Dr. Forqan Uddin Ahmed :
Neoliberalism is an ideology of the conservative exponents of capitalism. It cannot be the state ideology of Bangladesh, which was established with the avowed aim of economic emancipation of the working people. Bangladesh needs equitable development strategies to overcome social, economic and political deprivation and disadvantage of the common people. The country needs to increase the economic growth rates, but that growth cannot be allowed to increase inequalities of income and wealth. Inequality alleviation must be the central focus of Bangladesh’s development strategy.
Market provision needs not be shunned where efficiency is the prime need. Private sector should be encouraged in production of private goods like electricity, water and gas supply, industrialization, construction and transport. But markets will fail where distributive equity is the prime objective. Market will fail to provide good education and health to the lower income working people. Market will fail in providing adequate infrastructure development; environmental protection, social security and safety net programmes. Market cannot satisfactorily resolve the problem of externalities, imperfect markets, imperfect property rights and imperfect and/or asymmetric information.
The political ideology of the governments ruling Bangladesh for the last 46 years since 15 August 1975 has been conveniently changed to capitalistic market orthodoxy. Socialism was no longer fashionable as a state ideology since the decade of the eighties. Even Awami League adopted ‘open market economy as its avowed objective in early nineties.
The military regimes of Zia and Ershad were particularly vulnerable to pressure tactics applied by the USA and the Bretton Woods Institutions (BWIs) under its tutelage because of the lack of popular legitimacy of those governments. The Ershad Government occasionally complained about the SAP prescriptions, but had to go along because of the desperate needs for foreign financing to meet deficits in the current account of the balance of payments and budget deficits. The World Bank was aware that compliance by the Government was only partial. So, it continuously hardened the conditions of IDA loans. Its 1992 Country Strategy Paper (CSP) as well as the 1995 Country Assistance Strategy (CAS) introduced performance benchmarks to monitor progress in implementation. However, the pace of import liberalization and privatization increased during the period from 1991 to 1996 as the BNP Government was rather enthusiastic about such measures. Bangladesh happily signed the Uruguay Round GATT agreements of 1994 mainly because of the fact that the quota system known as the Multi-Fiber Arrangement (MFA), which had been introduced in 1974, was extended up to 2004, So, Bangladesh became a member of the World Trade Organization (WTO) from 1 January 1995.
The Awami League Government of the 1996-2001 periods tried to resist the dictations of the donors, but their leverage for back-tracking from trade liberalization was seriously shrunken by the WTO legal system since 1995. The BNP-led coalition government, which came to power again in 2001, resumed the liberalization and privatization processes zealously through partial floating of the exchange rate, closing down of loss-making jute mills, further privatization of state-owned enterprises, abandonment of five-year planning and formulation of poverty reduction strategy paper (PRSP). The IMF and the World Bank encouraged them through ‘soft loans’. The Awami League-led coalition government ruling Bangladesh since 2009 seems to be cautious in following the dictates of the BWIs. It is also important that foreign loans and grants as proportions of Bangladesh’s GDP have shrunk below 2 per cent in recent years. This has significantly reduced the clout of development partners in imposing the ideology of neoliberalism the policy regime of Bangladesh.
Donors recommended privatization of the health system, and Bangladesh experienced prolific growth of a market for health services characterized by a mushroom growth of private clinics, diagnostic centers and private hospitals since the eighties. Government hospitals and dispensaries have become almost dysfunctional. There is a serious shortage of experts at all levels of the health service because of drainage of such personnel to private facilities.
The capital market of the country was in a rudimentary state, and reforms could not successfully strengthen it during the three decades mainly because of the absence of a strong regulatory system and the continued misuse of the banking system for long term loans. The stock markets of Dhaka and Chittagong crashed twice, once in 1996-97 and again in 2010. These crashes were engineered by a group of big business operators who manipulated the markets through syndication. Thousands of small investors were robbed of their capital in these scandals, but the culprits were not punished. However, there were positive trends in the two share markets of the country during the last one year.
It is common knowledge that markets need to be properly governed by strong regulatory systems for checking malpractices. Bangladesh’s donor-dictated reforms of privatization did not create strong regulatory authorities in the eighties or nineties, which allowed organised manipulations to exploit the opportunities opened up by the hasty liberalisation process. This was true in import liberalisation, privatisation of banking and insurance, energy sector, industrial sector, public utility sector, and the capital market. Even the flourishing RMG industries grew rather haphazardly in absence of strong regulation. The recent accidents have focused on such glaring faults. Though, in recent years, such shortcomings are being addressed through the formation of a number of regulatory authorities and stringent rules and regulations, those bodies are not yet very effective. Corruption and rent-seeking must be strongly dealt with by the state. So, there must be judicious decisions regarding the assignment of proper roles to the market, the community and the state in achieving a prosperous socialist society of the 21st century through equitable growth.
(The writer is former Deputy Director General, Bangladesh Ansar & VDP).
