Anu Mahmud :
Bangladesh has made significant strides in its journey towards development in the recent past.
This fact has been widely recognized by the international community as well. Reputed international institutions like Goldman Sachs and JP Morgan have, in fact, included Bangladesh in their lists of the frontier five and the next eleven emerging economies as having a high potential of becoming one of the world’s largest economies in the 21st century.
The US has predicted that the ‘next eleven will surpass the combined development of 27 countries of European Union by 2030.
The Guardian of London writes, Bangladesh will overtake the western states in terms of economic growth by 2050.
Besides, Moody’s and Standard and Poor’s have been rating Bangladesh quite high over the last few years. All these predictions clearly indicate that Bangladesh has a bright future, ahead.
According to the current budget, we are dependent on foreign assistance for only 1.8 per cent of our GDP (gross domestic product), meaning that we have been able to strengthen our national capacity.
The latest report of BBS shows that our per capita income has increased to US$1314 which was US$1190 last year.
Bangladesh’s position in terms of per capita income is 58th in the world. Purchasing power and average longevity of people have also gone up. Bangladesh is being shown as a middle income country based on improvement in GDP.
Most people, including experts, are of the opinion that economic development is the ultimate goal in a nation’s life.
Bangladesh is undergoing a phase of rapid change. Economic indicators suggest that the country is moving forward.
Accelerated GDP growth coupled with remarkable socio economic achievements, sustained macroeconomic stability, political maturity, rising investment, export and remittances, – thriving industrialization, progress in digitization and improved business environment have contributed towards this commendable progress.
Stable Macroeconomy and Robust Economic Growth
The country’s macroeconomic fundamentals are among the best in the whole Asian region.
Over the last six years, GDP growth averaged 6.2 percent and per capita GNI (US$) rose 9 percent each year.
On the other hand, inflation steadily declined, and average inflation moderated to about 6.3 percent (year over year) in August, 2015. Building on recent gains in revenue mobilization, budget size has been increased more than 4.3 times, particularly development spending has been raised three times since FY06.
Alongside, fiscal deficit was kept in control and remained close to 4 percent of GDP on average. Public debt to GDP ratio, as a result, is gradually declining over the years enabling
Bangladesh to remain at a low risk of debt distress. In the external front, export receipts remained resilient and more than tripled and were matched with newly 2.7 times increase in import payments and 3.2 times increase in remittance inflows since FY06.
Narrowing trade deficit and overall BOP surplus have strengthened the international reserve build up which has increased almost 7.2 times, the second highest in South Asia, during the last six years (USS 26.2 billion by end of August 2015).
The nominal exchange rate has also remained stable.
National Economic Growth :
Progress made by Bangladesh in these areas has been recognised by various foreign organisations and the media. A report by Goldman Sachs, an American multinational investment banking organisation, contains a list of 11 promising countries of the world which have been termed ‘the next eleven. The list includes Bangladesh.
The organisation has stated that youths constitute the majority of Bangladesh population who can change the future of the country. JP Morgan has named 5 frontier economies and Bangladesh is one of those five.
According to the World Bank, Bangladesh has demonstrated all the potentials to become a middle income country by 2021.
Impressive achievements in social indicators
Bangladesh has made impressive progress with regard to socio-economic development and moved ahead of its neighbours in many key social development indicators.
It has already met several MDG targets in terms of reducing poverty, attaining gender parity at primary and secondary education levels, lowering under-five mortality rates along with making significant gains in increasing enrolment, reducing infant and maternal mortality, widening immunization coverage and reducing incidence of communicable diseases.
Headway made in infrastructure development
Important milestones have been achieved in physical infrastructure sector, especially in power and communication.
New roads and flyovers have been constructed in important cities, highways widened, roads and bridges constructed and old ones have been renovated.
Side by side, circular waterways have been introduced around Dhaka city.
Simultaneously, supporting acts and policies including Integrated Multimodal Transport Policy, 20 year Road Master Plan, National Road Safety Strategic Action Plan and Dhaka Transport Coordination Authority Act have been formulated. Recently, eight big projects (i.e., Padma Bridge, Ruppur Nuclear Power, Rampal Coal-based Power, Deep Seaport, MRT-6 line, LNG Terminal, Matarbari Power, and Paira Seaport) have been selected for fast track monitoring of a committee headed by the Hon’ble Prime Minister which will crowd in private investment leading to higher growth once these projects are completed. There is also a plan to generate 24,000 MW electricity by 2021.
Improving business and investment environment
According to a World Bank report, the number of days it takes to start a business in Bangladesh has been reduced to 20 days by 2014 from 44 days in 2008. It further reported reduction in cost for business start-up procedures.
In order to promote private investment, the Bangladesh Economic Zones Act has been enacted. Besides, Private Economic Zone Policy 2014 has been formulated.
The government has already approved 37 public and private economic zones in different parts of the country to attract both foreign and domestic investments.
A PPP office has been established with a view to supporting line ministries to identify, develop, outsource and finance PPP projects.
The newly incorporated Bangladesh Infrastructure Finance Fund Limited (BIFFL), a fully government-owned company with a capital of Tk.l00 billion, will provide long term financing facilities for PPP projects.
