Overcoming challenges

Muhammad Zamir writes for DOT
The Centre for Economics and Business Research (CEBR), London has at the end of 2018 has observed that Bangladesh is set to witness a significant economic growth in the next 15 years- to 36th position by 2023, 27th by 2028 and 24th by 2033. They are expecting Bangladesh’s “annual rates of GDP growth to average 7.0% between 2018 and 2033.
Our GDP in terms of constant prices in US Billion Dollars , currently at US Dollars 280 billion in 2018 should increase to USD 396 billion in 2023 and then to USD billion 553 in 2028. They feel that Bangladesh has benefitted from garments exports, strong increase in remittances,domestic consumption expenditure and government spending.
The CEBR has however noted that our country “runs the risk of negating gains from its successful export sector through its growing appetite for imports. The current account tipped into a deficit in 2017, and this is expected to widen in 2018.” Bangladesh has consequently been urged to explore options on how to increase revenues in order to finance upgrades for infrastructure while maintaining the social safety net.
It is clear that over the last five years the Bangladesh economy has moved forward but continues to face several challenges.
The new Finance Minister AHM Mustafa Kamal has a tough task ahead but appears to have taken his task of overcoming the challenges with commitment.
The Minister has expressed optimism that the country’s GDP growth rate in the current fiscal year would reach 8.5 per cent and has also urged the concerned authorities to adopt necessary measures for reforms pertaining to non-performing loans. He has mentioned that the existing rate of NPL is around 13 per cent and has suggested that efforts need to be made to reduce it to around 7.8 per cent. If this format of recovery can be achieved, then it will increase cash flow to private sector investors and definitely take our economy forward.
The Minister has also drawn attention to a few other pertinent issues. He has observed that only about 1.5 million people in Bangladesh pay income tax although nearly 25 per cent of the population has entered the middle –income category. In this context he has suggested that “we have to be tough on persons who dodge tax payment” and directed the National Board of Revenue to broaden the tax base down to the District level.
In his meeting with the media he has also referred to the need to revisit the issue of VAT so that existing controversies regarding VAT are removed. He has also proposed that this will require not only appointment of more revenue collectors but also the wider use of electronic cash register machines in business. This will ensure accountability.
In keeping with the 13-point election manifest pledges of the Awami League party for reforming the ailing banking sector the Finance Ministry has already sought active intervention of the Bangladesh Bank to tackle illegal capital flight to foreign destinations and money laundering through the use of false over and under- invoicing. Relevant branches of the Finance Ministry have now been asked to coordinate their action and formulate an effective and sustainable strategy to stop such illicit flight of funds. The banking sector has also been asked to put their house in order in this regard. Addressing this issue urgently will definitely salvage confidence with regard to our financial matrix.
The Ministry of Finance and our Ministry of Planning will have to have greater inter-active engagement. This is required to re-build trust- not only within the business and manufacturing sectors but also among the foreign community who might be interested in investment and doing business within different facets of our economy.
Success in this sphere will strengthen the efforts to be carried out in the future by our diplomatic Missions abroad with regard to economic diplomacy and branding of our country. Our new Foreign Minister has A.K.Abdul Momen has underlined the particular importance of such activity. He has in this regard also drawn attention to the need for our Missions to get more engaged with our expatriate population of Bangladeshi origin and urge them to invest in different Bangladesh sectors. Our diplomatic Missions through monitoring of the local markets should also help our Ministry of Commerce to boost our export potential by identifying new markets for our evolving diversified manufactured products.
If these contentious areas can be addressed successfully, we will be able to eliminate the negative denotations that have surfaced with the latest Forbes report that came out at the end of 2018. It contained a list of “Best Countries for Business for 2019”. Bangladesh has fallen behind most of its neighbors in this list. We have been ranked 109th among 161 countries. This was far below the rank achieved by most other major economies in the region. India was at 63, Sri Lanka at 78, Bhutan at 106 and Pakistan was at 102. Forbes acknowledged Bangladesh’s notable improvements in GDP growth, foreign exchange reserve and energy infrastructure, but at the same time has also drawn attention to potential political instability, poor infrastructure, endemic corruption, prevalent bureaucratic mindset and slow implementation of economic reforms.
Any observation made by Forbes might be partially correct but BEPZA should be more pro-active in its efforts to remove existing challenges and improving further investment opportunities. Our new teams in different financial Departments need to engage with each other to promote transparency in decision making and accountability. This should reduce corruption.
There should also be active planning with regard to enhancement of skill development to enhance opportunities for not only job opportunities abroad but also in attracting investment into Bangladesh.
We need to remember that according to the latest report of the Economist Intelligence Unit, Bangladesh has gained four places in the latest Democracy Index. That is recognition of participatory engagement. As a citizen I am confident that further pro-active efforts by the new government will enable our country to reach new heights.
Muhammad Zamir, a former Ambassador is an analyst specialized in foreign affairs, right to information and good governance, can be reached at muhammadzamir0@gmail.com