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The year 2008 is an important landmark in the planning history of Bangladesh as it was earmarked by the declaration of Vision 2021, a charter for moving towards a prosperous future. Vision 2021, through a full-blown Perspective Plan (2010-2021), laid down goals and strategies together with a framework for mobilising natural and human resources to achieve those goals. It called for socio-economic environment to be developed from a low-income economy to the first stage of a middle-income economy by 2021.
The Perspective Plan is scheduled to be implemented by two consecutive five-year plans namely the Sixth Five Year Plan (2011-2015) and the Seventh Five Year Plan (2016-2020). Since 2010, the year of commencement of the First Perspective Plan, the country has already attained the Lower-Middle-Income-Country status, gross domestic product (GDP) growth rate has crossed the milestone of eight per cent and has been indicating an accelerated growth path.
Under this new context, the need for a new long-term plan around the end of the First Perspective Plan on October 20, 2015 prompted the National Economic Council (NEC) to formulate the Second Perspective Plan. This is to be implemented from 2022 to 2041. This perspective plan has taken the Vision 2041, declared by the Honourable Prime Minister, as its base.
VISION 2041: Vision 2041 seeks to eliminate extreme poverty and reach Upper Middle-Income Country (UMIC) status by 2030 and High-Income Country (HIC) status around 2041 with poverty becoming non-existent. To convert Vision 2041 into a development strategy, the government is formulating the Perspective Plan 2022-2041 (PP2041) with requiured policies and programmes. The PP2041 builds on the successes of PP2021, while also drawing on the good practice experiences of other UMICs and HICs that have already travelled the development path that Bangladesh is endeavouring to cross.
SDGS AS A JUMPING PAD: Another aspect of initiating the Second Perspective Plan of Bangladesh (2021-2041) is to address the global commitment of achieving the Sustainable Development Goals (SDGs). The upcoming vision and its true translation into the perspective plan will thus create link with government's priorities vis-à-vis the SDGs and their targets. The vision will further develop pragmatic scenarios to predict the investment needs along with tools to mobilise local and external resources. It is further expected that the mechanism for policy coordination and policy directives will have a better shape out of this global exercise and the attempt could be labelled as "think globally, act locally". SDGs, that included 17 Goals and 169 Targets, will have a synergistic relationship with the PP2041. As the end year of SDGs mark the halfway of PP2041 implementation, successful execution of SDGs will ease the second half of the Perspective Plan (2021-2041). Similarly, the PP2041 through 8th and 9th Five Year Plan will spur the SDG attainments.
The success with MDGs for Bangladesh has proven how committed the country is in terms of fulfilling its international commitments. Likewise, the mid-term review of the Perspective Plan (2010-2021), Implementation Review of the 6th Five Year Plan (6FYP) and the Mid-term Review of the 7th Five Year Plan (7FYP) have demonstrated the country's implementation capability of its own development priorities. Aligning SDGs with the 7FYP and its ongoing effort to align them with the upcoming PP2041 along with the corresponding five year plans will pave the way for achieving SDGs in full along with the national objectives.
ALIGNMENT WITH BANGLADESH DELTA PLAN 2100: Bangladesh government approved the Bangladesh Delta Plan 2100 (BDP 2100) on September 04, 2018 with the objective of 'achieving Safe, Climate Resilient and Prosperous Delta'. In other words, BDP 2100 is the plan for moving Bangladesh forward for the next 100 years towards the 21st Century. BDP 2100 is indeed the combination of long-term strategies and subsequent interventions for ensuring long term water and food security, economic growth and environmental sustainability while effectively reducing vulnerability to natural disasters and building resilience to climate change and other delta challenges through robust, adaptive and integrated strategies, and equitable water governance.
In order to illustrate the role of BDP 2100 and its contribution to the long-term development of Bangladesh, two policy options are considered. One is called the Business As Usual (BAU) Policy Option (without BDP2100). Under this, there is a depiction of what will happen when the adverse impacts of the climate change increases-- the GDP growth rate starts to fall over time, efficiency of capital falls resulting in lower agricultural production, unemployment, migration and pressure on urbanisation. On the other hand, the Delta Plan (DP) Policy Option incorporates the adoption of strong climate change and other delta-related adaptation measures to achieve higher and sustainable growth trajectories in the face of the various weather-related natural hazards and risks. This DP policy Option will allow the country to achieve national level goals of eradicating extreme poverty, gain the status of UMIC by 2030 and also secure being a prosperous country by 2041.
The Second Perspective Plan (2021-2041) coincides with the Bangladesh Delta Plan, in terms of temporal space-the plans share 20 years of shared implementation period. More importantly, they share some common goals and visions to create an 'Environmentally Sustainable and a Climate Resilient Delta Nation'. The parallel implementation of two long term plans will have synergistic effect.
KEY ELEMENTS OF THE PERSPECTIVE PLAN (2022-2041): Over the next half-century, Bangladesh will have to cope with rapid transformational shifts in agriculture, trade and industry, education and healthcare, transport and communication, and in the way we work and conduct business. As a nation, we need to be fully prepared to address the challenges head-on and seize emerging opportunities, so that the future generation takes its rightful place in the comity of nations along side the high-income and developed societies. While these goals are pursued with vigour, the government will need to ensure that key natural resources like land, water, forestry, natural habitat and air are used in a manner that avoids their depletion and degradation.