Bangladesh has been identified by UNCTAD in 2013 as the distant second favoured investment destination in South Asia after India.
There has been consistent growth in the size of FDI inflows in the country indicating confidence of international investors in the country’s business potentials.
Lately, Bangladesh has witnessed a surge in investor interests, both in the manufacturing and service sectors as well as in the areas of power, energy, and infrastructure development.
Deepening Financial Sector
The financial sector has further deepened as corroborated by rising broad money to GDP ratio from 37.5 percent in 2006 to 52.0 percent in 2015.
At the same time, significant increase in the total assets as well as deposits of the banking sector indicates a sound financial base for the country.
Meanwhile, a good number of acts and policies, inter alia, Bank Company Act, 2013, Exchanges (Denaturalization) Act, 2013, Money Laundering Prevention Act, 2012 and Insurance Development and Regulatory Authority Act, 2010 have come into force to ensure improved efficiency and governance in the financial sector.
Growing Industrialization with Higher Employment
Bangladesh economy has been undergoing substantial structural transformation. Industry share of GDP is rising while agriculture share is falling.
Moreover, industrial growth is accelerating and creating job opportunities for new entrants in recent years.
In fact, manufacturing sector grew at an average rate of 9.2 percent in the last three years. Concurrently, 6.1 million jobs were created against 5.4 million new entrants.
Indeed, the pro-active role and policies of the government along with its initiatives to strengthen regulatory framework for industrial promotion, workers’ welfare, competition and innovation have greatly contributed to this development. In addition, the potential sectors identified in the industrial policy received both financial and nonfinancial supports from the government, the central bank, and the international community.
Bangladesh Marches On
With an ambitious vision crafted for future. Bangladesh is set to grow with its relatively young population, burgeoning middle class, expanding domestic market and conducive business environment.
For this journey towards prosperity, the country is equipping itself with huge investment in infrastructure and building a critical mass of skilled and talented labour force.
At this time of global transition, when most of the advanced economies are plagued with demographic problems, Bangladesh is ready to become a hub of human capital and an excellent destination for the international investors.
Socio-Economic Progress:
World economy was in trouble throughout 2009-14. Despite this disadvantage, economic development achieved in Bangladesh during this period is praiseworthy compared to 2001-06 which was a unique phase in global growth.
During 2009-14 period, average growth was 6.13 percent, public investment rate rose to 6.9 percent from 5.6 percent of GDP, power generation capacity increased three times, per capita income increased more than twice, tax-GDP ratio was scaled up to 10.5 percent from 8.8 percent, budget size increased about four times, development activities rose three-fold, rice production increased by 37 percent, export, import and remittance each increased three times and foreign exchange reserve grew six times.
Alongside, foreign exchange rate remained stable, and inflation declined steadily.
Aside from economic progress, Bangladesh has made significant strides in social advancement.
Indeed, education, health and sanitation facilities have been improved substantially. Child and maternal mortality rate has been reduced considerably. Life expectancy has increased significantly.
Poverty rate as well as depth and severity have been reduced beyond expectation.
A short account of socioeconomic achievements during 2009-14, as shown in Table 1, compared with those achieved during the tenure of previous regular government reveals the higher rate of progress during the tenure of the present government.
GDP growth
Despite global recession, GDP grew at an average rate of 6.14 percent during 2009-14 against 5.4 percent growth in the period of 2001-06. Indeed, government’s prudent policy and efficient economic management assisted in achieving relative higher growth.
– GDP at current prices increased to BDT 13,437 billion or US$ 173 billion in FY14 (BDT 15,136 billion or US$ 195 billion in FY15) from BDT 4,823 billion or US$ 72 billion in FY06;
– Notably, global economic situation was normal during 2001-06 and average growth in developing economies was 7 percent while average GDP growth in Bangladesh was 5.4 percent.
– On the other hand, even with global economic recession and average growth rate being 5.6 percent in developing economies during 2009-14, GDP growth in Bangladesh was 6.13 percent on an average.
Higher GDP growth, significant remittance inflows accompanied by slow population growth contributed to considerable rise in per capita income. Per capita income grew twofold to US$ 1,184 in FY14 (US$ 1,314 in FY15) from US$543 in FY 2005-06. In terms of purchasing power parity, per capita income reached US$ 3,340 in FY14 from US$ 1,980 in FY06.
Savings and Investment
National savings increased to 29.2 percent of GDP in FY14 from 27.8 percent in FY06. Besides, total investment stood at 28.6 percent of GDP in FY14 (29.0 percent in FY15) from 26.1 percent in FY06.
– During the same period, public investment increased to 6.5 percent in FY14 from 5.6 percent of GDP in FY06. Social and physical infrastructure sectors like power, energy, and communication received priority in public investment.
– Private investment increased about threefold and soared to BDT 2960 billion in FY14 (BDT 3340 billion in FY15) from BDT 993 billion in FY06.
– In FY06, import values of capital machinery, raw materials for ship building industry and raw materials of readymade garments industry were US$1.54 billion, US$ 0.98 billion and US$3.2 billion respectively.
