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.

Quick and inclusive economic development

Quick and inclusive economic development

Md. Joynal Abdin

The Independent on January 12, 2017

Bangladesh achieved its independence through a bloody war in 1971. The 1st government of independent Bangladesh under the leadership of Bangabandhu Sheikh Mujibur Rahman took initiative to rebuild the war destroyed country as soon as possible. Foreign aid, grants, loans were collected to rehabilitate Bangladeshi’s into respective profession. A large number of West Pakistani and foreign entrepreneurs, professionals went back to the respective countries and a common vacuum was visible in every sector. The then government of Bangladesh was influenced by the communist leaders of Bangladesh. As a result government adopted socialistic policies in economic arena. Socialist model resultants into nationalization movement and control market economy situation. But after a certain period, government has to shift its sole communist ideology into moderate socialistic approach due to many reasons. After 19980s capitalistic movement started to get momentum and individual investment in many sectors were inspired by the government policies. A long list of nationalized industries started to be sold into private sector. Foreign direct investment and private sector driven economy get started its progress in the independent Bangladesh.

Global free market economy concept was totally adopted in 1990s in Bangladesh. Almost all major barriers were withdrawn to allow private sector entrepreneurs to be involved in and uplift the economic development through employment generation in private sector. There are few cases of misappropriation of privatization concept but the free market economy concept strengthens its position in Bangladesh economy. Post 90s situation was made complex to determine its position.

With the change in government privatization was inspired by one party others are discouraging it. Five year plane got new title as PRSP. As the major political parties are rival to each other’s this contradictory environment started to be reflected everywhere of the government, bureaucracy, policy papers, and other governments priorities. One party is influenced by the socialistic ideology while others are the free market biased. Whatever is the motive but everyone has to be returned into the poverty alleviation, employment generation, social safety net, economic growth, overall development of the country etc. issues.

The world experienced failure of socialism and troublesome condition of capitalism as well. Therefore it is difficult to state that a single ideology is best to be adopted in Bangla desh for ensuring optimum level of inclusive welfare for the general people. Socialism / communism discouraged competition, innovation, and highest level of efficiency while capitalism made the human a product to be sold. A class of people becomes richer than ever while his neighbors are fasting to eat.  There are positive and negative aspects of each of the models offered by economist, social scientist till date. Therefor it is really difficult to determine which one is the best model to be replicated by a newly development potential country like Bangladesh?

In such a situation we could search information to determine the key factors contributed in economic development of the countries like Germany, China, and Japan etc. The ideal case of this condition could be Germany. It is the largest economy of Europe and forth largest GDP of the world. Size of the German GDP is $ 3.5 trillion to $ 4.00 trillion. GDP per capita of Germany is $ 42,000 to $ 48,000 in 2016. Contribution of service, industry and agriculture to the GDP of Germany is 69.1per cent, 30.2per cent and 0.7per cent respectively. Service sector contributed 73.8per cent, industry contributed 24.6per cent and agriculture contributed 1.6per cent of employment generation in Germany.

Major industrial sectors of Germany are iron and steel, coal, cement, mineral fuels, chemicals, plastics, production machinery, vehicles, trains, shipbuilding, space and aircraft, machine tools, electronics, information technology, optical and medical apparatus, pharmaceuticals, food, beverages, and textiles etc. The top 10 exports of Germany are vehicles, machineries, chemical goods, electronic products, electrical equipment, pharmaceuticals, transport equipment, basic metals, food products, and rubber and plastics. Major export destination of German products are the United States 9.6per cent, France 8.6per cent, United Kingdom 7.5per cent, The Netherlands 6.6per cent, China 6per cent, Italy 4.9per cent, Austria 4.8per cent, Poland 4.4per cent, and Switzerland 4.2per cent. Germany is one of the highest trade surplus nations of the world. In 2014 total trade surplus of Germany was $285 billion that is more than the total GDP of Bangladesh.

Now come to the question was Germany in the top position from the very beginning? The answer is no. Because of the industrial revolution occurred in Germany about 100 years later than that of the industrial revolution in England, France or Belgium. German states eliminated tariff barriers among themselves in 1834 while we are suffering to do so in SAARC even after 200 years later in this 21st century. To promote social development German Chancellor Otto von Bismarck promoted laws that provided social insurance, improved working conditions and instituted the world’s first welfare state during 1881 to 1889. Germany was the first to introduce social insurance programs including universal healthcare, compulsory education, sickness insurance, accident insurance, disability insurance, and a retirement pension. Moreover, the government’s universal education policy bore fruit with Germany having the highest literacy rate in the world 99per cent education levels that provided the nation with more people good at handling numbers, more engineers, chemists, opticians, skilled workers for its factories, skilled managers, knowledgeable farmers and skilled military personnel. These are the key factors of rapid development of Germany.

