bangladesh into a “can’t be ignored territory” to those who matter among the global consumer brands.

Digital interface and integration is happening fast. More and more international builders are getting engaged in large construction and EPC contracts in Bangladesh. Hence all the cross-border planes are full with the entry of foreign consultants, project managers, and marketing managers. The Holey Artisan tragedy might have reduced the entry of European and North American businesses, but, importantly, not from our neighbouring countries.

Despite travel alerts, we are seeing an increasing number of international development workers engaging with Bangladeshi development projects, including Rohingya rehabilitation.

We may be growing in a messy manner, but growth is still happening. Private investors are investing across the sectors, so are the existing and new multi-nationals. However, most of this is happening due to a rise in consumer demand or domestic consumer spending.

Rise in per capita income, salary increase of the government employees, expansion of micro-credit, and more importantly, increase in wage earners’ remittance have mainly contributed towards this rise in interest. One may, of course, give a lot of credit to Bangladesh’s private sector for the spectacular rise in this interest. But, some credit must also go to private sector-friendly policy regimes or even politicians.

Now comes the inevitable question: What’s next? How do we make this growth more sustainable? Those who have gone through the much-discussed book Why Nations Fail might already have some answers to the question. In order to ensure result-oriented growth, nations need to invest in institution-building and continuous reforms in public interest domains. Growing in a mess will create a lot of unforeseen side effects. Maintaining the right balance between all stakeholders’ interests will be crucial.

Improvement in our investment climate might influence the nation’s league table but in order to ensure long-term growth we must reform the supporting policy regime. Chinese President Xi Jinping and our own Prime Minister Sheikh Hasina may facilitate a large G2B or B2B deal, but they can’t oversee the aftermaths of the deal, which include smooth land acquisition, licensing, off-taker agreements, raising cross-border foreign currency debt or equity, concession offers, ownership or joint venture legal regime, dispute-settlement mechanisms, profit or dividend remittance, and availability of efficient managers unless relevant policy regime is restructured, smoothened, and made investor-friendly.

When one talks about growth, sustainability analysts try to arrest our attention towards climate change impact, diversity, or protecting public interest or investment in human capital thereby ensuring quality education and health care services. While one talks of quality human capital or an encouraging working environment, there comes the issue of transportation, efficient rail and road communication, as well as efficient sea and river ports.

Continuous efficiency can only be created through accountable public servants, an independent judiciary, investment in technology-driven solutions, and, most importantly, a growth-friendly policy regime. In order to drive reforms, we also need a strong, forward-looking political system reflected through inclusive elections. Only a popular government can ensure smooth and continuous reforms. A strong opposition in the parliament and more importantly parliamentarians without vested or individual interests can make much-needed positive difference.

Bangladesh being able to arrest the right kind of attention from the international community is very good news. However, translating this attention into continuous gains for the country warrants a “deep dive” look into our capacity-building and the re-engineering of the process and policy reforms.

The aforementioned former secretary turned Economics professor also reminded us to drive reforms in such a way that we avoid seeing more “Chawkbazar incidents.” We want our reforms to be long-lasting and less torturous for the common people.

Mamun Rashid is a leading economic analyst.