Shadow economy dominates the transport sector

Asjadul Kibria | Published: August 06, 2018 20:57:29 | Updated: August 07, 2018 14:54:08

Picture used for representational purpose — Star Mail

Road transport of the country is plagued with innumerable problems. The commuters face hassles on a daily basis. Inadequate and ramshackle buses, small vehicles, unplanned stoppages, disorganised routes, dilapidated roads and inefficient traffic management are taking a heavy toll on the people.

Civil society organisations, right activists and people in general have long been asking the government to fix the disorder on the road. But little progress has so far been made in this regard. Instead, chaos in the transport sector is on the increase. In fact, shadow economy dominates the sector and chaos is a clear reflection of that evil influence. 

The transport and communication sector contributes 11.0 per cent of the country's Gross Domestic Product (GDP). The value of the formal transport sector is estimated at Tk 1.09 trillion and annual growth rate stood at 6.33 per cent in the past year, according to the Bangladesh Bureau of Statistics (BBS).

But there are reasons to believe that the actual extent of economic activities in this sector is much more than recorded in official documents. The most glaring example of shadow economic activities in the sector is the existence of extortion rackets which is an open secret. 

Shadow economy is sometimes termed as the black economy, hidden economy, gray economy or even informal economy. Generally, any economic activity which is hidden from official authority is considered a shadow economy. The reason for hiding or skipping may be regulatory, monetary or any other. Moreover, the activity may be legitimate or not. Most of the experts want to consider the legitimate but hidden economic activates as shadow economy. They are of the view that the shadow economy reflects mostly legal economic and productive activities that, if recorded, would contribute to GDP. Nevertheless, in many cases there is a mixture of legal and illegal activities.   

A minister has recently said that a bus has to pay illegal tolls, ranging between Tk 5,000 to Tk 7,000, for trips from Dhaka to different districts of the northern region.  According to a guesstimate, the amount of terminal-centric extortions in Dhaka stands Tk 100 million daily. Leaders of different unions of the transport owners and workers allegedly receive shares of the amount. Same is the case with the members of the law enforcing agencies and road transport regulators. Local political leaders and activates, particulalry linked with the ruling party, are also said to have their stakes.

Extortion is not obviously recorded as a part of the official economic activities of the transport sector. Had it been included, what would have been the size of the transport sector GDP is anybody's guess.

A few initiatives were taken earlier to contain extortion. But very little could be done. Government even thought for legalising the extortion which drew huge criticism from different quarters. Transparency International Bangladesh (TIB), in a policy brief in 2012, opposed the move. It, however, recommended for periodical subscription for the membership of the valid transport unions and suggested that the payment or transaction be made through the banking system. TIB also suggested annual auditing of all the financial transaction of the unions.

While the transport workers are generally infamous for their unruliness and bad behaviour to passengers, they live in povery. Most of the transport workers are underpaid and exposed to a number of criminal activities.  BBS data show that monthly average income of a transport worker is estimated at Tk 11,981. As it combines different types of transport workers, from skilled drivers to untrained bus helpers, the actual pay for most of the workers in the public transport would be much lower than this amount.  The minimum wage for the transport worker was set at Tk 6,300 per month in 2010. Since then it has not been revised so far.

There are 5.20 million transport workers in the country. Most of them have no formal arrangement which also indicates the dominance of shadow economy.  Usually they have to work on day-to-day basis with a target of revenue in intra-city routes.  This informal arrangement turns them, especially the drivers, reckless on reaching to the destinations earlier to get additional trip over others. Reckless driving is a major cause for the killings on the roads as well as accidents. 

LFS data does not show the number or proportion of the informal workers in the transport sector. It is, however, presumable that the ratio is in line with the national rate. According to LFS 2016-17, some 85.10 per cent of the country's employed people are working in the informal sector.

The number of bus is increasing every year.  Statistics available with Bangladesh Road Transport Authority (BRTA) show that the number of registered buses and minibuses stood at 45,384 and 28,061 respectively by the end of June this year. Of these, some 17,570 buses and 2,417 minibuses got registration in the last seven years and six months. 

Nevertheless, these buses are not sufficient to meet the growing demand of commuters.  The Seventh Five-Year Plan (7FYP) also mentioned that buses are the only mode which can carry a large number of people at one time and has the potential to cater to all income groups. "But the number of operational buses is not more than 20 to 25 per cent of the number required to meet the demand. Moreover, bus service in Dhaka city is characterised by overcrowding, lengthy wait, difficulty in transferring from one route to another, long distance to and from bus stop," it added.

Inadequate bus is pushing the number of risky vehicles like human haulers across the country.  More than 10,000 thousand registered human haulers pressed into service in the last seven and half years in the country. Of these, around 2,600 are in Dhaka. Besides, many unregistered vehicles run the different parts of the country.  

Non-renewal of route permits and driving licences is another gray area of the sector. When the authorities go on a drive to check documents of the buses and minibuses, the transport union leaders allegedly reduce the number of vehicles or even call a strike.

The shady investment and ownership in the transport sector is widespread.  Sources in the road transport ministry and BRTA mention that a large number of owners of the buses, minibuses and human haulers are not the actual owners. They are allegedly proxies for law makers, policy makers and members of the law enforcing agencies. As a result, it becomes very difficult for the authorities to take legal action against the unruliness in this sector.

One way to curb shady ownership is to form holding companies of transport owners. Experts have been suggesting the idea for long. An initiative is also there. But progress is very slow. It requires strong political will and legal binding to move in this direction. 


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