Opportunities and challenges of the new industrial revolution

Opportunities and challenges of the new industrial revolution

Md. Joynal Abdin

The Independent on November 26, 2017

 

The term revolution means radical change of existing order in favor of a newer one. Industrial revolution refers to the radical improvement of manufacturing and other technologies that have completely changed the previous scenario and established a newer version with positive shift of industrialization. Experts are forecasting that 4th industrial revolution is taking place in the international arena. As a part and parcel of industrialization Bangladesh have to enter into the 4th industrial revolution to compete and gains its stake from the industrial world. Each change or shift offers something opportunistic and few challenges. Relevant policy makers have to be careful about the opportunities to grab and challenges to overcome of it. Bangladesh has a long list of industrial sectors waiting to take off. Some of the sectors are in performing level like RMG sector; some of the sectors are in growing stage like Leather and leather goods sector, some of the sectors are potential to grow like ICT and Outsourcing. In such a condition 4th industrial revolution is taking place. So we have to be careful about the opportunities and challenges of 4th industrial revolution and prepare proper policies to grab the opportunities at most and overcome the challenges efficiently.

The then latest technologies played vital role in each of the industrial revolution for example 1st industrial revolution (1760) was driven by the rise of steam power, railways and mechanized forms of production. Similarly 2nd industrial revolution (1890) was driven by the invention of electricity and new approaches to manufacturing based on assembly lines and mass production. Rapid improvement of semiconductors and the spread of computers and the internet technology were the driving forces of 3rd industrial revolution (1960s) finally 4th industrial revolution is going to be take place with the mass performance of the artificial intelligence, advanced robotics, mobile internet (available everywhere), 3D printing, autonomous vehicles, such as cars and drones etc. technologies. These technologies will offer new ways to create and consume, will transform how we deliver and access public services, and will enable new ways to communicate and govern. Almost every aspect of our lives will be touched: jobs, business models, industrial structures, social interactions, systems of governance.

In comparison to the 4th generation manufacturing / production technologies most of the Bangladeshi sectors are lagging behind. As a result there performance and product’s quality, productivity is very low in comparison to the competing countries technologies. Therefore challenge of losing market share by Bangladeshi companies in upcoming competitive world is becoming prominent day by day if we failed to adopt the sophisticated technologies and machineries in every sector. Study found it out that, new technologies are emerging faster, being adopted more quickly and delivering greater impact than ever before. For example fixed-line telephones (1878) took 75 years to reach 100 million users. On the other hand mobile phones (1979) took only 16 years to reach 100 million users. Similarly internet (1990) took 6 years to reach 100 million users. On the other hand Apple App Store (2008) took just 3 years to reach 100 million users. So it is proved that the technologies pushing the reality into 4th industrial revolution will be adopted faster and change the reality of human society even faster ever before.

Opportunities of 4th industrial revolutions could be wealth maximization through continuous improvement of GDP growth, inclusive growth, improved performance of the SMEs, jumping into advanced stage of development, connecting disconnected people, improve environment management system, automation of agriculture and transformation of agro production technologies, more access to healthcare and use of modern technology to forecast about natural calamities etc.  Bangladesh shall start its wholehearted preparation to avail all of these above mentioned opportunities of 4th industrial revolution. For example we have highest priority to economic growth, SME development, digitization of processes etc. but till now we are lagging behind in terms of inclusive growth, improved environment management system, access to healthcare by all etc. parameters. Preparation to avail an opportunity could be our strengths and vice a versa.

Challenges of the 4th industrial revolution includes losses of jobs and disruption by the lower educated people, inequality and political instability, end of low-cost and low-skilled labor based industrialization due to artificial intelligence and robotics technology, more market access to the global giant companies through offering more value to the customers, vulnerability of LDC countries to fight with cyber crimes and cyber attacks etc. Shift of technology causes losses of job by the people dependent on the previous technology for any reason. For example light engineering enterprises of Bogra light engineering cluster used to produce sallow machine, tube well and rickshaw etc. with shift these technology into deep tube well, tractor, battery driven auto-rickshaw and CNG driven auto-rickshaw many of them losses their job there in Bogra light engineering cluster. Because most of them have no access to the technologies relevant to the deep tube well, tractor, battery driven auto-rickshaw and the CNG driven auto-rickshaw due to many reasons. So they lost their livelihood from that profession. Similarly 70 coconut oil mill reduced into 4-5 during last couple of years in Bagherhat coconut oil cluster. Therefore government and relevant agencies have to be careful about the negative impact of 4th industrial revolution on many sectors in Bangladesh.