The German economic miracle was also intensified by an unprecedented population growth from 35 million in 1850 to 67 million in 1913 (while we are considering population growth as a burden). From 1895 to 1907, the number of workers engaged in machine building doubled from half a million to well over a million. Only 40 percent of Germans lived in rural areas by 1910, a drop from 67per cent at the birth of the empire. Industry accounted for 60 percent of the gross national product in 1913. The German chemical industry became the most advanced in the world, and by 1914 the country was producing half the world’s electrical equipment. The rapid advance to industrial maturity led to a drastic shift in German economic situation, from a rural economy into a major exporter of finished goods. The ratio of finished product to total export jumped from 38per cent in 1872 to 63per cent in 1912. By 1913, Germany came to dominate all the European markets. By 1914, Germany became one of the biggest exporters in the world. It was as like as China is doing in Asia today.

The economic model of Germany is based on the concept of the ‘Social Market Economy’. It is neither socialism nor capitalism in total nature. It is a socioeconomic model combining a free market capitalist economic system alongside social policies which establish both fair competition within the market and a welfare state. In other words it could be termed as a coordinated market economy known as Rhine capitalism.

The social market economy refrains from attempts to plan and guide production, the workforce, or sales, but it does support planned efforts to influence the economy through the organic means of a comprehensive economic policy coupled with flexible adaptation to market studies. Effectively combining monetary, credit, trade, tax, customs, investment, and social policies, as well as other measures, this type of economic policy creates an economy that serves the welfare and needs of the entire population, thereby fulfilling its ultimate goal. The “social” segment is often wrongly confused with socialism and democratic socialism, and although aspects were inspired by the latter, the social market approach rejects the socialist ideas of replacing private property and markets with social ownership and economic planning.

The ‘social’ element to the model instead refers to support for the provision of equal opportunity and protection of those unable to enter the free market labor force because of old-age, disability, or unemployment.

There are supporters of both the doctrines i.e. socialism and capitalism in Bangladesh. There are two types (socialism biased and capitalism biased) of policy makers in our existing parliament as well.

Therefore this German model of ‘Social Market Economy’ could be the best model for adopted in Bangladesh. Its success is proved in Germany as well as in China in some extent. Bangladeshi policy makers (political leaders), bureaucrats, and other stakeholders could be oriented with the model through more interaction between two friendly countries Bangladesh and Germany. The German Embassy in Dhaka could be play the role of catalyst here in adoption of German Social Market Economy model in Bangladesh.

Overseas Employment Sector Deserves More Attention

Overseas Employment Sector Deserves More Attention

Md. Joynal Abdin

The Daily Sun on November 18, 2016

 

Contribution of agriculture, industry and service sector to the Bangladesh GDP was 51.03%, 7.68% and 41.28% in the year 1971 (during the Liberation War of the country) respectively. Similarly, it was 31.55%, 20.63%, and 47.81% in the year 1980, 32.75%, 20.69% and 46.55% in the year 1990 respectively. Later on in the year 2000 contribution of agriculture, industry and service sector to the Bangladesh GDP was 23.77%, 23.31% and 52.91% respectively. Currently (2015) contribution of the same sectors to the Bangladesh GDP is 15.50% (Agriculture), 28.14% (Industry) and 56.34% (Service). From the above discussion it is quite clear that the economy of Bangladesh is going through a transformation from agriculture dependent economy into industrialised economy. Agriculture has an optimum point of production that could not be increased by increasing inputs. Therefore the government is encouraging industrialisation for facilitating employment generation, poverty reduction, earning foreign currency by increasing exports, and so on and so forth.

Since our independence one segment of Bangladesh GDP i.e. service sector is rising sharply without much efforts and measures. It has grown from 41.28% into 56.34% without any breakthrough. Contribution of industry rose to 28.14% from 7.68% with the growth of RMG, Leather, Plastic, Agro-processing sub-sectors. We offered back to back L/C facility, bonded warehouse facility, Cash incentives, Negotiated at WTO and other regional and bilateral forums to ensure duty-free and quota-free facilities to the manufacturing industrial sub-sectors. As a result, readymade garment (RMG) sectors earned UDS 25.49 billion in 2014-15 FY. If the value addition is around 30% then we could state that Bangladesh received USD 7.65 billion by employing 1.2 million workers, a large amount of capital, fullest capacity of our diplomacy etc.

On the other hand, Bangladesh received USD 15.31 billion remittance in 2014-15 FY by employing 0.6 million overseas workers. Without consuming Bangladeshi rice, water, gas, electricity or any other facility overseas workers contributed USD 15.31 billion for the country. Most of them are less-skilled, semi-skilled or even unskilled. How many Bangladeshi taka the government provided as cash incentives for them? How much tax government weaved? How many trade delegations went to negotiate with foreign recruiters regarding the welfare of these overseas workers of Bangladesh? How many free trade agreements required be negotiated or signed to promote flow of workers to the destination countries? How many institutes/ universities the government has established to increase their skills so that they could earn more money with the same service?