– In FY14, imports of these products increased to US$ 2.3 billion, US$ 2.6 billion and US$8.5 billion. This exhibits an upswing of 1.5 times, 2.7 times and 2.7 times in these categories, respectively;
– Foreign direct investment almost doubled, from US$ 744 million in FY06 to US$ 1,438 million in FY14. The stock of foreign direct investment increased to US$ 8.7 billion from US$ 3.8 billion during this time period.
Revenue Earnings
Compared to FY06, both total revenue and tax revenue earnings increased by more than three hundred percent in FY14.
Total revenue earnings rose to 10.4 percent of GDP in FY14 from 8.8 percent in FY06. During the same period, tax to GDP ratio increased to 8.6 percent from 7.0 percent in FY06. A number of measures including administrative and legal reforms in revenue collection management, increase of manpower and introduction of automated system have significantly contributed to revenue augmentation.
Budget Size and Management
The size of the government budget has more than tripled in FY14 to reach BDT 2,162 billion from BDT 611 billion in FY06 (Budgets for FY15 and FY16 were BDT 2,505 billion and BDT 2,951 billion, respectively). Special attention was given to mobilize resources for allocating the same to priority sectors. At the same time, unnecessary non-development expenditure was contained while maintaining a tolerable budget deficit. These measures have helped achieve robust GDP growth and maintained macroeconomic stability.
– Annual Development Program (ADP) expenditure has been increased by about three hundred percent in FY14 compared to FY06. Alongside, capital expenditure outside ADP allocation has also been increased consistently;
– Budget deficit has been kept within 4.0 percent of GDP. As a result, public debt to GDP ratio declined gradually.
– Contingent liabilities have been kept in control, and debt sustainability and debt repayment capacity gradually improved.
Inflation and Monetary Management
The aim of monetary policy has always been to achieve satisfactory growth along with low rate of inflation.
The government has been quite successful in achieving this target. Despite an annual average GDP growth of 6.13 percent during FY10 to FY14, inflation was contained within 7.4 percent, thanks to the government’s efficient economic and revenue management initiatives coupled with regular and effective monitoring system.
Notably, inflation rose to 10.9 percent in FY11 impacted by the oil and foodstuff price hike in international market.
It was gradually brought down in the subsequent years through effective macroeconomic management.
According to latest data, point to point inflation came down to 6.36 percent in July 2015; it was 6.35 percent on 12 months average basis.
Along with greater financial inclusion, depth of financial sector has increased substantially during FY10-FY14 period.
Broad money to GDP ratio, an indicator of financial depth of an economy, was 52.1 percent at the end of FY14, while it was 37.5 percent in FY06.
Alongside, the value of efficiency of financial intermediation index or, in other words, the gap between lending and deposit rates has reduced. Moreover, real rate of interest has also come down.
The spread between weighted average advances and deposit rates reduced to 5.3 percent during 2009-14 from 5.8 percent during 2001-2006 (Interest spread was 4.87 percent in FY15).
Foreign Trade
Despite strong headwinds from global economy, both imports and exports increased by about three times in FY14 as compared to FY06.
The values of imports and exports respectively were US$ 14.7 billion and US$ 10.5 billion in FY06, which increased respectively to US$ 39.3 billion and US$ 30.2 billion in FY14.
The average growth in export was 15.2 percent during 2001-2006, which increased to 16.8 percent during 2009-14.
The policy of market and product diversification of the present government has culminated in increasing the rate of trade openness (value of total imports and exports compared to GDP) to 44.3 percent in FY14 from 38.1 percent in FY06.
Commitment and Disbursement of Foreign Assistance
Foreign assistance and its utilization significantly increased. Foreign assistance commitment worth US$ 5,065 million on average was received annually during 2009-14 against US$ 1,572 million during 2001-2006.
Table 4: Commitment and Disbursement of Foreign Assistance
(Million US$)
Fiscal Year Initial Pipe Line Commitment Disbursement
Grant Loan Total Grant Loan Total
2005-06 6694.54 628.39 1158.98 1787.36 500.54 1067.09 1567.64
2006-07 6759.58 728.50 1527.64 2256.12 590.17 1040.40 1630.58
2007-08 7288.34 961.89 1880.56 2842.44 658.12 1403.40 2061.51
2008-09 8682.14 432.26 2021.06 2444.32 657.81 1189.50 1840.31
2009-10 8861.24 555.15 2428.53 2983.68 639.17 1588.60 2227.77
2010-11 9429.37 630.47 5338.17 5968.23 745.10 1031.64 1776.74
2011-12 14151.99 1441.38 3233.15 4674.52 588.00 1538.48 2126.48
2012-13 15430.15 554.53 5300.08 5854.61 726.27 2084.73 2811.00
2013-14 16624.00 497.82 5346.4 5844.22 680.73 2403.66 3084.39
Source: Economic Relations Division
An analysis of disbursement data shows that on average about US$ 2,405 million worth of foreign assistance was utilized annually during 2009-2014. Annual average utilization of foreign aid during 2001-06, on the other hand, was US$ 1,423 million.
Foreign Exchange Reserve
Export earnings and remittance inflows tripled in FY14 vis-à-vis FY06. As a result, the stock of foreign exchange reserve has been increasing rapidly.