Finally we can state that, advancement of technology could not be controlled by any society. We have to adopt it today or tomorrow by our own willingness or unwillingly. But we must have to be prepared ourselves to minimize diverse negative effect of it into the society and rehabilitate the victim society like Bogra light engineering and Bagherhat coconut oil cluster. Otherwise new industrial revolution will give us a missed result. Few people will be reached again and rest will be losing respective profession without any rehabilitation facilities. Again it will not be an inclusive development in the society.

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Place Private Sector in Driving Seat to Achieve SDGs

Place Private Sector in Driving Seat to Achieve SDGs

Md. Joynal Abdin

The Daily Sun on October 29, 2017

The post-MDG agenda adopted by the global leaders in a historic UN Summit on January 01, 2016 and to be achieved by 2030, are known as Sustainable Development Goals (SDGs). There are 17 goals focused to overcome poverty and sustainability of the planet i.e. the world. SDGs are – end poverty in all its forms everywhere; end hunger, achieve food security and improved nutrition and promote sustainable agriculture; ensure healthy lives and promote well-being for all at all ages; ensure inclusive and equitable quality education and promote lifelong learning opportunities for all; achieve gender equality and empower all women and girls; ensure availability and sustainable management of water and sanitation for all; ensure access to affordable, reliable, sustainable and modern energy for all; promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all; build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation; reduce inequality within and among countries; make cities and human settlements inclusive, safe, resilient and sustainable; ensure sustainable consumption and production patterns; take urgent action to combat climate change and its impacts; conserve and sustainably use the oceans, seas and marine resources for sustainable development; protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss; promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels; finally and strengthen the means of implementation and revitalise the global partnership to achieve the above goals of sustainable development.

All of the above goals are some qualitative statements to achieve a certain condition in each aspect. But how could we know that a particular target is achieved in a society? How to measure achievement of a certain country? To facilitate quantitative calculation of the performance of a community in SDG achievement 169 targets and 241 indicators have been set up. The world leaders are yet to decide on 11 indicators but 230 indicators have been selected unanimously. Whatever the final number may be, the 17 goals, 169 targets and 230 plus indicators are there to measure SDG achievements of a society in quantitative means. Let’s try to have a look on the relationship among goals, targets and indicators of SDGs.

For example; the first goal is end of poverty in all its forms everywhere; there are 5 targets and 9 indicators of this goal (SDG Goal -1). Five targets of goal number 1 are (by 2030) eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day; reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions; implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable; ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance; finally to build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, social and environmental shocks and disasters. All of these targets are to be achieved by 2030 under the first goal.

Nine indicators of the goal number one are proportion of population below the international poverty line, by sex, age, employment status and geographical location (urban/rural); proportion of population living below the national poverty line, by sex and age; proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions; proportion of population covered by social protection floors/systems, by sex, distinguishing children, unemployed persons, older persons, persons with disabilities, pregnant women, newborns, working injury victims and the poor and the vulnerable; proportion of population living in households with access to basic services; proportion of total adult population with secure tenure rights to land, with legally recognised documentation and who perceive their rights to land as secure, by sex and by type of tenure; number of deaths, missing persons and persons affected by disaster per 100,000 people; direct disaster economic loss in relation to global gross domestic product (GDP) and finally the number of countries with national and local disaster risk reduction strategies.

From the above two paragraphs it is clear when we could claim achievement of goals one i.e. end of poverty in all its forms everywhere. It also clear that SDGs are more transparent and scientific than the MDGs. In case of MDGs countries have reported a summary statement qualitatively and the United Nations has accepted it without any second thought. But in case of SDGs all these 169 targets and 241 indicators made the whole programme quantitative, transparent, measurable, methodical and off course time bound (by 2030). So SDG reporting would be more indicative with quantitative statistics therefore countries have to be authentic and claim anything with specific numbers backed by statistics. The only flexibility of the whole SDG programme is all the definition are to be fixed by respective governments of the country. Countries like Bangladesh are getting a certain degree of freedom to determine the national definitions. But to make the definitions acceptable they must be aligned with the neighbouring states or look-alike countries.