USD 15.31 billion is net profit of Bangladesh whereas we are working hard to get USD 7.65 billion profits by employing more workers, capitals, policies, and so on and so forth. It is very shame for the nation while we read news that baggage of this overseas workers are missing in Hazrat Shah Jalal International Airport while returning home. It is our national disability to establish a government commission for promoting overseas employment in abroad. They will be liable to collect foreign demands for the workers and supply visa to the interested workers without super profit of the middlemen.

We hate those Bangladeshi diplomats who are ashamed to talk to Bangladeshi workers abroad while they are in dire need for help. We hate those embassy people who disagree to offer information support / direction / advise while a Bangladeshi worker is missing abroad. Many Bangladeshi workers have to be buried abroad while they died there. Why could not we ensure an overseas worker that his dead body will be carried forward to your family if he dies over there? Anyway this sector is the second highest source of foreign currency for Bangladesh economy.

Migration from Bangladesh started in 1976 with a modest number of 6,078 workers. Presently Bangladeshis are engaged in overseas employment in more than 100 countries; about 6.07 million workers had been employed in various parts of the world up to October 2016. 2007 and 2008 were the highest overseas employment years in the history of Bangladesh with total 8.32 million and 8.75 million employed overseas. But in terms of remittance 2014 and 2015 are the highest earning years with USD 14.94 billion and USD 15.27 billion remittances respectively.

About 49.65% Bangladeshi overseas workers are less skilled, 31.75% are skilled, 15.15% are semi-skilled and only 2.3% of them are professionals. Comilla has the highest number of overseas employed population i.e. about 11% of the total overseas employed population followed by Chittagong 9.57%, Brambanbaria 5.22%, Dhaka 4.48% and Chandpur 4.16% of total migrated populations. Top most destinations of Bangladeshi overseas workers are the KSA, UAE, Kuwait, Qatar, Bahrain, Oman, Malaysia, Korea and Singapore etc.

To ensure smooth migration of workers and professionals, the government shall have to take the following steps:

  • to reduce the prevailing unemployment problem of the country;
  • to earn foreign currency without consumption of Bangladeshi foods or drinks;
  • to reduce frustration among the youths, terrorism, drug addiction, social unrest etc;
  • to develop the capability of investment for self-employment and entrepreneurship;
  • to promote relevant business sub-sectors like travel agents, aviation, tourism etc;
  • to enhance the financial capability and purchasing power of the migrant workers which gears up the economic activities and uplifts the standard of living;
  • to enhance transfer of technology to the country through technical knowledge and expertise acquired by the workers working abroad;
  • to create motivation and develops awareness of the migrant workers towards cleanliness, hygienic environment, importance of literacy, discipline, etc.

Overseas workers face the following challenges while migrating:

  1. Corrupt Passport office does not issue passports without some extra money / hassle.
  2. Super extra profit motive of the recruiting agency / visa sellers leads to abnormally high payment for the visa.
  3. Procedural hassles in some legal institutions in home and abroad.
  4. Over demand of the employers without adequate requirement of labour just to get the money by selling visa.
  5. Non-payment, underpayment, delayed payment, poor living conditions, refusal to provide air tickets at the time of exit, non-adherence to the terms and conditions of employment by the sponsors.
  6. Sometimes workers are repatriated after becoming handicapped temporarily or permanently due to accidents without proper treatment or compensation.
  7. If a worker dies over there, then carrying his dead body is another burden for his family.
  8. In most of the cases victims’ families do not receive insurance or other benefits due to non-claim for the benefit.
  9. The government is paying around three lakh Bangladeshi taka to each of the victims’ families (if workers die abroad) but the system is too cumbersome and lengthy.
  10. Sometimes recruiting agents do not provide any money receipt for receiving money from the migrant workers.
  11. Sometimes some agents do not handover the requisite papers like employment agreement, visa papers, etc., to the workers, or they deliver it at the last moment before departure.
  12. Sometimes recruiting agents do not come up to assist the workers who are facing various problems related to their contracts in the destination countries.

The above mentioned hassles would be removed if the government took following actions:

  1. Activating relevant government agencies with a view to turning regulators to service providers;
  2. collecting demands for workers and professionals from foreign recruiting authorities and supplying those visas to the interested workers and professionals with a logical / banking profit;
  3. the government should reduce government agency linkage to reduce migration time and relevant corruption;
  4. searching new destinations and new professions to increase remittance earnings;
  5. providing training on demanded trade and exporting skilled workers instead of unskilled or semi-skilled workers and using Bangladeshi embassies as service centres for the overseas workers instead of remaining typical bureaucrats.

