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English Essay for bank BCS and Non cadre job

O1 Simple steps for solving traffic jam in Dhaka


Life in Dhaka can be unbearable due to constant traffic jam on almost every road and street.
During my recent visit to Seoul, I noticed Seoul also has high rise office buildings and apartments
just like in Dhaka but the difference is I did not feel suffocated there. In Korea one out of three
citizens has a car. The situation brings big pressure on the city traffic but I was not feeling it at all
unlike what we all experience in Dhaka.
As Seoul makes greater efforts in developing its public transportation system, rush hour traffic jam
is becoming a thing of the past. Mass Transport System and taxi cabs are so efficient that people
are encouraged to use buses and taxis (occasionally). The public transportation (buses) can be
much faster than the cars because roads have dedicated lane for buses.
Here is what Oh Se-Hoon, the Mayor of Seoul, said, "Constructing more roads doesn't work in
dealing with the traffic problems, developing public transportation is the only solution."
The Seoul city started to improve its public transportation since 2004 with an investment of USD
100 million. Between the bus system and the subway, Seoul opted for the bus system as an urgent
priority, because greater impact of bus system is evident with the same amount of investment.
Lee Manki from the Seoul Transport Operation and Information Service Centre says, it costs USD
80 million to construct every 100 meters of subway. He says, the Transport Operation and
Information Service Centre can monitor more than 700 traffic cameras in Seoul. If any traffic
accident occurs, police and ambulance will be deployed at the site in three minutes. Moreover,
about 8,000 buses in the city have been equipped with GPS, so that the speed of these buses can
be monitored in real time. With this data, the centre can adjust the traffic lights in accordance
with the traffic flow.
From the Seoul model of traffic management we can derive important inputs to solve our own
unbearable traffic problem. Here are some suggestions:
1. All commercial and private apartment buildings should use car lift system for maximum
utilisation of the space. Instead of using the traditional basement car park system, if a car lift
system is used, the number of car spaces can be doubled or tripled.
2. Large 1000 car-capacity multi-storeyed car parks have to be constructed in Gulshan-1 (at least
1), Gulshan-2 (at least 1),Banani (at least 1), Dhanmondi (at least 3), Mirpur (at least 3), Uttara (at
least 3) Elephant Road (at least 1), New Market (at least 1), Shahbagh (at least 1), Moghbazar (at
least 1), Motijheel (at least 2)

3. Dhaka Metropolitan City has to initiate sophisticated surveillance system. Any car parked
illegally has to get an automatic ticket when the surveillance camera will detect a car parked on
any street. The software system will issue the ticket automatically without any human
involvement.
4. New light weight buses should be allowed within the Dhaka Metropolitan City. The heavy buses
which have a huge luggage compartment in the belly should not be allowed to plough through the
Dhaka Metropolitan City.
5. All bus drivers should have at least 10 years of driving experience and clean driving record. At
least 25 per cent of the bus drivers have to be women.
6. Illegally parked cars on any street have to be towed. Proceeds earned from the illegally parked
vehicles should be spent on keeping the footpath clean.
7. The traffic control system should be fully automated and monitored 24X7 to avoid traffic
violation and smooth traffic flow.
8. In the long term over-passes and under-passes have to be built for uninterrupted traffic flow.
9. Scope of the metro rail project has to be increased manifold over the course of next two
decades.