The government of Bangladesh has already prepared its policies like 7th Five Year Plan, National Industrial Policy, ICT Policy etc. in line with the SDGs. The government is serious on SDG achievement and appointed a very experienced and influential bureaucrat as Coordinator for SDG affairs under the Prime Minister’s Office. But till now something more has to be done to achieve the SDGs in time. This is involving private sector as key partner to achieve SDGs.

There are several committees in different ministries with private sector representatives in this regard. But what will have to be done – how, when and by whom? These types of questions regarding private sector’s involvement in SDG are missing. Generally, no private company is supposed to spend money for capacity building of their employees to achieve any certain target of SDG. Therefore it is the government who has to create mechanism to involve or engage private sector entities more closely with the SDG process.

Leadership chair has to be given to the private sector to achieve few goals and the government could remain there as a catalyst. Today is the prime time to delegate the responsibility with adequate power and authority to the private sector organisations from the bureaucracy to achieve SDGs by 2030; otherwise it would be too late to do so. Off course, another valid question would be private sector’s capacity to handle the issues efficiently. And, again, the government has to play a vital role along with the development partners for capacity building of Bangladeshi private sector to make them capable enough to play their role effectively. Only government’s initiative without private sector in the driving seat is bound to fail in this regard.

 

Development Realities of Bangladesh

Development Realities of Bangladesh

Md. Joynal Abdin

The Daily Sun on October 5, 2017

Bangladesh is one of the most potential Least Developed Countries (LDCs) to be graduated from the list within next one or two decades. It has proved its capacity by achieving several socioeconomic indicators during the last few decades.

For example, Bangladesh reduced the number of people living below poverty line from 31.5% in 2010 to 23.2 % in 2016, maintained economic growth rate between 6-7 % during the last couple of years, increased foreign exchange reserves to $33 billion in 2017 from $10.8 billion in 2010, reduced lending rate from 15% in 2013 to 9.5% in 2017 etc. Bangladesh economy proved its resilience power in much international financial turmoil in the past. We are hopeful to overcome current challenges like massive flood in the Northwestern part of the country, injection of about a million Rohingya refugees by Myanmar into its Southeastern part etc. too.

We have visions to be developed from our major political platforms in the form of vision 2021, vision 2030 and vision 2041 etc. Now it is a moral responsibility of the political leadership to implement the visions from respective platforms. Bangladesh economy has to maintain 7% plus economic growth rate for the next couple of years in order to graduate to middle income country status within the projected period. Maintaining economic growth numerically may not be enough to be a middle income country without inclusiveness of the growth. That means we need inclusive economic growth in a rate of 7 plus per cent. For inclusive growth we have to ensure female participation in the income generating activities, not only minimising the gender gap in the labour market. Macroeconomic stability has to be ensured through maintaining the trade balance, underperforming loan, stability in the financial sector etc.

Unemployment is another major treat to the economic development of Bangladesh. Employment generating movement or making the workforce self-employed is a major task for the government and policy makers now. Industrialisation especially promoting micro, small and medium enterprises could be an aid to employment generation. The government may go for rapid policy reform to make the investment wheel move faster than ever before. Restrictions, licensing requirement, registrations and permit requirements could be reduced to boost up the investment climate.

Policy reformation is not enough to boost up development of the country. We have to ensure an entrepreneurial environment from every aspect like, pro-entrepreneurial education system, well setup skill development facilities, availability of business development services, reduced requirements of permits, registrations, licences etc. Free movement of capital machinery and raw materials, hassle free transportation, security and safety of the local and foreign investors have to be ensured by the state.

Bangladesh has to be more cautious about the skill development of its population from top to the bottom edge. About 8 million Bangladeshi expatriate workers are earning $13-15 billion per year whereas it has to pay back $5-6 billion per year by recruiting less than half a million foreign professionals here. Per head income and payment ratio is too high here. Therefore we have to train up our expatriate workers to ensure better earnings in the bottom of the pyramid. At the same time we have to train up our professionals to develop managerial and technical skills to take over the seats from the foreign professionals for saving foreign exchange at the mid-level.

Bangladesh has to start a good number of trade policy reforms for better flourishing of the economy. Internationalisation of local companies could initiate journey of a Bangladeshi global brand like the Coca-Cola, Bata etc. Reform is required to increase access to foreign capital by the Bangladeshi entrepreneurs. Capacity building of the sea ports to handle growing foreign trade of the country is one of the most urgent needs of the time.