Two principal visions underpin the PP2041: (a) Bangladesh will be a developed country by 2041, with per capita income of over $12,500 in today's prices (more than $16,000 in 2041 price), and fully in tune with the digital world; (b) Poverty will become a thing of the past. The transition-indeed transformation-can be realised through a process of rapid inclusive growth leading to elimination of poverty while increasing the productive capacity, building an innovating knowledge economy and protecting the environment.
The challenge is formidable but the stakes are high. Setting an ambitious goal is the starting point of a long journey that will require steadfast resolve to steer the course while making hard political and economic choices along the way. This is why, a road map like the PP2041 is necessary. Achieving high growth with shared prosperity requires coordination of cross-cutting policies and synchronisation of multi-sectoral programmes aimed at achieving the final outcome. It is critical that thematic and sectoral strategies under PP2041 are robust and internally consistent.
High growth, job creation, and reduction of poverty and inequality are the final outcomes. This, in turn, demands effective tax and expenditure policies, savings mobilisation and investment growth, strong focus on transport, trade, and energy infrastructure to raise productivity of firms engaged in economic activities. As the movement from agriculture-to-industry and rural-urban migration reach the turning point with the tightening of labour markets, job-creating export-oriented industrialisation in a digital era of globalisation and Fourth Industrial Revolution (Industry 4.0) will need consistent trade policies in tune with 21st century cross-border transactions of goods and services. Agriculture, though declining in relative size, will remain a pivotal sector for food security and nutrition balance, and inter-sectoral policies have to be directed towards gaining a highly productive modern agriculture that is also climate change-resilient over the long-term. For reaching high-income status in two decades, there is no alternative to investing in human capital development by raising educational quality and deepening skill development programmes to support innovation-driven knowledge society of the future.
INSTITUTIONS MATTER: PP2041 recognises the critical importance of institutions in Bangladesh's development process. Vision 2041 and the associated PP2041 relies on four institutional pillars that will be harnessed by the people, the principal driver of growth and transformation. These are (i) governance; (ii) democratisation; (iii) decentralisation, and (iv) capacity building. Shared prosperity is a basic thrust of the PP2041, facilitated by effective institutions of governance: a properly functioning judiciary, a people-oriented civil administration, efficient land management, and sound economic management, among others. The second pillar of Vision 2041 is democratisation. The third pillar is decentralisation. Bangladesh may not go forward and be a developed country by 2041 unless administrative, financial (including revenue) and political power is decentralised at the grassroots level, more formally to the lowest hierarchical level of government structure. The fourth pillar is institutional capacity building. The purpose of building the capacity of institutions is to make them compatible with a transforming economy which is focused on strategic relationship, resource development and internal management and operations.
MACROECONOMIC MANAGEMENT FOR ACCELERATED INCLUSIVE GROWTH: Macroeconomic stability is an essential prerequisite for growth. PP2041 comes at a time when Bangladesh is experiencing a growth surge spurred by strong national policies of inclusive growth. This growth path is underpinned by prudent macroeconomic management reflected in low inflation, low fiscal deficits, a comfortable balance of payments and low internal and external public debt.
APPROACH TO FISCAL OPERATIONS: A key factor in the country's prudent macroeconomic management has been the maintenance of sustainable fiscal deficits and public debt for nearly three decades. The strategy has been to keep public expenditures within the bounds of available revenue envelope plus external resources and low domestic borrowing. This fiscal policy stance will be maintained under PP2041. However, a difficult fiscal challenge has been the very low tax-to-GDP ratio. At around 9 per cent of GDP, it is among the lowest tax effort in the world. Raising the tax-to-GDP ratio to around 15 per cent of GDP will be the most pressing fiscal policy challenge for PP2041. To augment revenue in order to finance the growing demand for public investment in infrastructure and other public services, revenue mobilisation will adopt a strategy of expanding the tax base and making the strategic shift from heavy reliance on trade taxes to focusing on direct taxes (income and corporate) and value-added tax (VAT).
MONETARY MANAGEMENT TO COMBAT INFLATION AND FOSTER GROWTH: The target for the future will be to reduce the rate of inflation to less than three to four per cent per year and maintain this level. This will be done by ensuring well-coordinated monetary and fiscal policies; improvements in productivity; attention to supply augmentation with emphasis on food security; and strengthened competition policies in a deregulated market economy.
TRADE REGIME FOR EXPORT DIVERSIFICATION: Weaknesses in trade infrastructure (ports, transportation infrastructure, and customs administration) are well known. Export competitiveness is sharply reduced by the high transaction costs relative to competitors from other countries. High transaction costs are also fuelled by the inefficiencies of custom procedures. Turning this around will be a strategy for the immediate future. However, it is the trade policy regime that acts as the most serious constraint to diversification. At the moment, the incentive system is heavily skewed in favour of production for domestic sales rather than exports. A strategy of export diversification could take lessons from the success of the readymade garments (RMG) sector. Non-RMG exporters can be provided similar facilities as RMG.
Dr. Shamsul Alam is Member (Senior Secretary), General Economics Division, Bangladesh Planning Commission and lead Author of Bangladesh Delta Plan 2100.