By the end of FY06, foreign exchange reserve was US$ 3.5 billion, which increased by about six times to reach US$ 21.5 billion by the end of FY14. Foreign exchange reserve stood at US$ 25.5 billion at the end of July, 2015.
Table 5: Advancement in the External Sector
Capital Market
The issue of capital market development received special attention as vibrant investment environment needs presence of a sound capital market. There was a capital market debacle towards the end of 2010 and beginning of 2011 which was deepened by investors’ excessive expectation and weak control mechanism.
In order to prevent this kind of debacles, special attention was attached to reforming legal and administrative framework along with revising market regulations.
For long-term development of capital market, steps were undertaken to demutualize as well as to ensure transparency in the market. It took about four years to reform the capital market.
As a result, the volume of share and securities transactions too has increased substantially. Together, these measures have put the capital market in a stable and reliable state.
Market capitalization was 4.22 percent of GDP in FY06 which reached 30.8 percent in FY14. During the same period, the volume of transactions reached BDT 1227.6 billion from BDT 57.5 billion.
Agriculture and Food Production
Integrated implementation of a number of measures including targeted utilization of agriculture incentives, distribution of agriculture input assistance cards, opportunity for opening farmers’ bank accounts with BDT 10 only, sale of fertilizer at local level through sales agents, invention of short duration and high-yielding variety of crops tolerant to drought, salinity and submergence and ensuring fair price for agricultural produces contributed towards increase in productivity and crop intensification. Incentives in the agriculture sector rose to BDT 90 billion in FY14 from BDT 6 billion in FY06.
Besides rice, production of corn, jute, potato, and vegetables also increased significantly.
Total production of food crops was 27.9 million metric tons in FY06, which increased by 37 percent to reach 38.3 million metric tons in FY14.
As a result, Bangladesh has achieved self-sufficiency in food ahead of anticipated time.
Alongside, rice export is taking place (to Sri Lanka) for the first time in FY15 after meeting domestic demand.
Besides, overall food security is being ensured by TR (Test Relief), VGF (Vulnerable Group Feeding) and VGD (Vulnerable Group Development) programmes and improving the storage capacity of food silos.
Industrial Production
Contribution of industrial sector in GDP of Bangladesh increased to 29.6 percent in FY14 from 25.4 percent in FY06.
There has been a shift of surplus agricultural workers (whose marginal productivity was almost nil) to the burgeoning industrial sector.
This transfer has resulted increase in productivity as well as wage of those workers on one hand, and increase of overall industrial production on the other.
In the last five years, Bangladesh has been transformed to a technology-led modern state through widespread development of ICT friendly infrastructure and environment.
Progress in Service Sector
In terms of contribution to GDP, a qualitative change has taken place in the service sector.
Contribution of growth catalysts, among service sector components, especially components such as transport and communication, financial intermediation, retail and wholesale increased substantially in FY14 as compared to FY06. Contribution of transport and communication and retail and wholesale increased to 11.5 percent and 14.1 percent respectively in FY14 from 10.2 percent and 13.6 percent respectively in FY06.
This is indeed an indicator of a growing service-oriented market economy.
International Recognition of Economic Achievements
Bangladesh through its consistent economic achievements has captured many international organizations’ attention as well.
The Citi group has listed Bangladesh as one of the most growth prospective 11 countries until 2050.
The JP Morgan has labeled Bangladesh as one of the ‘Frontier Five’ economies with high potential to become an attractive destination for investment as well.
Besides, according to the latest report of the PricewaterhouseCoopers, Bangladesh will become the 23rd largest economy in the world by 2050.
After assuming office in the previous term, the present government took steps to get the sovereign credit rating evaluated by internationally acclaimed rating agencies in a bid to improve country image.
Standard & Poor’s, Moody’s and Fitch are currently evaluating our sovereign credit ratings. Despite adverse global conditions.
Bangladesh, by virtue of her good macroeconomic management among the South Asian countries, has been able to achieve and sustain credit ratings equal to the Philippines, Indonesia and Vietnam.
Progress in Social Sector
Supported by positive impacts of economic momentum, Bangladesh has made considerable headway in several social indicators.
The country has achieved most of the crucial MDG targets like reducing poverty gap ratio, attaining gender parity in primary and secondary education, reducing incidence of communicable diseases and improving child and maternal health ahead of 2015 deadline.
Moreover, almost all the population has been brought under the immunization coverage, safe drinking water and sanitation facility.
Likewise, Bangladesh has made commendable progress in human development index. Between 1980 and 2013 its HDI value has increased by 66 percent.
The pace and level of achievements in the social sector has drawn attention of many in the international arena.
Acknowledging these developments, Amartya Sen, the famous Bengali Nobel Laureate economist, has profusely lauded Bangladesh’s achievement in various social indicators in his book ‘Uncertain Glory: India and its Contradiction’.
As a whole, sustained economic growth along with pro-poor and inclusive growth strategy of the government has helped achieve this noteworthy success.
More specifically, in comparison with the previous elected government (2001-06), present government’s (2009-14) commitment and support for human development and social protection programmes have had considerable impact, an account of which is presented in Table-6 below:
Poverty Alleviation
Government has placed alleviation of poverty and elimination of all forms of disparity at the forefront of its development strategy which helped achieve the MDG goal of poverty reduction within the target timeframe.