Other socioeconomic priorities for development of Bangladesh could includes reform the education system to make it productive and demand driven, spreading up the healthcare facilities into the door step of rural poor people, promoting agriculture for food security and agro-processing industrialisation, infrastructure development, electricity generation and other energy security, qualitative change in the politics, maintaining friendly trade regime with the trade partners, rooting out corruption through social revolution etc.

Working upon the Sustainable Development Goals (SDGs) could be a comprehensive syllabus for Bangladesh to be on the right track of development. There are 17 goals and 169 targets to be achieved by the UN member countries by 2030. Goals and targets of the SDGs are setup to boost up economic, humanitarian and environmental development of the planet and to save the planet as a whole. Therefore rigorous efforts from all stakeholders are required to achieve the SDG goals in time so that development of Bangladesh could be a reality of tomorrow. Political leaders, bureaucrats and well off people of the society have to be more responsive from respective positions to achieve each of the 169 targets by Bangladesh. 

Economy: Facing the challenges

Economy: Facing the challenges

 

Md. Joynal Abdin

The Independent on September 25, 2017

Bangladesh economy was flourishing during last couple of decades with on an average 5-6 per cent growth. As a result, we are hopeful that, Bangladesh could get place of middle income country from existing lower middle income country status by 2021, graduate from LDC by 2030 and finally become a developed economy by 2041. With this view in mind our political leadership offered vision 2021, vision 2030 and vision 2041 from respective platforms. More or less policy reforms have been initiated to align with the vision and create a pro-growth environment. Entrepreneurship development and private sector growth got attention of the government to be promoted and prosper.

As a least developed country (LDC) Bangladesh has few built-in barriers like poverty, unemployment, limited resources, shortage of technical knowhow, absence of good governance, corrupt bureaucracy, absence of true sense democracy etc. towards its development. But recently we are in front of few external barriers like recent flood in the northwest, Rohingya crisis in the southeast and upcoming national election in 2019. These three crisis could be well managed if concerned authorities play a respective role with dedication and neutrality. Each of the above mentioned crisis could create unrecoverable damage in the way of our economic prosperity if these are not being managed with professionalism and liability to the nation.

 Around 20 districts of the northern and northwest region of the country affected by the massive flood in 2017. This year flood has broken record of the historic flood of 1988. About 1 million people have directly been affected due to this flood. A good number of agro-farms including poultry, fisheries, and dairy farms has been destroyed by the flood. Exact monetary value of this damage is not calculated yet but no doubt that it is a severe damage to the economy of flood affected people. Poor people of the flood hit districts already loss their livelihood. Damage of will be more painful with the passage of time. This pain will be feeling more when water goes out and new irrigation season starts. Currently farmers are continuing with their savings of crops and cash, but his savings will be ended up if waterlogging period extended than that of the normal phenomenon. Government has to continue relief and other social safety net support in the flood affected area till new crops comes up. This is not less than a six months’ period. Providing relief to 1 million flood affected people for long six months is really a challenging tasks for the resource scarcity nation like us.

Military of neighbouring Myanmar (Burma) is operating a genocide against its citizen in Rakhine State (Arakan). This military operation aims an ethnic cleansing in Rakhine against the Muslim majority Rohingya community. Rohingyas were ancient citizen of independent Arakan in seventies. Burmies king conquered Arakan and made it a state of Burma (Myanmar) and rename as Rakhine. Burmies ruler never provided minimum humanitarian rights of Rohingya community as their citizen. Current military backed government of Myanmar is ignoring citizenship of Rohingya community and pointing out them as outsiders. They are operating an ethnic cleansing program against the Rohingya community. Myanmar military forces are killing Rohingya men, raping Rohingya women, burning their houses, destroying wealth without any causes. As a result, Rohingyas are fleeing out and became refugee in the neighbouring countries mainly in the Muslim majority Bangladesh to save their lives. Total 1 million Rohingya entered into Bangladesh in different times mostly (about 0.7 million) in last two months.

Bangladesh offered them food and shelter due to a humanitarian reason. But over populated and flood affected Bangladesh could not bear their liability for a long time. Ensuring basic needs of a human being for 1 million Rohingya is beyond the capacity of a least developed and already over populated country like Bangladesh. International community as well as regional powers like India and China is playing role of underworld don with this Rohingya crisis. Another big brother Russia is supporting the war criminals in this case. Global geopolitical stakes of these big brother could be motivational factor in this case. But we (Bangladeshi) are not responsible for this crisis we do not want regional or global geopolitical game with this humanitarian issue. We want that global community will come forward to ensure humanitarian needs of this largest number of refuses and get them back to their home with safety, security and dignity. This Rohingya crisis could be another big whole towards projected economic prosperity of Bangladesh.