02 City's acute water crisis


Dhaka, the capital city of Bangladesh, has this year been adjudged the worst city on earth.
The reasons for making such an assessment could be many. But, to a large number of its
residents, the city deserves to be adjudged so because of its failure to supply pure and
safe drinking water in sufficient quantities. The Dhaka Water and Sewerage Authority
(DWASA) does not have any record of making available sufficient volume of water, not
even when the number of inhabitants of Dhaka city was within a manageable range.
With the passage of time the population of the city has increased manifold. To
accommodate an exponentially increasing population, the city has expanded in all
directions. The DWASA has installed supply lines to most part of expanded areas. But
what it could not ensure is the supply of water in sufficient volume because it does not
have the means to do so. The state-owned water and sewerage authority is managing
only a half of the water requirement of Dhaka city and it is mainly dependent on
underground water for making available one of the key factors supporting life on earth.
Such large dependence on a sole source has given rise to problems of fast depletion of
ground water. Experts have estimated that ground water of Dhaka is going down by a
metre every year because of a large-scale lifting by WASA and other entities, industrial or
otherwise. The depletion has also been forcing the DWASA to engage in sinking deep tube
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wells again and again in different areas of the city to reach the fast receding underground
water table at substantial cost. Unfortunately, the agency could not ensure supply of
greater volume of water from surface source such as rivers despite the fact the Dhaka city
is encircled by a good number of rivers.
The DWASA once had a surface supply source - the river Buriganga. But that supply source
was discarded long ago because of extreme pollution of the water of the river. The
authorities had announced a number of plans to add new surface water sources with
external assistance. But for unexplained reasons the plans are yet to be materialized. A
couple of other factors bedevil water management by the DWASA. One is contamination
of water because of frequent digging of holes along the supply line by other utility
agencies and individuals and the other is rampant pilferage of water through
unauthorized connections.
In such a situation, the residents, particularly those who live in densely populated areas of
the city, are the victims of severe water shortage. There are some specific areas in both
old and new parts of Dhaka where the water supply-shortage is chronic. Despite repeated
media attention, there has not been any improvement in the situation. During the current
heat wave and drought-like situation, their plight has only worsened. Many residents of
these areas are found moving to distant places to collect water even during the dead
hours of night.
Any city, that claims to be a modern one, can not subject its inhabitants to sufferings, in
terms of availability of utilities such as water and power. The government has taken up
quite a number of high-profile projects, each costing a large amount of money. There is no
harm in executing such projects. But the first priority of any government worth its name
should be meeting the basic minimum necessities of its citizens. It is expected that the
present government will look into water shortage issue in that spirit.

03 Commodity exchange key to fair prices


The Bangladesh Securities and Exchange Commission (BSEC) has moved to set up a commodity
market to provide a platform for producers to get fair prices and hedge risks of their products. The
move came after an amendment to the Securities and Exchange Ordinance 1969 in November last
year, allowing establishment of a commodity exchange in the country.
Derivatives and commodities market, a very new concept in Bangladesh, is a place for selling and
buying of commodities. Here one issue is essential to come up with a decision of 'how to start
developing such exchange trading facility' so that we may end up with a very effective beginning
of such a well-accepted system to get the best benefits out of this. This system is so effective that
several developing countries have been taking its advantages for long. In our country, we are
expecting this market to be five times of the capital size of the current stock market.
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Development of a commodity exchange would be more unlike than starting with derivative
exchange. There are very thick lines in between because of the nature of the asset classes and types
of contracts which use to be traded on each type of platforms and which needs to be described
precisely.
Let's say, one potato grower is anticipating a huge price drop in coming season because of a good
harvest. This is a definite scenario of our agricultural products in our country. If we would have wellorganised 'Derivative Exchange' in our country, he might go to an investor to buy a 'Contract' on
condition that 'if the price falls from Tk 10/kg, then someone at the other end (hedger and
speculators/ investors) would buy his product at Tk 10 a kg (a pre-fixed price of contract).
He would do this to secure his profit from coming harvest. Now the question is: "Why would
someone at the other end do this?'. Because there are a few more smart people who have more
information and research which help them predict that in the coming season, a huge consumption of
potatoes will actually raise potato prices. Thus they are projecting future profit by which they would
make more money by buying potato from him with a less price (which is Tk. 10 a kg) selling it at
higher prices later.
Now let's see what would happen if the prediction made by the people of other side goes wrong.
Predicting the future loss, the investor would go to even larger investors to take more risks to get
more rewards and so on and so forth. The contract trading could be made based on any asset class
e.g. stock, index, bonds securities certificates, metals, livestock, agricultural commodity and carbon
exchange for CO2 emission reduction certificate trading.
In stock exchange, pieces of ownership of any company are traded directly between the sellers and
the buyers. There is the same type of market for physical commodity which is known as commodity
exchange, more specifically Commodity Spot Market. For metal, it is Metal Exchange. Many of these
are also called Multi Exchanges for their trading platforms of different classes of multi- commodities.
A few are so big and significant that they actually control business of a single commodity worldwide
like Sugar Exchange in New York, Cotton Exchange in London, Gold Exchange in Dubai etc.
Any type of contracts derived from any of these asset classes is called Derivatives. Derivative
market, which we call 'the 3rd market', is highly potential and risky as well. Potential, because it
provides liquidity in commodity market and shed risks of primary traders and commodity producers.
These contracts are basically three types depending upon its nature of trading and its participants-Forward, Future and Options. All the participants of this market are also basically three types Individuals, Hedgers and Speculators.
If you want to buy a car, you may go to a 'show room' and buy a new one. If you are in budget
constraint, you may pick a 'reconditioned' one taking risk of frequent maintenance expenses. If you
still can't find a suitable one, you may also go for third market like 'car haat' as we locally call it or
buy from www portals, keeping in mind that you may find the car doesn't have its own engine but
replaced one. So you must take an expert technician to the third market, just like the (Over the
Counter) OTC market that we have now, less regulated and high risky market. This market is
potential for higher returns though.