– MDG target of halving the population living below the poverty line (from 56.7 percent to 29.0 percent) has been achieved in 2012. Estimated figures suggest that poverty and hardcore poverty have come down to 24.3 and 9.9 percent respectively by December, 2014;
– The latest HIES 2010 data show that incidence of poverty has declined at an annual rate of 3.21 percent during 1992-2010 against the MDG target of 2.12 percent. It is also noteworthy that for the period 2005-10 rate of poverty reduction (4.67 percent) was even higher than the long-term (1992-2010) average (3.21 percent);
– Number of poor and hardcore poor has been brought down to 38.5 million and 15.7 million in 2014 from 57.3 million and 35.9 million respectively in 2005. About 45 percent of the total number of people pulled out of poverty between 1992 and 2014 were achieved during the last five years of the present government;
– Besides poverty rate and number of poor people, both depth and severity of poverty have declined significantly. Between 1992 and 2010, poverty gap ratio reduced to 6.5 against 2015 target of 8.0; also severity of poverty as measured by the squared poverty gap index declined from 2.9 in 2005 to 2.0 in 2010;
– Income and consumption inequality has also been reduced substantially. Income and consumption GINI coefficient reduced to 0.46 and 0.32 in 2010 from 0.47 and 0.33 respectively in 2005. Moreover, between 2005 and 2010 poorest 5 percent’s share in the national income increased by 1.3 percent while income share of top 5 percent reduced by 8.6 percent;
Sustained GDP growth rate in excess of 6 percent for the last ten years, vibrant rural economy, increased female labour force participation (from 26.1 percent in 2003 to 33.5 percent in 2013 ) along with targeted expansion of social protection programmes have contributed to poverty reduction. It may be mentioned that in FY16 BDT 269.58 billion has been allocated for social protection programmes (9.14 percent of national budget and 1.57 percent of GDP). Both budget allocation and number of beneficiary under social protection programmes have increased manifold during 2009-14 compared to that in 2001-2006.
Education
Bangladesh has made major strides towards achieving the MDG of ensuring universal primary education and gender parity in primary and secondary education.
Gender disparity in primary and secondary school enrolment has already been eliminated, and the country is near to achieving universal primary education.
– Almost 100 percent enrollment at the primary level has been ensured;
– Significant progress has been made in reduction of dropouts [primary school grade-5 survival rate in 2013 was 81.8 percent (77.65 for boys and 84.45 for girls) from 43 percent in 1991], improvement in completion of the cycle and implementation of a number of quality enhancement measures in primary education;
– As far as equitable access to education is concerned
(a) Gender parity in primary and secondary enrolment has been achieved
(b) Ratio of girls to boys in primary and secondary education increased to 1.06 and 1.14, respectively in 2014 against 2015 target of 1.0 for both;
– Adult literacy rate increased to 61.1 percent in 2014 from 51.3 percent in 2005. Adult women literacy rate increased to 58.1 percent in 2014 from 45.5 percent in 2005.
Positive development in education sector is attributable to
– Adherence to the constitutional provision for free and compulsory primary education
– Implementation of National Education Policy, 2010
– Some specific government interventions, such as-
(a) Infrastructure building
(b) Appointment of adequate number of teachers
(c) Improvement of quality of education through holding examination with creative questions and creative talent hunt
(d) Distribution of free textbooks among all students up to secondary level
(e) Provision of stipends and exemption of tuition fees for girls
(f) School feeding Programme, etc.
Health
The health sector has done especially well. Notably, the decline in infant and child mortality rates since early 1990s is among the fastest in the developing world. Bangladesh’s progress towards reducing infant and maternal mortality was recognized through UN award in 2009. Its success in reducing population growth rate is also unique among countries at similar per capita income level.
– births in 2015, under-five mortality rate has been reduced to 41.1 per 1000 live births in 2013;
– The target of reducing infant mortality rate is also on track; Infant mortality rate (per 1000 live births) has been reduced to 33 in 2013 from 51 in 2005;
– Average rate of decline of maternal mortality rate from the base year has been about 3.3 percent per year, compared with the average annual rate of reduction of 3.0 percent required for achieving corresponding MDG in 2015. Maternal mortality rate (per 1000 live births) has been reduced to 1.7 in 2013 from 2.4 in 2005.
– Life expectancy at birth has gone up to 70.7 years in 2015 from 67.5 years in 2005.
These achievements are attributable to strong national commitment and actions for better public health, social and economic development leading to gradual transformation in the behavioral pattern of the society, the successful programmes for immunization, control of diarrheal diseases, ‘vitamin A’ supplementation and so on. A large number of community clinics have been set up at the grass-root level which provide health and nutritional services to the poor, destitute and pregnant women, and children.