Current legal government is ruling the country with 154 uncontested (without peoples voting mandate) members in the parliament. Legal validity of this government is declared by the court. But ethical standard of this government is still questionable in home and abroad. Therefore, current prime minister Sheikh Hasina wants an unquestionable election in 2019. Similarly, general people of the country is also waiting for a free, fair, credible and participatory election in 2019. But ensuring that free, fair, credible and participatory election is still a big challenge for the nation. Ruling party has completed all legal arrangements to hold the national election under their regime. But it is quite impossible to hold a fair election under any political party in the power. Dhaka city corporation election and elections of last few years proved this assumption. Therefore, same scenario of 2014 could be seen again in 2019. Government could use the law enforcement agencies to hold a partial election and oppositions may go for strikes and other damaging programs. Which may be cause of mass destruction of people’s wealth and life.

Finally; we could state that, massive flood, Rohingya crisis and upcoming national election etc. could be nightmare before the economic prospects of Bangladesh. Flood affected people have to be rehabilitated in time through ensuring their basic needs and rehabilitating supports. Rohingya crisis has to be resolved with support of international community, global platforms, and our friends in the Europe, America and Muslim worlds. Regional big brothers may not play a friendly role here in this regard. We may play the same role which was played by our great neighbouring friend India in 1971. If India have done a great job for the Bangladeshi in 1971 why not Bangladesh could adopt the same policy for the Rohingya community in 2017. Finally, we have to work out and reach into a way forward to hold the national election 2019 peaceful, free, fair, credible and participatory by leaving hock and cook instruments away. Otherwise, our vision 2021, 2030, and 2041 will remain in the paper and never be in practice.

Two Starting Goals for Achieving SDGs

Two Starting Goals for Achieving SDGs

 

Md. Joynal Abdin

Published by the Daily Sun on August 20, 2017

Bangladesh has significant achievements in attaining the Millennium Development Goals (MDGs). For example, Bangladesh was able to reduce poverty from 56.7% in 1991-92 into 31.5% in 2010 and finally 24.8 % in 2015. Similarly, our achievement in achieving universal primary education, reducing child mortality, promoting gender equality and women empowerment was outstanding globally.

Global leaders adopted a set of new development goals on January 01, 2016 in a historic UN Summit to be achieved by 2030. These new 17 goals are known as the Sustainable Development Goals (SDGs). SDGs are focused to overcoming poverty (1), overcoming hunger (2), healthy life (3), quality education (4), gender equality (5), access to clean water and sanitation (6), access to clean energy in affordable cost (7), economic growth through decent work (8), industrialisation along with innovation and required infrastructure (9), reducing inequalities (10), inclusive and resilient cities (11), sustainable production and consumption (12), controlling climate change (13), proper management of resources under water (14), sustainable use of resources on land (15), peace through justice and effective institutional setup (16), finally global partnership to achieve the goals (17).

It is visible that, few SDG goals are the continuation of the goals of MDGs. For example, the 1st goal of MDG separated under two different heads poverty and hunger as the 1st and 2nd goals of SDG. Primary education target of MDG is enlarged here in SDG as quality education. Similarly, gender equality, environmental sustainability and global partnership to achieve the goals are common is both the goals namely the MDGs and SDGs. There are some additional targets in SGDs like decent work and economic growth, industry innovation and infrastructure, reduced inequalities, inclusive and sustainable cities, responsive consumption and production, climate action, life below water, life on land, peace, justice and strong institutional setup etc. New goals of SDG are mainly focusing on two major themes namely economic growth as a catalyst of poverty reduction secondly sustainable development with a care to the environment.

All of the 17 goals are interrelated and very much linked with each other. For example, no-hunger will be achieved unless zero poverty could be ensured. Similarly, we can state that, there will be zero poverty while no hungry people will be there in the society. There could be a long debate which one comes first, zero poverty or no hunger. Other goals like quality education versus economic growth may be placed in such a debate, quality education requires adequate economic investment to train up human resources, establish libraries and laboratories etc. On the other hand, a well-educated nation could earn sustainable economic prosperity. So which one comes first, economic growth or quality education? Similar debate could be argued with the goal reducing inequalities versus inclusive and resilience cities.

