Saleh Akram :
The sheer scale of investment in Bangladesh does not indicate any predominance of the private sector in any way. On the contrary, the private sector in our country which is expected to play a pioneering role in a free market economy is still miles away from the cherished goal.
As the seventh five year plan draws to a close, brisk preparations are on to finalize the next plan to be tabled in the Parliament in next July. There are reports that the new plan envisions ‘high income employment’ in stead of just ’employment’. It is true and understandably so that employment is the life line of survival for many who are neither self-employed nor owners of property or wealth through inheritance. High income employments bring about positive changes in living standard and are symptomatic of development. But mere engagement in any work or profession can not be termed as true employment. For example, if a doctor or an engineer is found performing a job below his/her qualification, it is underemployment. There are plenty of similar examples in our society.
Economics defines employment as an opportunity to work according to one’s eligibility, that is engagement in a work or service befitting his/her qualification/capability in lieu of a payment thereof. Thus high income employment is an essential ingredient for development.
One of the salient features of the new plan is to strike a GDP growth rate of 10% and thus help reduce the existing inequalities between the wealthy and the poor. In addition, investment particularly private investment has been prioritized. Both these have a cause and effect relationship and are complementary to each other.
The sheer scale of investment in Bangladesh does not indicate any predominance of the private sector in any way. On the contrary, the private sector in our country which is expected to play a pioneering role in a free market economy is still miles away from the cherished goal. The story line of private investment in Bangladesh depicts a not-too-bright picture as entrepreneurs are not coming forward with major investment industries- a fact that stands as a major predicament for desired growth and eventually equitable distribution of income. As private investment is not forthcoming to the extent it is required the gap between the rich and the poor is widening. According to economists, the gap can be narrowed down only through high income employment, not just increasing job opportunities.
Simultaneously, intending entrepreneurs should be encouraged and priority should be given to self-employment. Appropriate policies are to be framed and existing restrictions should be liberalized or lifted and a fully investor friendly environment should be in place.
At present, private investment accounts for only 23% of GDP and in all likelihood it is unlikely to reach a desirable level in next few years ? one of the reasons being liquidity crisis in Banks and financial institutions. So the question is, how do we boost private sector investment in Bangladesh to achieve the much larger GDP growth? Several policy-induced challenges need to be addressed. Trade policies need to be revised with strategic and dynamic industrial policies aimed at rapid expansion and diversification of the economy through large-scale domestic and foreign investments. Since the crisis of the banking sector in our country is not conducive for private sector investment, meaningful and effective remedial measures against the irregularities in the banking sector are required to boost the confidence of the private sector. Furthermore, the tax system in Bangladesh is still a revenue-oriented tax policy, not a development-oriented one, and thus it requires a major overhaul. Investors in developing countries like Bangladesh suffer from paucity of fund as a result of which they are over reliant on the Banking sector of the country which is at present unable to accommodate the requirements of the entrepreneurs. Moreover the present non-performing loans (including written off loans) of the Banking sector is nearly Tk.150 thousand crores which is putting immense pressure on the Banks’ liquidity. As a result credit has become dearer for both individual as well as corporate investors. Stock market which helps create additional fund for industries is almost always under par. In addition, provision of public funds to the financial services industry is posting a multiplier effect on public debt.
Global economic slow down has left drastic consequences on developing countries like Bangladesh and foreign assistance is harder to come by. Judicious selection of borrowers has become a dire necessity for Banks and financial institutions of Bangladesh in view of massive non-performing loans and defaulting borrowers should be made to return their loans so that more entrepreneurs could be accommodated.
(Saleh Akram, media personality, email: [email protected])
