For sustainable economic development

For sustainable economic development

Md. Joynal Abdin

The Independent on November 3, 2016

 

Contribution of Agriculture, Industry and Service Sector to Bangladesh GDP in 1972 (soon after the independence) was 59.60 6.06 per cent and 34.32 per cent respectively. In the year 1980 contribution of the same sectors to Bangladesh GDP was 31.55 per cent(Agriculture), 20.63  per cent(Industry) and 47.81 per cent(Service). Similarly in the year 2000 contribution of Agriculture reduced into 23.77, industry increased into 23.31 per cent and Service increased into 52.91 per cent to the Bangladesh GDP. Current contribution (2015) of Agriculture further reduced into 15.50, Industry and Service Sectors increased into 28.14 per cent and 56.34  per cent respectively. From the above statistics we could state that, Bangladesh economy is transforming from an agriculture dependent economy into an industry dependent economy. But till now agriculture is the single largest sector for employment generation, agriculture employed 47.5 per cent of total manpower to contribute 15.50%. That means productivity of agriculture sector is lower than that of the other sectors or manpower employed in agriculture sector are underutilized.

As per Labor Force Survey 2010 conducted by the Bangladesh Bureau of Statistics there are 2.6 million unemployed populations in Bangladesh, at the same time another 2 million workable labor force is coming forward per year into the employment market. Employment generation for this large number of unemployed population is a very hard task for any government. Therefore government emphasized upon private sector development and industrialization as an effective tool for employment generation. Development and promotion of labor intensive small and medium enterprise (SME) lead industrialization could offer a better solution to this unemployment problem. If adequate policy, institutional and monetary support is available a large number of this unemployed population could be entrepreneur and employ others too.

Government of Bangladesh have already initiated few industry friendly policies and support through the SME Foundation, Bangladesh Bank, EPB, BSCIC, BITAC, BCSIR, BEPZA, SEZ authority, Ministry of Commerce, Ministry of Industries, finally NCID etc. institutions. Bangladesh is getting dividend of their activities by this time. As a result Bangladesh economy is growing steadily even during the global financial crisis in recent past. But Bangladesh is one of the lowest performing countries in the doing business index till now. According to a recent report Bangladesh positioned 176 out of 190 countries. Bangladesh performed most miserable at registering property (185th), resolving insolvency (151st), starting business (122nd), and paying taxes (151st) etc. indicators. All of these indicators are controllable by good governance. If there is a political commitment of the government that they will not be involved in corruption and will not allow bureaucrats to be corrupted then these problems will be solved automatically.

Bangladesh has capacity to grow even faster than the projections if good governance could be ensured. Proper implementation of existing policies and some new institutional support could lead us easily to a higher middle income country even before 2041. Following institutional support could boost up current transformation of Bangladesh economy and achieve a middle income country faster than ever:

  1. Establishment of an ‘Entrepreneurship Development Institute (EDI)’: Establishing a new institute for entrepreneurship development while we already have about 132 (One hundred and thirty two) universities in Bangladesh could sound as a stupid proposal. We have about 37 public, 92 private, and 3 international universities in Bangladesh. All of the universities are creating skilled, knowledgeable professionals including business graduates, engineers, and doctors etc. to enter into the job market after completing respective degrees. We are enlarging the list of jobseeker every year but not producing job providers academically. Entrepreneurs are just born is an old concept. It is proven that, entrepreneurs can be created through a systematic training, guidance, support and mentoring. Indian government (Government of Guzrat) has established a completely separate types of institute in 1983 (about 33 years back) to produce only entrepreneurs. The Entrepreneurship Development Institute of India is a name of enormous success into its mission. The model has been replicated by many countries including Vietnam, Cambodia, Myanmar and few African countries to establish entrepreneurship development institute. Bangladesh can easily replicate that model to establish an engine of entrepreneur creation. These types of specialized institute to create entrepreneur is also available in many other countries like, Entrepreneurship Institute of Malaysia, Entrepreneurship Institute Australia (EIA), Institute for Entrepreneurship & Enterprise Development (IEED) in UK, The Entrepreneurship Institute of Canada, and Global Entrepreneurship institute (GEI) in the U.S etc. So it is quite clear that, separate institute is required to create job providers i.e. entrepreneurs. Bangladesh government could establish or inspire relevant organizations like SME Foundation or BSCIC to establish “Entrepreneurship Development Institute of Bangladesh”. Development partners could come forward to establish an entrepreneurship development institute here in Bangladesh to produce entrepreneurs the most essential component for private sector development.
  2. Establishment of ‘SME Cluster Development Authority’: Cluster based SME development could be another vital weapon for boosting up the industrialization of Bangladesh. There are 177 SME clusters identified by the SME Foundation throughout the country, of which 129 fall under SME Booster sector and 48 under Non–booster SME sector. There are 69,902 enterprises operating in these 177 clusters employing a workforce of 1,937,809, of which 74 per centare male and the rest 26 per centare female. Total approximate annual turnover in these clusters has been estimated at 295150.66 millions. Clusters were found in 51 districts of Bangladesh. So development of SME clusters could give us another platform of balanced economic development considering geographical locations of these. Undertaking and implementing massive development interventions in these cluster is required to develop and promote the SMEs located there. Government could establish a separate body namely ‘SME Cluster Development Authority of Bangladesh” or establish specialized wing in SME Foundation with adequate budgetary and manpower support for rapid development of SME Clusters. It will increase GDP growth, make Bangladesh self dependent, increase export earnings, generate more employment and finally alleviate poverty sustainably.
  3. Establishment of ‘Sector Specific Engineering & Technology Institute’: Like my 1st proposal this one could sound stupid too. Establishing sector specific Engineering & Technology institute while we are having a number of engineering universities and polytechnics in Bangladesh. But the ground reality is this; there is a long distance between the graduates of those engineering universities, polytechnics and our industry’s demand. Industry needs operators, troubleshooters, technicians of modern machineries currently using in the sectors. While engineering universities and colleges are producing high profile graduates to deserve 5 digit salaries from the first day at job. Therefore it’s time to establish sector specific engineering and technology institutes as per sectoral needs. Currently the government of Bangladesh is helping to establish Bangladesh Institute of Plastic Engineering and Technology (BIPET), similarly we are in need of Bangladesh Institute of Agro-machinery engineering and technology, Bangladesh institute of ship building technology, Bangladesh institute of leather goods diversification technology, Bangladesh institute of Agar Ator Technology etc as per sectoral demands.
  4. Establishment of ‘Common Facility Centers (CFC) in Every Clusters’: There are 177 SME clusters in Bangladesh. Entrepreneurs in a cluster are producing similar products throughout the year. In some cases there is one or more common process to manufacture several products. Currently these tasks are doing manually as a result product quality become inferior. On the other hand single entrepreneurs cannot afford modern machineries to complete the common process due to high prices of the machines. A single testing is applicable for almost all products of a cluster to ensure products quality. But due to the same reason none can afford it. If government or development partners come forward to establish a common facility center into the SME Clusters with the machinery needed to complete the common process or test the products quality then all the entrepreneurs will be benefited from it. SME Foundation or BSCIC could be the lead organization if government takes this initiative. It will increase overall productivity of Bangladesh; quality of the products will go up. High quality products will be acceptable to the local and foreign buyers.
  5. Establishment of ‘Trade Negotiation Commission’: Till date there is no common body to negotiate bilateral, regional or multilateral trade negotiation of Bangladesh. A group of professionals including WTO Cell of the Ministry of Commerce, Bangladesh Tariff Commission, EPB, NBR etc. represent Bangladesh in different trade negotiation table. Most of them are civil servant performing transferable job. A person being specialized in any particular agreement and got transferred into a completely irrelevant position after three or four years. We can remember many officials of WTO cell get involved with the process and currently serving in totally irrelevant desks. Therefore we need a constitutional body for handling our trade negotiation issues only. It will help the professionals to be specialized with a single issue and handle it efficiently with any counterparts. Otherwise Bangladesh will be completely isolated if proper initiatives are not taken to negotiate bilateral free trade agreement with our existing or potential buyer countries. Similarly we have to maintain our involvement with regional free trade agreements and multilateral arrangement under the umbrella of WTO.
  6. Establishing ‘Product Research & New Product Development Center’: Bangladesh has a very small product basket. To enlarge the product basket and diversify export items we are in need of a product research and new product development center. It will be a separate body to conduct research with existing and potential products producing or could be produced in our industries.
  7. Establishment of ‘Manpower Export and Management Center’: Remittance is the second largest source foreign currency. In true sense it is the single largest sector of earning foreign currency without deployment of all the factors of production. Till now Bangladesh is sending unskilled workers into various destinations. Many workers are experiencing cheating in home and abroad during his migration. If government took initiative to collect visa from demanding countries and distribute these to the manpower exporters in a fixed price then these harassments could be minimized. At the same time this Manpower Export and Management Center will collect demands for professionals like Doctors, Engineers, Teachers, Business Executives, Researchers, Analyst, and Lawyers etc. and take necessary initiative to send them safely. By exporting higher educated professionals Bangladesh could easily earn hundred times more remittance than that of the present earnings.

Finally we could summarize that, Bangladesh economy is moving forward with many limitations due to our resource constraints. We can move faster if the government took timely initiative to establish few institutes which are very essential for industrialization and economic development. Only economic growth may not make us happy without inclusive, balanced and sustainable development. During this transforming period it is time for the policy makers to formulate and implement inclusive economic development policy to ensure every body’s stake into this prosperity. Otherwise social disparity will be higher and create chaos a new threat to sustainability of this development.

 

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Md. Joynal Abdin

Development Researcher, Columnist and Author

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