Now, almost one and half years have gone to set targets, outputs, outcome etc. which are tools to measure the achievements of SDGs. Like other 193 nations Bangladesh is also working out to adopt SDG focused policies, action plans etc. We are enacting SDG oriented laws, policies, projects so on and so forth. But the reality is that, a country like Bangladesh has limited resources to focus on all these 17 goals of SDG. Therefore, we have to select one or two goals to work with full strength which will facilitate achieving other goals as well. These two goals could be termed as the starting goals to achieve SDGs. I am here to propose goal 4 i.e. quality education and goal 9 i.e. industry, innovation and infrastructure as the start for the goals of SDGs.

Currently we are in need of achieving these two goals first; these will facilitate achievement of other goals. Quality education could lead us towards poverty reduction, zero hunger, gender equality, responsive consumption and production etc. Similarly, industry with innovation and infrastructure could lead us towards decent work and economic growth, reduction of inequality, no poverty and zero hunger etc.

Therefore, the government of Bangladesh could declare goals 4 and 9 of SDG as preparatory goals and work intensively on these for the next 10 years.   Employment oriented, productive and hands on education could be promoted to ensure optimum output of education. Similarly promoting industrialisation, innovation and infrastructure development could be strengthened for employment generation, increasing economic growth, export earnings, poverty alleviation within the shortest possible time.

Different ministries will have to work for achieving different SDGs but maximum budgetary allotment as well as attention of the government should go for quality education and promoting industrialisation, innovation and infrastructure development for the next 10 years in Bangladesh. Within this period, we will achieve strengths and qualified manpower to attain other 15 sustainable goals within the last 5 years of SDG period. Therefore 2015-25 decade should be decade of quality education and industry, innovation and infrastructure development. If we could make justifiable progress in these two goals, then Bangladesh will automatically achieve other goals within the set period.

All the government, non-government, autonomous, NGO operated, local and foreign aided educational institutes should get maximum budgetary, policy, instrumental support of the government to ensure quality education. At the same time industrialisation, innovation and infrastructure development should get maximum priority of the government for next 10 years. Thus Bangladesh could start its journey towards achievement of SDGs by 2030 and ensure its optimum result.

An Evaluation on the Proposed Budget for 2017-18

On Proposed Budget for 2017-18

Md. Joynal Abdin

The Daily Sun on June 4, 2017

Honourable finance minister AMA Muhith has proposed the national budget for the 2017-18 FY in the parliament on June 01, 2017. The most experienced finance minister of Bangladesh has broken his own record of placing maximum budget in the parliament. The total size of the proposed budget is taka 4.26 trillion along with an annual development plan of about taka 1.55 trillion. The sizes of the total outlay and ADP are both the ever highest in Bangladesh budgets. Critics called it an election budget to manage everybody. Few criticisms came with crueller words like to cut mass peoples pocket and collect election expenditure of the party. In spite of all the political criticisms, we welcome this biggest budget in the national history. Before going into detailed evaluation, I would like to have a look on the development budget allocation.

As per the proposed development budget transportation and communication got the highest priority with about 27.4% allocation. Bangladesh economy is transforming from agriculture dependency into industrial economy. During this transformation stage transportation and communication sector got its justified priority. So no doubt that, the experienced brain committed a justified move. The second highest budgetary allocation goes to the education and technology sector. It is another wonderful step from the honourable minister. But it makes me sorry that the healthcare sector is just neglected in this budget with 6.1% budget that stood at the 6th position of the ADP. It could get the 2nd or 3rd highest priority. Because till now there is only one child hospital in Bangladesh for 160 million people. The capital city is the only way out for treating many serious diseases.   The government healthcare sector is overloaded to bear the demands of 160 million populations. Private healthcare facilities are just out of reach to 80% of the citizens. In such a situation healthcare sector deserves more budgetary allocation to establish more seats in the existing district level government hospitals. Establishing specialised hospitals at the divisional or district level is a justified demand of the mass people. Childcare is crying loudly in Shaymoli when a serious child needs ICU facilities to save his / her life.

