The Financial Express

Reform -- key to double-digit growth

| Updated: October 22, 2017 12:09:40

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Reform -- key to double-digit growth


Bangladesh Investment Development Authority (BIDA) maintains that reforms in several areas of the economy are necessary for achieving double-digit growth. The BIDA told the Business Initiative Leading Development (BUILD) on November 22, 2016 that identifying what is bad in order to promote what is good for attracting foreign investors to the country is 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.
BIDA says it will do "everything possible" to elevate Bangladesh as the most attractive place for growth and domestic and foreign investments for business. Bangladesh, it said, is going to focus on three major areas of its economy: (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 Bangladesh Investment Development Authority (BIDA) plans to hit the ground by finalising an action plan to improve the country's "business environment" aimed at enhancing economic growth. BIDA, designed to attract foreign investment into the country, aims at 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.
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 climbed two steps up and more progress is critically needed. 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 double-digit - meaning 10 per cent or more.
The joint meeting was organised to hear stakeholders' opinions on how to achieve the targets. A high ranking 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 has been drafted and would be sent to the relevant ministry. "It will be finalised within December (2016) and executed in January (2017)," he added. 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". 
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 has already started working. The November 19, 2016's meeting was also held in line with the decisions taken at the meeting with the PM. 
Karim Belayachi, a Senior Private Sector Specialist of the WB, who presented the keynote paper at the November 19 meeting, mentioned some of the common features of successful reforms to achieve the targets Bangladesh has set for itself. 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 well monitored measurable goals, 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 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 the rest. 
Despite gaining two spots up in the ladder, Bangladesh lags behind most other South Asian Association for Regional Cooperation (SAARC) countries, managing only to overtake war-ravaged Afghanistan. Several discussants at the November 19 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. He said that related government agencies should find ways for 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 private sector in overcoming the power supply problem. It also proposed forming a committee with FBCCI representatives to implement big projects with foreign investments.
However, none in the meeting expressed concern over 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 poverty and inequality. Inequality is depriving the common people of the equitable share of income growth and thus hindering growth or achieving early double-digit growth.
The writer is a retired Professor of Economics, BCS General Education Cadre.
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