Economic Zone
The government has taken initiatives to establish economic zones in prospective regions with a view to encouraging industrialization, generating employment, enhancing production and promoting exports. Government approval has been accorded to the establishment of 37 public and private economic zones in different parts of the country. Among them, five economic zones (i.e., Sirajgonj, Mongla, Mirsarai, Anwara, and Srihatta) received endorsement in the first phase, and their execution is progressing. Meanwhile, Private Economic Zone Policy 2014 has been formulated in order to allow private investors to develop economic zones. So far, five private economic zones including Garments Shilpa Park by BGMEA have received approval for development. In view of huge prospects for economic zones, government has planned to establish 100 economic zones across the country in the next 15 years, which is expected to generate 10 million additional employments and enhance export earnings by about $40 billion.
Creation of Economic Zones For Rapid Industrialization
Prime Minister Sk. Hasina has recently laid the foundation of 10 Special Economic Zones in different areas under several districts over video conference at Bangabandhu International Conference Center. In this regard on the basis of the Special Economic Zone Act of 2010 government has established the Bangladesh Special Economic Authority Zone (BEZA).
Under this organization among the target of 100 special economic in all over the country, this 10 Economic Zones foundation stones have been set up. Among these 10 areas four will be established under the government initiative and the rest six will be under the Public Private partnership (PPP) program.
There is no alternative to develop the country without the support of industrialization. Economy will be so much strong with the establishment of industrial units in large scale and at the same time employment opportunity will also be expanded. Under this circumstances we welcome of those steps of creation of Economic Zone Authority. But the creation of Economic Zone is not sufficient, these zones will be created as industrial favourable and the related facilities will be confirmed. Now question arises, how much facilities have been confirmed in those proposed zones related to the industrial establishment activities. In our country since long the investment climate was not very favourable. The main reason behind this are- crisis’s in gas-electricity supply, scarcity of developed infrastructure and high interest rate in bank loan. The demand for gas and electricity will increase with the expansion of new economic zones. Also requirement for developed infrastructure be expanded gradually. For these reasons necessary steps will be taken immediately to solve the prevailing problems to gear up investment activities. So, it is seriously expected, the government will take care about these with the expansion of new Economic Zones. Prime Minister has requested the entrepreneurs to establish their industrial areas by taking under considering the three preconditions (factors), those are- (a) Provision of water reserve, (b) green belt and (c) wastage dispatch procedures in the area of industrial location . With this instruction PM has given emphasis on environment and atmosphere no doubt. So, it is necessary to take necessary steps. In fact, to establish any commercial institution including industry this policy is required to follow. Any steps, whether those may be profitable may not be accepted whether it may be harmful to forest areas, river-cannel and human life hazards.
From the economic point of view, different areas of Bangladesh have huge prosperous. To establish Special Economic Zone is also become the demand of the time in reality. For this zones local and foreign investors will encouraged properly. Many specialists think that, due to our scarcity of capital foreign investors required to be given emphasis. In this regard it may be noted that, behind the economic development of South Korea main role played by the foreign investment. Considering this views, investment prospect will be utilized completely and properly. It is our inspiration that the present government is very cordial in this matter. But if we do not take care properly regarding some matters initially, expected result may be hampered.
The acquisition of land is the big hurdle to establish economic zones. It is not expected to wastage of time to acquire land matter. At the same time it will be taken under consideration whether the fertile agricultural land will be acquired further. After this to expedite the development and infrastructure construction activities steps will be taken speedy to release of fund. For implementation of total activities related economic zones required manpower will recruited. Now a days any steps related to industrial investment will go in vain due to scarcity of power and energy supply. For this reason proper planning is required to take for smooth supply of power. Developed communication infrastructures are required to establish in those areas. Overall political stability will also be maintained, which is very essential to attract foreign investors. A group of people though a separate Economic Zone will be created for light engineering’s industries and women entrepreneurs. This recommendations are required to be taken under consideration. If the private entrepreneurs do not come forward economy of the country will not be speedy, indicating this PM has mentioned that industries will be established in a special place in different parts of the country. if the industries are scattered all over the country in different places, environmental balance will be hampered. Ours river-environment may be polluted, considering this views government has taken this steps to locate industries in a specific area and places. Though it is appreciable, but regarding some points cautious steps will be taken.
Bangladesh have serious land scarcity problem. We are losing 1% agricultural land in every year due to our increased population. Under this situation if we block the land of 100 economic zones in this way for long time unused, it may effect negatively other way. Our previous experience regarding BISIC and EPZ are not comfortable. Land fallen vacant, but no existence of industry in those places. Proper utilization of land those were given to the private companies are required to be confirmed by the government authorities. It will also be taken into consideration seriously that, the land those were offered for creation of economic zones to China, India and Japan’s fate will not be like of Korean EPZ. After all before that, there will be specific instructions related to the facilities and concessions those will be offered in those economic zones.