Neighbouring India earns much more remittance per overseas worker because they are sending skilled workers after negotiating their working environment, minimum salary, insurance benefit etc. Migration cost from India to the same destination is much less than that of Bangladesh. Therefore it is time for the government to come forward for the welfare of the overseas workers and migrating professionals to ensure a hassle-free, safe and secure migration and ensure logical remuneration for them through government to government negotiation. Special drives could be taken for encouraging highly educated professionals to opt for overseas employment to ensure more earnings and quick development of the country.

Policies required to develop tourism sector

Policies required to develop tourism sector

Md. Joynal Abdin

The Independent on October 3, 2016

Bangladesh has great tourism potential. It is potential in terms of continuous economic growth, strategic location for regional connectivity, enriched natural and historical beauty, diversified landscape including plain lands, hills, rivers and sea sights etc.   It has green plain land, medium-height hilly range with evergreen trees, sandy sea beaches and the largest mangrove forest in its beauty basket. With such land diversity it has ethnic diversity of people, religious varieties, cultural differences and different life styles of the people.

Direct contribution of tourism into Bangladesh GDP was 2.2 per cent in 2014, which is expected to grow to about 4.7 per cent by 2024 according to the projection of WTTC. This level puts Bangladesh at a rank of 165, whereas countries like Thailand and Malaysia are ranked at 35 and 41, and neighboring India ranked at 135. The total contributions of the tourism sector to GDP for the abovementioned countries are respectively – Thailand (20.2 per cent of GDP); Malaysia (16.6 per cent of GDP) and India (6.2 per cent of GDP.) These statistics suggests that Bangladesh needs to improve its performance significantly over the medium term to attain the target achieved by India.

Similarly the tourism sector has so far generated about 3 million jobs in 2014, and is projected to generate up to 4 million jobs by 2024. Thus the contribution of tourism sector in total employment is around 4 per cent and according to the WTTC projections it may reach 4.3  by 2024. The projections however are not very promising as it suggests only 0.3 per cent increase in employment generation over the next 10 years’ time period.

Bangladesh’s beauty basket contains beautiful landscape like, Bisanakandi at Sylhet, Sangu River at Thanchi in Bandarban, tea gardens in Srimongol, Bhawal National Park in Gazipur, Himchari National Park in Cox’s Bazar, Kaptai National Park in Chittagong Hill Tracts, Lawachara National Park in Moulavibazar etc. Its archeological excellence includes Lalbagh Fort in Dhaka, Ahsan Manzil in Dhaka, Shalbon Bihar in Kotbari, Comilla, the War Cemetery in Moynamati, Comilla, Mahasthan­garh in Bogra, Shat Gombuj Mosque in Bagherhat, Tajhat Palace in Rangpur, Paharpur Bihar in Naogan, Kantoji Temple in Dinajpur, Puthia Palace in Rajshahi, and Suna Mosque in Chapai Nawabgaonj etc. Beautiful sea beaches like Cox’s Bazar Sea Beach, Patenga Sea Beach in Chittagong, Teknaf Sea Beach in Cox’s Bazar, Saint Martin’s sea beach in Cox’s Bazar, Kuakata Sea Beach in Patuakhali etc.

Bangladesh is having diversified and rich religious attractions like Mazar of Hazrat Shah Jalal (Rh.) and  Shah Poran (Rh.) in Sylhet, Shah Mostafa (Rh.) in Moulvibazar, Khan Jahan Ali (Rh.) in Bagherhat, Shah Mokhdum (Rh.) in Rajshahi, Baro Awlia in Chittagong etc. All these are considered as holy places by the Muslim community. Bangladesh is also home to religious heritages of the Hindu community like Dhakeshwari Temple in Dhaka, Joy Kali Temple in Dhaka, Kantaji Temple in Dinajpur, Chandranath Temple in Chittagong, Dhamrai Jagannath Roth in Dhamrai, Boro Kali Bari Temple in Mymensingh, Comilla Jagannath Temple in Comilla, Adinath Temple, Moheshkhali, Cox’s Bazar and Bhabanipur Shaktipeethin Bogra, etc. There are places in Bangladesh carrying memories of famous Buddhist Saint Atish Dipankar and many more.

Besides these Bangladesh have many beautiful islands, hill stations and natural forest sights yet to develop as tourist place. Cox’s Bazar is the most prominent tourist attraction of Bangladesh. Sylhet, Moulvibazar, Sunderbans and Koakata have tourist potentials but Cox’s Bazar is the most potential one. We feel proud that Bangladesh has the longest sandy sea beach of the world at Cox’s Bazar. But this pride is facing threats due to the erosion of beach sands in many spot in Cox’s Bazar. I have visited Cox’s Bazar in 2008, 2012 and very recently in September 2016. I have the opportunity to visit most of the beaches at the town up to the Enani. I found many Spots like BIAM spot, Labony Spot, Himchari spot and Enani beach etc. beaches are broken and big holes are creating near to the surfing area. In some points sea came up to the marine drive. I saw few dams in those points to prevent this broken tendency of the sea. Similar action is required to retain the beach points by filling up the holes with sands. Tourists are used to take bath at the beach; if these beaches are not safe for tourist’s bath then people will not go to these beaches. Broken down of the beach in many points may cause of long-term threat to the sea beach based tourism of Bangladesh. Therefore it is the right time to inspect the causes of abnormal broken down of the beaches and take necessary development interventions to retain the existing beaches and explore new spots for future expansions.