Here is an example how 'derivative exchange' works for stock and bonds. You've got news that ABC
Company's financial status is little bit volatile and you are predicting the price of company share
(which is Tk 15/share) may fall by next three months. Based on this anticipation you may still make
profit from this share. How? At this time, you better call your broker to borrow ABC share for you.
He then borrows the share from any available sources like from other brokers in the market. Then
tell your broker to sell the borrowed share at current price which is Tk 15 per share and keep the
money to your BO accounts. After two months, you find yourself right and the share price starts
going down to Tk 10 per share. Then call your broker to say that you want to buy the same share and
want to take it back from where your broker borrowed it. What you have done actually made profit
of Tk 5 per share. Thus you're making profit when the price is going down. All you've to do is to pay
some commission to your broker for doing it, which is absolutely logical.
So no matter how many types of contracts can be produced and traded as derivatives, there must be
the primary market (IPO for Stocks and 'Spot Exchange for Commodity) to generate trading volume
and originate securities to derive 'derivatives'.
Without forming any commodity spot exchange, a Derivative Exchange may be formed but that
would not be 'Farmers' Cup of Tea'. Because contracts derived from stock and bonds would be
traded within. We can start a derivative exchange. Only we need to make a few additions and
amendment to existing OTC market regulations.
For information, OTC market is the same as the stock market but not that much regulated as we
describe earlier. We may call it 'unregulated stock market'. The main objective of our OTC market is
to facilitate Z-Category listed company to turn around or any public limited company can trade their
share directly through OTC point. But we may not be able to trade in form of commodity future
contracts because we must need exchange for commodity spot trading.
To start derivative market moulding our OTC market, we need to form a 'clearing company' to settle
transaction. For your information, Clearing Members are the most prime concerns of any commodity
exchange, as they give funds to settle all unsettled deals at the end of the day.
To come up with a commodity spot exchange, the preparation is really on large scale. Its outcomes
also add value at macro level. The Agricultural Commodity Exchange adds significant value to
agricultural value chain and eco system. Farmers are highly benefited from such a system as they can
make fair bargain to get fair price for their produce. We must need to integrate a few large-scale
infrastructures to design the platform like exchange designated warehouse and logistic system all
around the country which must be connected by a well-managed ICT system. To generate volume of
trade, we must need warehouse receipts collateralisation under well-defined rules. After having
prepared these we need to conduct country-wide awareness programme to form producer groups
to let them participate at spot trading.
Now we may leave the matter to experts and policy-makers and hope that they would do the best to
develop such a system in our country. But without the commodity spot market, the derivative
exchange is another third market for stocks and bonds. Eventually that won't be our farmers' cup
of tea.