Experts mentioned that, it is not sufficient only to create 100 economic zones, but it be confirmed to be implemented within the stipulated time. Initially 10 economic zones will be implemented and on the basis of this achievement the creation of other economic zones will be taken into consideration in future. In this context if the steps area taken on the basis of the demand, the wastage of land and wealth be possible to reduce. Initially confirmation of investable favourable atmosphere is necessary to ensure. Neither the steps those were taken by the government to create economic zones to encourage local and foreign investors may be disturbed. It is also necessary to confirm that all the land and assets of our country are properly used for productive sectors. One stop service are required to provide in economic zones to solve any type of problem related to investors. It is also necessary to process the applications of investors under the policy to encourage the productive investment and corruption free process may be required to ensure here. PM has given emphasis on some issues in this regard, like- uniform development of all over the country, proper highest utilization of land regarding the establishing of industries, not to wastage of agricultural land, not to pollute environment, creation of facilities to dispatch the wastage and not to dispatch the wastage in the rivers. Special and excess incentives for women entrepreneurs. Secured domestic facility for laborers specially woman laborers. Target of the government is to fully activate all the economic zones within 15 years. We know comparatively it is not easy task to make ensure the infrastructural facilities in a specific area. Due to this wastages of land will be reduced, the infrastructure cost will also be minimized. Behind the tremendous economic development in Chine for last three decades great role was played by the special economic zones. There were two targets behind of this- to attract foreign investment and to increase economic growth and development. Corporate tax for foreign investors will be imposed on a reduced rate compared to other areas. In 1980 first economic zone was located at Shenzen area in China. Within three decade period this small town of that time become one of the important economic center of the country. India has declared the policy to create economic zones in the first phase of the year 2000. Their policy were clear like Chine to increase foreign investment and to confirm the creation of disturbance free situation for economic zones.
These experiences of two main economic power of the world economy may be properly utilized by the Bangladesh government, entrepreneurs and related all parties. In the economic zones there will be government investment and also be the government- private joint investment. There will also be provision for Bangladesh government to investment jointly with the other country’s government. We have a target ( Vision -2021 ) to enter into the range of middle income group country and also within the next 25 years ( Vision – 2041 ) we want to reach to the line of developed world. To achieve these goals precondition is to implement the mass industrialization program in our country within the stipulated time. If we could able to achieve the target of materialization of 100 economic zones in full swim. we are sure that will be able to reach to our goal.
Already Special Economic Zone Authority has been formed. For this organization expert and efficient man powers are required. At the same time they should have the capacity and capability to take prompt decision and to get all sorts of cooperation from any government and private organizations.
Those 100 economic zones will be setup by 2030. Among these 59 has been given approval initially and development work of 10 of them has already been opened by the PM. Economic zones those will be initiated and managed by the government authority, those are – Mirersharai economic zone of Chittagong, Shreehatto economic zone of Mouluvi Bazar, Mongla economic zone of Bagerhat and Sabrang tourist area of Technaf. Non-government economic zones will be at – Palash of Narshindhi, Munshingaj, two in Sonargaon of Narayanganj. Gazipur and Narayangonj. Implimentation and management of those economic zones will responded by – Khan group. Abdul Momen Ltd, Meghna group. Bay group and Aman group. Government has arranged land for those economic zones. But development and implementation works will be financed by the entrepreneurs. Under a continuous process those have already approved and in future other economic zones will be implemented.
These 100 economic zones will be implemented by the year of 2030. It is needless to say, for the economic development and to improve the living standard of the people it is a gigantic plan and initiative of the present government. If the economic zones area implemented within the stipulated time, there will be a revolutionary change in the production, export, earning of foreign currencies and creation of employment in our country. Finance Minister Abul Maal Abdul Muhit has expressed his expectation that, from the 100 economic zones export earnings will be 4 thousand crore US dollars and one crore people will get employment.
Bangladesh still mainly is a country of agro based economy. National expectation of any country’s economic development and progress may not be achieved only on the basing of agro-economy. Now it is essential to build up strong industrial based economy simultaneously along with the agro- economy.
From the Pakistan period till the date many industries and factories were located in the different areas of the country mainly-Dhaka, Chittagong, Gazipur, Tongi, Savar, Khulna, Jessore. These industries and factories and creating civic and environmental problems in different ways. Garments factories are even located in different residential areas of Dhaka and tannery factories at Hazaribagh become the source of civic disturbance and environment pollution. This type of industries and factories create population pressure, traffic jam, accommodations crisis, scarcity of civic facilities make problems like mountain. From long days, continuous pressures are giving to shift the industries and factories in distant places from the urban city areas. Experts opines that existing many problems will be solved if separate industrial town areas be created for different types of industries and established in different places of the country, then will be balanced economic development. No remarkable progress has been made regarding the establishing of planned industrial area city and shifting industries in different distance areas from the urban cities.
In this regard EPZs are exceptional ‘and examples are required to follow. Government has taken a plan and step to set up economic zones in every district, with the implementation of this program a balanced industrialization will occur and many of the remaining problems be solved. A balanced development atmosphere will create regarding industrial development, expansion of export, earning of foreign exchange and creation of employment in Bangladesh.
Skill Development and Raising Women Participation
Government is attaching equal importance to improving productivity of working labor force.
It has undertaken a programme namely ‘Skills for Employment Investment Programme (SEIP)’ to enhance skills of 1.5 million people in three phases.
Different course curriculum have been prepared under this programme considering training needs of various industrial sub-sectors.
Under this programme, job-oriented quality training will be provided by 32 government institutes under three ministries, SME division of the Bangladesh Bank, Palli Karma Sahayak Foundation (PKSF), and nine industry organizations in a coordinated manner. Notably, 70 percent of the trainees so trained are expected to be employed by relevant industries.