The local government and rural development got 15.3%, Energy and electricity got 13.5% of the proposed ADP. To ensure a balanced development of the country local government and rural development deserves attention. Similarly, energy and electricity are the inputs to industrialisation and essential catalyst of mass people’s living standard. The honourable minister explained his achievement to bring 9,000 MW electricity generation capacities to 15,000 MW. But till now we are experiencing uncontrollable load shedding in the capital city especially during last two months. The experience of the rural people is even more agonising than that of the city duellers. At the same time a significant portion of the rural Bangladesh is still to get electricity connection. In this circumstance energy and electricity deserves extra attention.

Now we would like to have a look on the sources of this money. The finance minister has proposed to collect 62% of the revenue through the National Board of Revenue (NBR). It could be an extra pressure on the income tax and customs collectors. As a result, mass people especially the business community could face tough treatments from the NBR people. At the same time, single rate VAT collection has been proposed with a waiver list which is offering a relief to some identified groups but in general poor people have to be brought out from this VAT net. It is not clear how the government is planning to do so.

This budget has an over dependency on foreign aid and foreign loan. There are many examples of our inefficiency in utilising existing foreign assistance. But in the proposed budget these sources have shown a 3 times growth. How such a large amount of foreign assistance will be managed and how we could utilise those with our existing project implementation capacity remains a big question. Therefore, how the budget deficit of Tk. 1.12 trillion will be made up is remaining a very prominent grey area. If the government borrows unusual amount of money from the local sources than the private sector entrepreneurs could face credit deficit.

I am afraid of the proposal of imposing Tk. 800 as excise duty on bank deposits of Tk. 1-10 lakh. This decision is completely at variance with the government move for inclusive banking / financing. At the same time, it would be a pocket cutting decision for the low income group who are maintaining bank accounts with one lakh taka just to face any inconvenient situation or emergency. Therefore, this slab for imposing excise duty could be raised to Tk. 10-20 lakh. Less than Tk. 10 lakh should be exempted from imposing excise duty; otherwise poor people will lose interest in saving money and depositing them in banks.

As the number of unemployed higher educated youths in the country is rising day by day, we were expecting a special move from the government to address this issue through this budget. But relevant initiatives to generate employment or develop entrepreneurship are not visible in this budget though the honourable minister could defend himself by the GDP growth projection conducive to job creation. But still job creating projects deserve extra care in current situation of unemployment. Special allocation or mechanism is required for employment generation and entrepreneurship development.

A very good decision has been taken by reducing corporate tax rate and inspiring green industrialisation. But personal income tax slab also deserves to get hiked because people’s living cost is rising throughout the country due to inflation and other developmental effects. As the living cost of the mass people is rising, the personal tax-free income slab should be raised further.

Finally, we would like to conclude this brief evaluation on the proposed budget 2017-18 with a hope that, the honourable parliament members will evaluate the proposed budget and propose adjustments in some areas like increasing the slab of bank deposit to impose excise duty in line with the vision of inclusive banking, increasing the personal income tax slab due to rise of living cost of the mass people etc. And finally the most experienced finance minister will rethink few issues to make this budget more people-oriented, pro-poor and pro-development budget.

Merits and Demerits of Foreign Direct Investment

Merits and Demerits of Foreign Direct Investment

Md. Joynal Abdin

The Daily Sun on May 26, 2017

 

There are significant reserves of foreign currency in Bangladesh. It is mounting up during the last few years. At the same time, we have a good amount of unutilised money in the banking system. It seems good to listen that we are becoming a wealthy nation with handsome cash in hand. But till now our investment in percentage of GDP is about 29%. It is 56% in Bhutan, 33.25% in India. Bangladesh’s investment in percentage of GDP is increasing day by day but the growth rate is too slow.

It is a matter of investigation whether foreign currency reserve and unutilised cash in banking system is mounting because of this poor performance in investment or not. In terms of attracting foreign direct investment (FDI) we are performing even poorer than the neighbouring or competitor countries. Bangladesh earned USD 1191, 1726, 1432, 1830 and 2001 million during the last five fiscal years. It is only 0.98, 1.19, 1.74, 1.47 and 1.73% of the GDP whereas India earned FDI of 2.00, 1.31, 1.52, 1.70 and    2.11% of its GDP during the last five years. Vietnam got FDI 5.48, 5.37, 5.20, 4.94 and 6.10% of its GDP. The Maldives received FDI 17.29, 9.05, 12.91, 10.77 and 8.70% of its GDP during the last five years.

