Removing hurdles to private-sector growth

The potential challenges before Bangladesh economy's growth recently came under a fresh review from the ADB (Asian Development Bank)'s Independent Evaluation Division (IED). The limitations that, it said, were affecting the economy's growth include, among others, the predominance of the earnings from the garments export and expatriate wage earners' remittance. True, such concerns about the economy's growth constraints are the stuff of deliberations concluded at different forums. So, their reiteration by the bank's evaluation body should be a cautionary note for all concerned, especially, the government. The answer to these all important concerns is also well-known. They are diversification of exports, expansion of the domestic industry and thereby increasing its contribution to the GDP, improving infrastructures and so on.

But knowing a problem is one thing and doing what is required to be done to solve it is another. And that is more so, when the government leaders on various occasions have been making bold claims about the economy's present performance and the prospects ahead despite the slowdowns and other possible negative impacts of the pandemic. While one would like to be optimistic in the face of all such odds, it also falls upon those leaders to present supporting facts and figures while issuing   their statements

In this context, the observations that the ADB's evaluation body did make while assessing the projects the bank looks after in the country have a direct bearing on the sustainability aspect of the growth model now being pursued and indicate if it can contribute to reducing income gaps in society.  That in other words means that the present trend of jobless growth will not be able to meet the government's most important development goal-alleviation of poverty. To achieve that goal, the GDP to 'aggregate private investment' ratio needs to be more than its present level at 23 per cent. So, there is a need to increase this ratio by creating an enabling condition for more local entrepreneurs to invest in the economy and thereby generate more employments in the economy through private sector growth. To this end, the financial sector's inefficiencies have to be addressed and the hurdles to the private sector credit growth should be overcome by freeing the banks of the burden of non-performing loans which is now over 9.0 per cent of the total lending. And with the increase in the private sector's confidence in the economy, the foreign direct investors, whose present share is below 1.0 per cent of the GDP, too will begin to show interest. In fact, the popular topic of wooing some foreign companies looking to relocate their business elsewhere from their costlier host economies like China would make sense if they are not mere pet wishes.

So, again, what all such prospective investors, local or foreign, would look for is adequate infrastructural and regulatory support. They would invariably want easy and encumbrance-free access to land, power, communication network and so on. The Regulatory regime should be such that the cost of doing business is affordable and competitive and the starting process for business is expeditious. Also, the tax system should be friendly towards foreign businesses' repatriating their profits. These are off-repeated familiar issues doing the rounds in our development talks and have again been raised by the ADB's evaluation team. But familiarity should not be an excuse for putting them on the back burner. The imperative is to treat them with urgency.