Many expert used to argue that, Bangladeshi tourism sector will not be flourished due to our inability to offer bar and other recreational facilities to the foreign tourists for sociocultural restriction to these. It’s true that bar etc. has an extra appeal to the young tourists but all tourist are not required these two. There are researchers come to watch diversified birds, animals, and other ecological agent of a country. Therefor we could try to develop research based ecotourism here in Bangladesh. The Sunderban, various safari parks and other coastal forests could be utilized in this regard. Archeological researchers could be attracted into the archeological glories of Bangladesh. Reserved tourists spot could be specially developed for the foreigners only. Hill stations and tea gardens could get special priorities to develop cottage / rest house based tourist attractions in Bangladesh for spending vacation with beloved people. Religious Muslims, Hindus or Buddhist tourists could be attracted into the historical and religious important locations.

We have many limitations in terms of tourist infrastructure, safe environment, secure residence, unwanted hassles from criminals or police so on and so forth. Until now tourism is a seasonal affair (mainly winter-based). But it could be developed as a year-long industry with proper planning.  This is the time to change our mindset from foreign tourist-dependency into domestic tourist-based activities.

Bangladeshi tourists are contributing significant earnings of Indian tourism sector. Why they do not feel comfort to stay at home in this regard? This is because of the shortage of tourist infrastructure’s availability in Bangladesh. Private Sector could play a vital role in developing tourist spots throughout the coastal belt of Bangladesh. Never the less potential has in the northern, eastern or the western part of the country. If local tourists feel secure and comfortable in Bangladesh then foreign tourists will feel confidence to come and enjoy the beauty of Bangladesh.

Better services delivery can make economic development meaningful

Better services delivery can make economic development meaningful

 

Md. Joynal Abdin

The Independent on September 6, 2016

 

The current Awami League government led by Prime Minister Sheikh Hasina took power in January 2009. This government started its journey with massive support of people as well as their expectations. The government used to attract the attention of the new generation of people with its ‘Vision 2021’ and ‘Digital Bangladesh’ slogans at that time. Its achievements in increasing per capita income, power generation, educational expansion, infrastructural development, poverty alleviation are remarkable.

To analyse Bangladesh’s progress during 2009-2016, we could review the following statistics: for example, Per-capita Gross National Income (GNI) was UDS 599 in 2007-08 Fiscal Year (FY), which has risen to Per-capita GNI USD 1466 in 2015-16 FY. The absolute poverty rate was 40.4 percent in 2005 which is reduced to 26.4 percent in 2013. GDP growth rate was 6.21 percent in 2007-08 FY; it increased to 7.05% in 2015-16 FY. The total GDP at current price was BDT 5,419.2 billion in 2007-08 FY, it stood at BDT 17,295.7 billion in 2015-16 FY. The maximum electricity generation was 4130.0 MW in 01 September 2008 which increased to 9036 MW in 01 September 2016.

This achievement of economic development cannot be meaningful to the general people due to absence of good governance and hassle-free citizen services as well as for bold presence of corruption in the public administration. A recent research report shows that passport issuing authority i.e. Department of Immigration and Passports under the Ministry of Home Affairs achieved the highest rank in corruption. The reality is that, getting a passport or renewing your existing passport is the toughest task I have experienced ever. I collected my first passport in 2008 during the Caretaker Government period and got it within one single hour (on an emergency basis) without any hassle/recommendation/reference. I have praised the passport office for their devoted service provided to me in June 2008. But in 2013 during the last tenure of current government I went for renewal of my passport and failed to submit the application for four consecutive days (though all prescribed documents were supplied by me duly). The first desk refused three times to accept my application by showing one or other ambiguous causes. Later on the situation made me bound to get a reference in passport office and renew my passport with the same documents. Being a 1st class service holder I had to suffer in renewing my passport for almost 15 days. Now I could easily understand what the measurable situation a non-educated village dueler faces to get a passport when he would like to go to Middle East as a non-skilled worker.

Remittance is the second highest contributory sector to our GDP. These uneducated, non-skilled workers who suffered a lot to collect their passports used to send USD 15.31 billion in remittance during 2015-16 FY. In real sense it is the highest contribution to the GDP. Because the Ready Made Garment (RMG) sector used to import raw materials, pay labours and other factors of production and earned USD 28.09 billion but what is the absolute value addition? It is not more than 25%, that means, Bangladesh gets USD 7.02 billion only from the RMG export.