Let’s have a look at the benefits of receiving FDI into a developing country like Bangladesh. FDI could offer the following benefits to its host country:

1    Increasing supply of foreign currency and channelise international sources of industrial funds;

2    Increases employment opportunity and help to reduce unemployment rate;

3    Increases skills of the host country’s labour and facilitate technology transfer;

4    Increases managerial knowledge of the host country’s professionals;

5    Foster economic growth, export earnings;

6    Introduces products standardisation and international exposure of other products;

7    Provides corporate tax to the government and contribute in revenue growth;

8    Creates a competitive business environment and productivity improves with the competition;

9    Develops international channel of distribution;

10    Assists in adopting international standard policies and creates a global business regime;

11    Contributes to development of backward and forward linkage local enterprises and

12    Assists in improving living standard of the stakeholders through different social responsibility measures.

Bangladesh is fighting with the development barriers like unemployment, poverty reduction, enlarging product basket, enlarging export basket etc. since its independence. It achieved significant economic advancements but till we have scope to grow further. Therefore, the government attaches the highest priority to industrialisation of the economy by any means. Already we have eight Export Processing Zones (EPZ), 78 Industrial Estate developed by BSCIC to host investment. Furthermore, the government is progressing to establish 100 Special Economic Zone (SEZ) in Bangladesh. All these arrangements are to host investment either from local or foreign sources. Bangladesh Investment Development Authority (BIDA) has been restructured by merging the Board of Investment (BoI) and Privatisation Commission together. BIDA is organising conferences, seminars, road shows abroad to draw attention of the foreign investors. The government declared a long list of fiscal and non-fiscal incentives to boost up the investment movement. But till now Bangladesh’s performance in FDI attraction is considered poor. It is because a number of other factors like good governance, political stability / understanding among the political parties, security and safety of investment, law and order situation, availability of industrial logistics, hassle-free business registration and licensing etc. are involved with an investment decision making.

Now Bangladesh has to go for a comprehensive investment services like one stop service, approaching foreign investors with specific project proposals, justification of investment policies and revision (if necessary), establishment of sector specific technical and engineering institute, establishment of sector specific testing laboratories, signing free trade agreements with existing and potential export destinations, reducing business licenses and registration requirements, activating BIDA with own manpower instead of the cadre officials deployed in deputation to activate the investment attraction measures.

Bangladesh has everything to be a good destination for foreign investment. It is located at the heart of South Asia, corridor between SAARC and ASEAN countries. It has a large number of domestic consumers. Purchasing power of local people is increasing day by day with economic growth of the country. Bangladesh has a good number of sectors to invest profitably with supply of enough manpower in competitive cost. The government keeps assisting the investors with a long list of fiscal and non-fiscal incentives. Finally export items of Bangladesh are enjoying duty-free and quota-free market access to most of the export markets other than the USA. All the LDC facilities under the WTO arrangement are enjoying by an entrepreneurs while doing international trade with Bangladesh. Therefore, Bangladesh could be considered as one of the most attractive locations to relocate global business corporations to the EPZs and SEZs being developed by the government.

It is for sure that Bangladesh needs foreign investment to boost-up its economy but we must remember that there are some adverse effects of FDI too. For example, FDI in some sectors could have an adverse effect on local employment sector. For better understanding we could imagine a scenario where a large corporation establishes a highly sophisticated readymade garment factory here in Bangladesh, where most of the tasks are completed by robotic technologies instead of human labour. Its productivity is much higher than human labour and product cost is also lower. In such cases, local factories will lose its market share. After a certain period it could be seen that local factories are reducing their manpower to adjust with the situation. Large number of people loses their employment due to that large investment. Similarly extreme competition from an FDI company may be the cause of death to many local SMEs. Repatriation of a large FDI conglomerate could have an adverse effect on foreign currency reserve or balance of payment of a country. Therefore, we must consider all these possible adverse effects of FDI into the local economy and adopt legal framework to mitigate these threats.

Finally, we could state that, Bangladesh needs FDI to functionalise its upcoming SEZs and generate employment for the growing number of job seekers. But we must reserve few product and service sectors for the local entrepreneurs. Welcoming campaign for FDI has to be increased and equipped with enough precautionary measures. Adequate preparations, practical drive and a business friendly local business environment could encourage the investors to invest here in Bangladesh. We have everything to become a middle income country by 2027 if our government, political leaders, decision makers play respective role accordingly. Otherwise piecemeal investment drive will not give us complete output up to the expectation.