04 Bangladesh agriculture -- prevailing realities


Bangladesh is one of the least developed countries in the world. The majority of its people
depend on agriculture for survival. Despite planned efforts by the government to increase
agricultural productivity for over four decades, the growth and output in this sector has
not kept pace with the growth of population. This is a matter of great concern for the
people as well as the policy-makers of the country.
In Bangladesh, agriculture is still the single-largest producing sector of the economy since
it comprises about 18.6 per cent (data released in November, 2010) of the country's Gross
Domestic Product (GDP) and employed around 51.4 per cent of the total labour force in
2005-2006. The performance of this sector has an overwhelming impact on major
macroeconomic objectives like employment generation, poverty alleviation, human
resource development and food security.
In the country, about 80 per cent of the total population live in the rural areas and are
directly or indirectly engaged in a wide range of agricultural activities. The agriculture
sector plays a very important role in the country's economy. The sector comprises crops,
forests, fisheries and livestock. Of the agricultural GDP, the crop sub-sector contributes 71
per cent, forests 10 per cent, fisheries 10 per cent and livestock 9 per cent. The sector
generates 63.2 per cent of total national employment, in which the crop sector's share is
nearly 55 per cent. In the past decade, the agriculture contributed about 3 per cent per
annum to the annual economic growth rate.
Although rice and jute are the primary crops, wheat is assuming greater importance. Tea
is grown in the northeast. Because of Bangladesh's fertile soil and normally ample water
supply, rice can be grown and harvested three times a year in many areas. Due to a
number of factors, Bangladesh's labour-intensive agriculture has achieved steady
increases in food grain production despite the often-unfavourable weather conditions.
Although rice, wheat, mango and jute are the primary crops, due to the expansion of
irrigation network some wheat producers have switched to cultivation of maize, which is
used mostly as poultry feed. Wheat output in 2007-2008 was 1.0 million metric tons.
Population pressure continues to place a severe burden on production capacity, creating a
food deficit, especially of wheat. Foreign assistance and commercial imports fill the gap.
Underemployment remains a serious problem, and a growing concern for Bangladesh's
agricultural sector. It will go beyond its ability to absorb additional manpower. Finding
alternative sources of employment will continue to be a daunting problem for future
governments, particularly with the increasing numbers of landless peasants, who already
account for about half the rural labour force.
Wheat is not a traditional crop in Bangladesh, and in the late 1980s little was consumed in
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rural areas. During the 1960s and early 1970s, however, it was the only commodity which
witnessed increase in local consumption because external food aid was mostly provided in
the form of wheat. In the first half of the 1980s, domestic wheat production rose to more
than 1 million tonnes per year but was still only 7 to 9 per cent of total food grain
production.
Record production of nearly 1.5 million tonnes was achieved in FY 1985, but the following
year saw a decrease to just over 1 million tonnes. The proportion of land devoted to
wheat remained essentially unchanged between 1980 and 1986, in a little less than 6 per
cent of the total planted area. Wheat accounts for the great bulk of imported food grains,
exceeding 1 million tonnes annually and going past 1.8 million tonnes in FY 1984, FY 1985,
FY 1987 and 1.6 million tonnes in 2007-2008. The great bulk of the imported wheat is
financed under aid programmes of the United States, the European Union, and the World
Food Programme.
Food grains are cultivated primarily for survival. Only a small percentage of total
production makes its way into commercial channels. Other Bangladeshi food crops,
however, are grown chiefly for the domestic market. They include potatoes and sweet
potatoes, with a combined record production of potatoes in 2010, 2013 and 2014 to the
tune of about 8.5-10 million tonnes; oilseeds, with an annual average production of
250,000 tonnes; and also fruits such as bananas, jackfruit, mangoes, and pineapples.
Bangladesh agriculture, apart from being the single-largest contributor to income and
employment generation, is also a vital element in the country's challenge to achieve selfsufficiency in food production, reduce rural poverty and foster sustainable economic
development. Despite Bangladesh being an agriculture-dependent economy with a
growing population, it has one of the world's lowest per capita land area. Nevertheless,
the arable land area is being continually squeezed annually through a significant rate of
non-agricultural use that needs to be checked. Not surprisingly, the most important issue
in Bangladesh agriculture is to enhance and sustain growth in crop production. The most
pressing problem is, therefore, the current state of stagnating yields and declining
productivity in a range of food and non-food crops.
With negligible scopes for area expansion, as most of the arable lands of Bangladesh are
already under cultivation, future growth will have to rely on raising productivity per unit
of land. For this reason, continuous efforts should be made towards developing new and
improved seed varieties. It is also felt that the agricultural sector is yet to exploit the full
potential for crop production, and that there are various opportunities for substantially
increasing cropping intensities. Currently, only 40 per cent of the potential irrigated area is
covered by modern varieties and, most important, there are wide gaps between the
potential and the realised yields for all crops in the country.