In other words, our migrant workers are contributing double than that of the RMG sector without consuming food grown in the country’s land. Therefore, for the sake of this majority people government should take effective measures to make the passport office free from corruption again like June 2008. Effective digitization of the total system could be a way forward in this regard. For example, passport office used to blame police (the second most corrupted organ of the government) for delay in passport delivery as they took a long time to send verification report. Today, all voters have provided primary information including the finger print to the government in the voter list. Mobile companies are verifying their identity to issue a mobile seam. BRTA is doing the same thing for car registration.

A comprehensive list of criminals is available to the police. Therefore this police verification could be waived for mass people if his fingerprint available in the voter list could be verified to issue the passport. Renewal of passport can be easier than the passport issuance. The whole system should be digitized so that anyone can easily renew his passport without visiting passport office. Applicant could pay online from his bank account, verify his national identity by providing fingerprint from any scanner/touch screen of his mobile phone and submit a complete application. After a certain period he could collect his passport from nearest delivery point.

Not only the passport office, other organizations such as law enforcing agencies, land administration, electricity, judicial services, gas, trade license issuing authority, BRTA, tax and duty collectors, etc., especially the organizations responsible for direct citizen services, should be taken special care of directly by the prime minister’s office. Making all these system digital and keeping the system functional could be a way forward in this regard. This drive will lead us one step ahead to creating a Digital Bangladesh.

Our leaders, specially the ministers, should be more aware about the digitization and keeping the whole system of government functional. Special attention of the prime minister and other responsible authorities is required for digitization as well as keeping the system functional to ensure hassle-free citizen services to the general people. Otherwise the current economic development of the country will be meaningless to the general people. If something is meaningless to the general people it will not be remembered over time.

 

Adopting the concept of multi-role projects

Adopting the concept of multi-role projects

 

Md. Joynal Abdin

The Financial Express on March 9, 2016

A programme is a plan of actions made in order to achieve a specific result. In other words, a programme is a plan of things aimed at achieving a clear objective, with details on what is to be done, by whom, when, and what resources to be used. On the other hand, a project is a planned set of interrelated tasks to be executed over a given period of time and within a certain amount of budget and other limitations. Main objective of this article is not defining programmes and projects with a few sweet sounding words, but to analyse the development projects now being implemented by the government, NGOs, development partners. We all know that Bangladesh passed 44 years of its independence. Bangladesh has earned the experience of implementing of hundreds of projects with billions of Taka either with local fund or donor grants and loans. The main objective of all the development projects is to empower people to eradicate poverty, overcome infrastructure limitations, and effect employment generation, entrepreneurship development, industrialisation, rehabilitation, education, healthcare, communication development and so on.

 We are happy to watch the country grow. But have we ever thought about the opportunity cost of all the projects and programmes implemented here in Bangladesh since independence? Bangladesh received about US$ 50 billion as foreign aid through government or non-governmental (NGO) channels. The sum is equal to US$3000 per head of our present population (160 million). Besides foreign aid, grants, loans internal funds were also being used in numerous development projects. Have we got optimum result out of this huge investment? The answer is obviously in the negative, because our earlier projects were not scientifically planned and designed with a broad vision.

Many plans, policies, targets and visions are now under implementation by 43 ministries and about 350 departments, directorates and agencies. Hundreds of development projects are approved by concerned authorities and implemented every year. Few projects have inter-ministerial coordinated components (combined efforts to address different needs).  As a result, a good project of one ministry/agency may cause huge damage to other ministry’s/agency’s role. For example, over-bridges and flyovers were built to reduce traffic jam in the city. But the same over-bridges and flyovers are identified by experts as one of the major causes of traffic jam in the city.

The above phenomenon has arisen due to single-purpose programme planning by our decision makers. Time has come to give up this one-eyed (single-purpose) planning and think about multi-role project/mega projects. For example, Dhaka is one of the worst cities to live in (as per a few recent research reports) owing to its environment pollution and unplanned urbanisation. Traffic jam, shortage of public transport, water pollution, and environment pollution of Dhaka city could be reduced if a ‘Back Home’ mega project could be implemented.

The idea of this project is not to send everybody to their respective native villages by force, but to create a situation whereby people will automatically leave Dhaka. For example, an office executive at present has to waste an hour and a half to attend his office at Motijheel from Uttara or Mirpur. The same person can attend his/her office from Comilla easily if there is a fast train service between Comilla and Dhaka with only two stoppages at Daudkandi and Bhoberchar. It will not take more than an hour. Similarly someone from Gopalganj, Rajbari or even from Mymensingh may not require more than one hour to reach Dhaka by a bullet train. So we need a six-lane road with double railway lines from Comilla to Dhaka, Gopalganj to Dhaka, Rajbari to Dhaka and Mymensingh to Dhaka. We already have highways in these routes which should be developed. These four routes will allow half the Dhaka dwellers to move back to Comilla, Munshigonj, Narayangonj, Madaripur, Faridpur, Gopalganj, Rajbari, Manikganj, Narsingdi and Mymensingh districts.