There is also a plan to establish 30 centers of excellence in 15 industries with a view to imparting suitable training.
Despite progress in women development during the last decade, participation of women in economic activities is still much lower (33.5 percent) compared with their male counterpart (81.7 percent).
In this backdrop, government is committed to continue women friendly programmes such as preventing child marriage, providing residence facilities to working women, continuing daycare programmes and vocational training facilities, granting preferential access to credit and job market, formulating gender-sensitive budget and securing overseas employment for them.
Reforms in Governance
Considering low revenue-GDP ratio, Government has already introduced structural reforms in the revenue administration by enacting a new VAT Act in 2012 and plans to launch the new VAT Act from July 2016. Besides, draft of a new Direct Tax Code is underway which is likely to broaden the tax base by eliminating exemptions.
Moreover, government has a plan to implement ‘online return filing and digitization of tax returns’ project by June 2016.
Upon its completion, all taxpayers will be able to submit their income tax return electronically.
Aside from that, a new Customs Act is under formulation to make it consistent with the ongoing automation of tax administration including the use of ASYCUDA world software.
On public expenditure management, Finance Division has already revised the existing classification framework to make it consistent with international standard and practices.
Once this new economic classification is implemented, it will make public expenditure management more disciplined and transparent. Initiatives have also been taken to develop databases for pensioners as well as government employees.
Finance Division aims to prepare a preliminary concept note on funded pension and universal pension system after consultations with all major stakeholders in the current fiscal year.
Moreover, public expenditure and financial accountability assessment (PEFA) is now moving ahead to lead the government’s ensuing public financial management (PFM) strategy and potential development partner -supported PFM programmes.
Alongside, wide-ranging reform activities are continuing in a number of sectors for improving governance and accountability.
They include introducing result-based performance system of the public offices, modernizing land management survey, and record keeping, improving project preparation, monitoring, evaluation, and public procurement, developing statistics and informatics, and stabilizing financial sector, and so on.
Amid global recession, Bangladesh has been able to keep a consistent rate of growth over 6 (six) percent. Yearly development expenses increased to 8.8billion in 2013-14 from 3 billion dollar in 2007-08 fiscal year.
Accordingly, the Annual Development Program (ADP) implementation rate has been increased to 97%. Inflation has been decreased to 6.97% from 13% in 2008.
Foreign exchange reserve stands at US$ 22.39 billion (till 18 December 2014), highest in the history of Bangladesh.
Domestic and national savings stand at 23.43% and 30.54% respectively in Fiscal Year (FY) 2013-14.
Total remittance in FY 2013-14 stands at US$ 14.22 billion. In 2013, World Bank ranked Bangladesh as Eighth top remittance receiving country in the world.
Inflows of FDI (Foreign Direct Investment) rose 24 per cent year-on-year to US$ 1.6 billion last year.
Revenue has been doubled. In 2013-14, export earnings crossed US$ 30 billion-mark for the first time.
Investment in the FY 2013-14 stands at 28.69% in which private investment contributes 21.30% and public investment contributes 7.30%.
The advancement of national economy has brought about a far reaching effect on all other sectors.
The per capita income and per capita GDP stands respectively at US$ 1190 and US$ 1115. Our Budget deficiency is now 5 % less from the GDP. Most importantly, we see astonishing reduction of poverty from 57 percent in 1991 to 24.8 percent at present.
Building Digital Bangladesh
Government’s initiatives ranging from creating enabling infrastructure to providing regulatory framework are attuned in pace and composition to the vision of building a ‘Digital Bangladesh’.
Especially, the pace at which the country has been transforming into a technology based modern state is commendable.
The Hon’ble Prime Minister has been awarded the “South-South Cooperation Visionary Award” of the United Nations for her role in advancing Bangladesh towards digital system and expansion of education.
Every day, on average, more than 4 million people receive e-service through 4,547 union information centers, set up in the remotest corners of the country.
Bangladesh is, in many ways, a country ahead of its time in terms of mobile access. Despite being ranked as a lower middle income country, over 50 percent of the population subscribes to mobile services and has outpaced all its peers in terms of network coverage.
The total number of mobile phone subscribers in Bangladesh has increased from 19.1 million in 2006 to 128,8 million in July, 2015 making it the 10th largest mobile phone user country of the world.
In the mean time, internet penetration has increased from 1.45 million in 2006 to 50.7 million in July, 2015.
Moreover, c-Commerce and c-Governance procedures have been put into operation and are providing necessary impetus to growth.
Besides, digitization of land records and land management are underway.
Software produced in Bangladesh is now being exported to 30 countries including USA, Canada, Japan, Australia and several European countries. Indeed, Bangladesh is poised to become a major hub for IT industry in future.
In 2009, Bangladesh has started a journey to cope with the technological advancement around the globe.
In 2014, the country has come a long way towards ‘Digital Bangladesh’. Till November, 2014, more than 119 million people (constituting 75% of population) are connected with mobile network and 48.4 million people are using internet. Just five years ago, there were only 5 million dollars revenue in IT sector. It now stands at $ 125 million, an increase of 5 times.
