All-out reform needed to achieve a double-digit growth in Bangladesh

The Bangladesh Invest­ment Development Authority (BIDA) maintains that reforms in several areas of the economy were necessary for achieving double-digit growth. The BIDA told the Business Initiative Leading Development (BUILD) on November 22, 2016 that calling out what is bad in order to promote what is good for attracting foreign investors to the country was one of BIDA’s goals. The BIDA said that Bangladesh is the global leader in Ready Made Garments (RMG), so it will use RMG strategies in other sectors of the economy also. The BIDA also stressed on research for development of other potential sectors of the economy.

The BIDA said, it will do “everything possible” to elevate Bangladesh as the most attractive place for growth and domestic and foreign investments for business. Bangladesh is going to focus on three major areas of Bangladesh economy and they include (i) investment agencies, (ii) service providers and (iii) ecosystem for development. These are aimed to directly contribute to investment in private sector and reduce bureaucratic barriers to economic growth. The BIDA said that “We are already working for establishing linkage for setting up new industries”.

The Bangladesh Investment Development Authority (BIDA) plans to hit the ground running in January 2017 by finalising an action plan to improve the country’s “business environment” aimed at enhancing economic growth of the country. The BIDA, the state entity, designed to draw foreign investment to the country, envisages placing Bangladesh among the top 100 countries in the World Bank’s (WB) “ease of doing business” rankings within 2021 in order to make it an attractive destination for global businesses. Senior BIDA officials sat with related ministries and businessmen on November 19, 2016 to devise plans to meet the lofty ambitions of the country being seen as business-friendly to attain the target.

The joint meeting titled, “National Consultation on Ease of Doing Business for Double Digit National Growth”, was held at a Dhaka city hotel. The BIDA said at the meeting that Bangladesh has already jumped up two steps forward. It wants to make more progress and show the world that Bangladesh is a great place for investment. In its Doing Business 2017 report the WB has placed Bangladesh in the 176th position among 190 countries. Bangladesh was ranked 178 last year. Besides the target of improving by at least 76 positions BIDA would also work to push the annual Gross Domestic Product (GDP) growth rate to a double-digit number – meaning 10 percent or more.

The joint meeting was organised to hear stakeholders’ opinions on how to achieve the stipulated targets. A high ranking Bangladesh government official said at the meeting: “It’s our demand, the prime minister’s demand, to see Bangladesh among the countries with a double-digit position (10-99) in the “ease of doing business index””. He said “it’s an aggressive target, but achievable”. He also added that an action plan to achieve the targets had been drafted and would be sent to the relevant ministry. According to him it was to be finalised within December 2016 and executed in January 2017. He further mentioned Rwanda and several other nations as examples of countries that had made impressive progress in the “ease of doing business” rankings. He said in a confident voice that “They did it. We’ll also be able to do it”.

The BIDA was formed through the merger of the Privatisation Commission and the Board of Invest­ment (BoI) in September 2016. At the first meeting of its board chaired by the Prime Minister (PM) on November 9, 2016, the prime minister approved a proposal to take Bangladesh forward in the “ease of doing business” index. The BIDA told that following up on the decisions taken at the meeting, a taskforce headed by the country’s Finance Minister was formed and it had already started working. The November 19, 2016’s meeting was also held in line with the decisions taken at the meeting with the PM.

According to Karim Belayachi, a Senior Private Sector Specialist of the WB, who presented the keynote paper at November 19, 2019’s meeting, some of the common features of successful reforms to achieve the targets Bangladesh has set for itself are a long-term comprehensive vision and clear objectives. He added that leadership at the highest political level, clear accountability mechanisms and inclusive reforms with an appropriate institutional mechanism are also important to achieve the target. He further said that detailed implementation plans with measurable goals which are monitored and private sector involvement and effective communication would also be needed.

The WB’s “ease of doing business” study analyses the effectiveness of government regulations in promoting a positive business environment. It ranks the business environment of a country on the basis of 11 indicators, which include: (i)  starting a business, (ii)  dealing with construction permits, (iii) getting electricity, (iv) registering property, (v) getting credit, (vi) protecting minority investors, (vii) paying taxes, (viii) trading across borders, (ix) enforcing contracts, (x) resolving insolvency and (xi) labour market regulations. Bangladesh has made improvements in two indicators but plummeted in four.

Despite gaining two spots, Bangladesh lags behind most other South Asian Association for Regional Cooperation (SAARC) countries, managing only to overtake war-ravaged Afghanistan. Several discussants at November 19, 2016’s meeting expressed dissatisfaction over the current business environment in Bangladesh. Executive Director, Policy Research Institute (PRI) maintains that it takes 404 days to get an electricity connection. Why this should much time is needed. He said the related government agencies should find ways of creating an environment friendly condition for businesses. President, Foreign Investors’ Chamber of Commerce and Industry (FICCI), said that “laws need to be simplified”. The Secretary, Ministry of Law, said a law was being enacted to provide “one-stop service” for investment.

It was also pointed out that procrastination in trials of business related cases was hindering investment. The Supreme Court Registrar General proposed the forming of a taskforce and a special bench for hearing such cases. The Federation of Bangladesh Chamber of Commerce and Industries (FBCCI) emphasised the involvement of the private sector in overcoming the power supply problem. It also proposed forming a committee of FBCCI representatives to implement big projects with foreign investments.

However, none in the meeting expressed their concern regarding the elimination of high level inequality of income that results from the current mode of higher income generation process.  The ongoing model of growth is not adequate for the eradication of the country’s common people’s poverty. It is depriving the common people of enjoying equitable share of income growth and thus hindering furtherance of growth or achieving early double-digit growth in the consequential absence of necessary widening of the domestic market.     

                        

 The writer is a retired Professor of Economics