These six-lane routes will not be a matter of connectivity only. These routes will facilitate economic development through industrialisation of respective districts. As a result, new employment will be generated. One such multi-role project can offer multi-dimensional solution to our existing problems.

Construction of multi-lane roads has multiple effects. Other projects like development of existing SME (small and medium-sized enterprises) clusters could also help provide multiple solutions to existing problems. For example, a cluster development includes several segments of activities like skill development of existing workers and entrepreneurs, creating new workers and entrepreneurs, upgrading existing machineries, establishing training centres, testing laboratories, storage facilities, specialied transportation system, market linkage, new market searching, and expanding value chain for maximum value addition, etc. As a result, new employment will be generated in each of the segments of the chain. It will raise productivity, improve product quality, augment sales, increase profit and so on. All of these effects will cause poverty reduction and ultimately usher in economic development of the country. Critics may argue, why SME cluster development instead of Special Economic Zone (SEZ), or Export Processing Zone (EPZ)? The answer is simple. SEZ or EPZ requires huge cash investment for infrastructure, utility and land development. On the other hand, in case of SME clusters, these are already available there. Plot allocation, utility supply etc. of a SEZ or EPZ may be controversial in terms of political identity or corruption. SME clusters are free from these controversies. Therefore it is better to think about development of existing 177 SME clusters without going for expensive industrial estates, SEZ, EPZ, etc.

The concept of multi-role projects could be applicable in every other sectors. For example, existing ‘Sadar’ hospitals located at district headquarters could be transformed into nursing institutes, medical colleges, medical technology centres and hospitals. It would require huge money and premises to establish a separate nursing institute, medical technology institute, medical college and a ‘Sadar’ hospital in separate premises as separate programmes. All these institutions can be set up in the same premises, or in other words, existing Sadar hospitals can be transformed into such a multi-role organisation and much lesser allocation will be required. A co-located multi-sectoral technical education centre concept can drastically change our existing education system and turn it into a practical demand-driven, profession-oriented education system.

It is time to think about multi-role inter-related/inter-connected institutions both in case of public and private entities through implementing multi-role projects. It could be far more productive with lesser investment.

The path to higher middle-income status

The path to higher middle-income status

Md Joynal Abdin

The Financial Express on July 11, 2015

The current fiscal year started with a good piece of news for Bangladesh. The World Bank upgraded it from the low income country status to a lower middle income category on July 01 last. This upgradation will increase our dignity while applying for foreign loans either by the government or by private sector investors. We will be treated a low-risk country for investment. Therefore, it will have a positive impact on decision-making of foreign direct investors. Increase of foreign direct investment (FDI) could be an immediate positive outcome of this graduation.

The World Bank has classified economies into four broad categories based on their Gross National Income (GNI) per capita. The lowest category is the low-income country having per capita GNI of less than US $ 1,045. The next category is the lower-middle income country having the per capita GNI of US $ 1,045-4,126. The third category is the higher-middle income country having the per capita GNI of US $ 4,126-12,735. The topmost category is the higher-income country having per capita GNI equal to or more than US $ 12,735 per year.

Statistics shows that Bangladesh’s GNI per capita reached US $ 1,054 in the fiscal year (FY) 2012-13 and gradually it reached US $ 1184 in 2013-14 and US $ 1314 in 2014-15. As we achieved the higher GNI per capita for three consecutive years, more than the lowest slab of the requirement for becoming a lower-middle income country, the World Bank officially shifted the country into that category. But there are instances of a country slipping back into the low-income status or remaining stuck in the lower-middle income level for several decades. Therefore, Bangladesh has to be careful about not falling back while a clear vision has to be there so that we can enter the next level of higher-middle income country quickly. The next target for Bangladesh is more challenging, because it has to achieve per capita income of more than US $ 4,126, four times the present achievement.

The present level of achievement is attributed to the common people, who did it without that much planned intervention of the government or policy makers. The full credit goes to the common people. They did it unlike us. Until now we are lagging behind economic targets mentioned in the Vision 2021. According to the Vision 2021, the country was supposed to achieve 8.0 per cent GDP (gross domestic product) growth by 2013 and 10 per cent by 2017. But at present the GDP growth is hovering from 6.0 per cent to 6.5 per cent. Similarly we were supposed to achieve the hundred per cent literacy rate by 2014, but it has been achieved up to 70 per cent. We have a long way to go before achieving the target of per capita GNI of US $ 4,126. It cannot be attained overnight. It requires proper planning and timely implementation of decisions.

THE CHALLENGES: This is the time to recognise our challenges and find out strategies to face them. Increasing investment could be one of the best ways forward for Bangladesh to increase the GDP growth, create jobs and reduce poverty. Investments stood at 28.58 per cent of GDP in the country in the FY 2013-14. It helped achieve 6.06 per cent growth in the fiscal year. The investments need to be raised to 34.4 per cent to post 8.0 per cent GDP growth. That means we have to increase investment by about 5.82 per cent of our GDP (the total GDP is Tk 13,509,204 million, according to the data of Bangladesh Bureau of Statistics as of 2014).

