Reforms needed in govt institutions for sustained economic development

Terming institutional weaknesses one of the major areas of concerns, discussants at a programme on Sunday suggested major reforms in government institutions for the sake of a sustained economic development in the country.

There is an urgent need for ensuring good governance and rule of law along with strong political will for doing so, they say.

They came up with the observations at a book-launching event titled 'Is the Bangladesh Paradox Sustainable?' organised by the South Asian Network on Economic Modeling (SANEM) at the BRAC Centre in Mohakhali area of the capital.

Dr Mashiur Rahman, economic affairs advisor to the Prime Minister, attended the ceremony as the chief guest while Chairman of the Centre for Policy Dialogue (CPD) Professor Rehman Sobhan and Professor of Development Economics at the University of Ulster, UK Dr Siddikur Rahman Osmani were the guests of honour.

SANEM Executive Director Dr Selim Raihan moderated the session.

In his speech, Dr Mashiur Rahman emphasised the critical link between tax legitimacy and effective collection.

"Taxation policies should also come under scrutiny," he said, advocating for a more precise application of supplementary duties and value addition, as well as for acknowledging excise duty before pursuing revenue increments.

Addressing the function, Prof Rehman Sobhan says in a broader analytical framework, there are other countries that can be included the discourse of growth paradox.

"When considering growth, we not only observe the Bangladesh paradox but also the Vietnam and China paradox," he said, adding that despite having very poor institutions, they have managed to outperform Bangladesh economically.

Bangladesh needs fundamental breakdowns of institutions that are not rule-based, they do not operate according to the laws as written, the CPD chairman says.

"We need rule-based institutional frameworks, not person-based institutions. Many people do not believe that there are any rules in Bangladesh."

The central to institutional failure is the departure from a rule-based system, he says, adding: "Once you enter into that situation, people refuse to believe in any institutions."

He also said that rescheduling of loans with the banks should be rules based on equality.

"There are discriminatory rescheduling, some people are privileged, some are not," he said.

Dr Selim Raihan made a brief outline of the book that was the outcome of almost two and a half years of research on Bangladesh's development process.

The book highlights on the institutional diagnostic framework for Bangladesh, challenges in primary education, export diversification, the banking sector, and land administration.

"Bangladesh has established pockets of informal institutions and a political settlement process that facilitates growth drivers. However, there's no consensus on the validity of these growth drivers for the future," Dr Raihan mentioned as the main reason behind the paradox, which may not be sustainable for the future.

Bangladesh faces stable corruption equilibrium, the book reveals, where forces and counter-forces of corruption maintain equilibrium, sustaining a status quo, he adds.

"There is a strong anti-reform coalition in the system that prevents breaking this cycle of corruption."

Professor MM Akash said the recent mergers of the banks may not bring in optimum results unless reforms in institutions like the Bangladesh Bank takes place.

He also says there are rules and regulations but problem lies with their implementation.

"There is presence of more powerful negative forces than the positive force," he said, adding that a nexus of corrupt politicians, bureaucrats and business people manipulate the system.

Chairman and Chief Executive of Policy Research Institute of Bangladesh (PRI) Dr Zaidi Sattar and Research Director of Bangladesh Institute of Development Studies (BIDS) Dr Manzur Hossain also spoke on the occasion.

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