Investing such a large amount is almost impossible for both the government and the local private sector alone. Therefore, the government could inspire the private sector to boost the local investments and at the same time they could lure foreign direct investors to invest in Bangladesh. Foreign direct investment (FDI) could be very much helpful for Bangladesh to achieve the projected GDP growth.

Statistics says the level of fresh FDI is not satisfactory. FDI inflow was US $ 1194.88 million, 1730.63 million and 1495.5 million in 2011-12, 2012-13 and 2013-14 respectively. A major percentage of the FDI was reinvestment of locally-earned profits. The foreign equity capital inflow was only US $ 454.1 million, 761.03 million and 270.59 million. We have to increase our performance in attracting FDI at any cost. Otherwise, it could be almost impossible to meet the targets.

COMPARISON WITH VIETNAM:  We can compare our economic performance with that in Vietnam. Both the countries have similar stories of achieving independence through long bloody war. Both suffered heavy losses during their war. As per IMF data, Bangladesh’s total GDP is about US$ 185 billion. Similarly, Vietnam’s total GDP is about US$ 186 billion. Vietnam earned FDI to the tune of US $ 19,886.1 million, 15,598.1 million and 16,348 million in 2010, 2011 and 2012 respectively. During the period Bangladesh got only US $ 913.3 million, 1136.4 million and 1191 million respectively. Bangladesh posted FDI inflows equivalent to only 11-12 per cent of what Vietnam saw. It is reflecting our measurably poor performance in increasing investment.

If Bangladesh wants to enter the higher middle-income country category within the next one or two decades, we have to draw up a proper action plan and start implementing it from today.

INVESTMENT CLIMATE: The current investment climate in Bangladesh is very cumbersome from every aspect. An investor is required to go to about 30 different institutions for a licence, registration and permission to operate a business. These institutions are under different ministries. An investor seeking to run a manufacturing company has to go to a city corporation or a union council for a trade licence, to the National Board of Revenue (NBR) or tax authority for TIN (taxpayer’s identification) and VAT (value-added tax) registration. Besides, there are the Registrar of Joint Stock Companies and Firms (RJSCF) for joint stock registration, scheduled banks for business account, the Chief Controller of Imports & Exports (CCI&E) Office for import and export registration certificates, the Directorate of Environment (DoE) for environment clearance, Bangladesh Standards and Testing Institution (BSTI) for certificates on product standards, the Export Promotion Bureau (EPB) for rules of origin certificate etc. A manufacturing company also needs gas, water, telephone, insurance and many other services. Most of the offices are operating as regulatory bodies. The policing mentality of a section of officials there and corrupt practices make the whole process complex and time-consuming. Now it is the time for decision makers to make the process easier, even one-stop investment service (if possible) can be offered to attract local as well as foreign investment.

In a chaotic political environment entrepreneurs lose most either in the form of money or human capital. Foreigners are not used to this type of man-made chaos. As a result, they become disillusioned. It affects our exporters, joint ventures and FDI flows. Our political leaders have to reach a consensus on ensuring a better political atmosphere and thus make sure that Bangladesh emerges as a higher middle-income country.

Bangladesh’s international trade (export and import) is mainly dependent on a single seaport-Chittagong Port-and the single highway, namely, the Dhaka-Chittagong highway. So, traffic jams are eroding our competitiveness in international trade. Bangladesh has to think of alternatives to these two single options. Traffic jams in Dhaka city also are eating up a significant portion of man-hours. Infrastructural development should be made adequately to ease the problems. All government offices including Secretariat as well as the cantonment, universities and garment factories should be relocated outside Dhaka and it will provide a relief to the city-dwellers. A deep-sea port, transit routes to India, Nepal, and Bhutan etc. have to be developed within the shortest possible time to reap benefit of the four-nation transport and transit agreement signed recently in Nepal. We are lagging behind our competitors in the use of industrial utilities and infrastructure. The government should think of cluster-based industrial development and ensure required infrastructure and utilities for such industrial units.

Inefficient or corrupt bureaucracy is a big hurdle for economic development of a country. There is enough room for improving the efficiency level of our bureaucracy by introducing digital filing and any other transparent process. Most of the trade and investment institutions have the scope for capacity-building. The government has to undertake prompt action for institutional capacity building of public sector organisations and agencies. New service-oriented (not regulatory) and pro-development institutions like a specialised trade negotiation commission, a cluster development agency, a foreign investment promotion agency, an entrepreneurship development institution etc. are required for supporting and promoting the private sector and it will help the economy attain the take-off stage. Only then we can dream of a higher middle-income status or even more than that for Bangladesh.