Narrowing the gaps between actual and assumed yields, however, is easier said than
done, for there are various underlying issues and constraints in terms of productivity that
are beyond the bounds of technology and another 'green revolution'. To think that the
growth in crop production and the goal of self-sufficiency depend almost entirely on
technological progress is not only fanciful, but also detrimental to the long-term
sustainable development of the country.
Aside from the fact that Bangladesh is prone to frequent natural disasters, there are
significant factors, both institutional and socio-economic, that play a part in determining
the productivity of the agricultural sector and food security situation in the country. These
include: landownership, environmental degradation, crop diversification and social and
physical infrastructure and support services. These are long-drawn agrarian problems to
be solved.
The recent trend in food grain production has not been positive. The agricultural sector is
now confronted with low and stagnating yields of most of the crops, including rice; and
the gap between domestic production and demand has actually widened. In spite of the
fact that rice production has increased at a higher rate than the rate of population growth
during the last decade, and despite the fact that there are both public and private imports
each year, the daily per capita availability of food grains in Bangladesh has not reached
the standard food grain requirement or target consumption level of 454 grams since 19911992. Given that food availability is not equally distributed, it is clear the situation is
worse for the poor than the food production figures would lead one to believe.

05Foreign exchange reserves and the central bank's role


Recently, there has been a surge of both applause and concerns regarding the record foreign
exchange reserves announced by the Bangladesh Bank (BB). Suggestions are coming from different
corners to ensure the proper utilisation of the reserves so that its bad effect on the economy is
minimised.
In this regard, Biru Paksha Paul, a professor of Economics at State University System of New York,
Cortland, has offered two suggestions in an article titled "High Foreign Reserves: Asset or Liability"
which was published in a Dhaka daily. The suggestions are: (1) Bangladesh Bank should take the
initiative of further import liberalisation so that funds are easily available for importing capital
machinery and intermediate goods. (2) Bangladesh government should speed up its public
projects work to stimulate the spirit of the private investors. That means Prof Paul has suggested a
Keynesian intervention in the economy to stimulate investment.
First of all, the question arises: on what basis should the BB take the initiative of further import
liberalisation? If the argument, as it is in Prof Paul's view, is that record reserves will create

currency appreciation effect which is in fact detrimental to export, a counter argument can be
offered that such outcome is natural and the BB should not proceed on this justification only.
Secondly, the Keynesian intervention is not tenable given the source of woes and misery that the
country is suffering from. If one analyses the source of sluggish economic performance, one can't
support such Keynesian perspective to boost the economy. We should seek a permanent cure of
the wound rather than temporary cures from time to time.

ROLE OF THE CENTRAL BANK: If one accepts the statement that political factors are responsible for
sluggish investment and import growth that has given rise to a record surge of foreign exchange
reserves, then how can one suggest that the BB should make an active intervention to offset the
possible bad effects stemming from the record foreign exchange reserves? Certainly, it is not a
task of the BB, the central bank.
It has become a habit to think that the central bank is such an omnipotent organisation that it
should take action whatever the circumstances are. But prudence dictates that the BB should
respond to what the economic trend indicates and not determine what the economic trend should
be. Again, if the current flood of foreign reserves has partly been caused by political factors, then
how much justification is there to claim that BB is responsible to offset the effect of high foreign
exchange reserves? It should not be a concern of the BB.
The traditional thinking in academic and professional circle is that an economic crisis, whatever
may be its source, should be cured by economic measures taken either by the government or by
its allied organisations such as the central bank. To cite Prof. Paul's suggestion, let's say that the
central bank has adopted the import liberalisation measure to offset the ballooning currency
appreciation effect. And also assume that by such measure, the BB has escaped the currency
appreciation effect. From a very simple point of view, we should welcome such a decision since
the danger of export contraction would be avoided by overcoming the currency appreciation
dilemma. This is true but this is not the spirit of the use of economic measures by the central
bank. Why should the central bank be burdened with a responsibility to cure an infection that is
created by unruly politics? This may be justified given the exigency of the circumstances. But the
question remains: how much desirable is such a solution? We fear that this import liberalisation
policy by the BB will not pass this desirability test at all. The desirability test is that economic
policies should not be used as an instrument to ward off crises that are generated completely out
of the ecnomic model; to rephrase, if we describe the model as an economy and we describe such
a model by setting and postulating some definite relationship among different variables, then any
disturbance that is generated within the model should be warded off by economic measures or
policies.
To cite a historical example from Keynes' General Theory, if the marginal efficiency of capital is
depressed by the lack of confidence of investors which is due to some unwanted behavioural mess
such as animal spirits, we can justify the intervention to bring an economy back to the track. But,
the recent bulge of foreign exchange reserves is not generated within the model but completely
by some factors outside the model, for example, by political mess. If this is the case, then we
recommend that central bank should refrain itself from taking any initiative to prevent a hazard
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that is contributed by political instability. Doing so would be indulging the political parties to do
the same harm in the same manner in the future and keeping them as safe as before. Let
economic forces teach them a lesson and this is more desirable because if they take some lesson,
they would think twice in future to inflict any harm on the economy.
Coming back to the central issue, we argue that the BB should allow Taka to appreciate against the
dollar to the same extent as reserves inflated by the sluggish investment and import growth due
to political instability. To present this in a precise way:

In the above figure, foreign exchange reserves (R) is measured off on the horizontal axis and
exchange rate (ER) on the vertical axis. The graph shows that as the amount of foreign exchange
reserves increase, domestic currency against dollar appreciates or exchange rate increases. It
shows that normal exchange rate at the normal exchange reserves (Rs*) is ER*. But when the level
of exchange reserves increases, exchange rate increases and for the reserves increase to the
amount (Rsa - Rs*) exchange rate increases to the amount (ERa - ER*). As pointed in the above
graph, both reserves bulge (Rsa - Rs*) exchange rate appreciation (ERa - ER*) are outside the
model; that means they are not generated primarily by any shocks to any variables inside the
model where the model is the entire economy.
By this reasoning, we argue that increased reserves measured by (Rsa - Rs*) is not a desirable
reserves and the exchange rate appreciation measured by (ERa - ER*) is not also desirable. Now
the question is: how to overcome the currency appreciation effect from such an unwanted reserve
bulge? We may try two solutions: The first solution can be import liberalisation as suggested by
Prof. Paul. The second solution can be decreasing the unwanted reserves by allowing the currency
to appreciate. If we take import liberalisation step, then we will be able to keep exchange rate at
ER* since such import liberalisation will reduce the foreign exchange reserves from the unwanted
level Rsa to the desirable level Rs*. On the other hand, if we take the second step, same outcome
will emerge with the exchange rate ER* and reserves Rs* decreasing the level of reserves from Rsa
to Rs*. But this symmetricity is not a sign of symmetricity at all. Why is this so? Let us see.
For this reason that, without replacing economic instability due to political instability by corrective
economic policy such as import liberalisation step, we make political chaos a function of economic
instability which is in this case soaring exchange rate. Therefore:
In the above figure, change in the exchange rate (re) is measured off on the horizontal axis and
political chaos (pc) or instability on the vertical axis. The graph shows a downward sloping straight
line depicting a negative relation between political chaos and the change in exchange rate that as
the magnitude of the change in exchange rate increases political chaos decreases and vice-versa.
This downward sloping straight line is derived from the function J. From the graph, we see that at
the re* change in the exchange rate, political chaos is pc0. But as the value of re increases to re1,
political chaos decreases to pc*. But our desired value of the change in exchange rate and political
chaos or instability are re* and pc* respectively.
Now, the question is: how to achieve this combination of both values? The function J which
embodies the negative relationship between political chaos and the change in exchange rate gives
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the answer. It implies that as the value of re approaches re1, the value of pc approaches pc*. But
the value of re1 is not the real value associated with pc* rather it is compatible with re*.
Therefore, value of re1 for re can't exist when the value of pc is pc*. So, the line TT makes a
leftward shift and the value of re also reduces to re* from re1. This illustration is built on the
notion that the central bank allows Taka to appreciate against dollar due to reserves bulge instead
of taking other steps just to offset the appreciation effect. Now, assume instead that the central
bank has taken the other route to prevent currency appreciation effect and has allowed import
liberalisation as per Prof Paul's suggestion. The spirit of such measure is captured by the function
J1 which shows that whatever the value of the change in exchange rate, political chaos is always
fixed at pc0. Let's say by import liberalisation, the central bank has achieved somehow the value
re* and so political chaos should be pc*. But the function J1 indicates that political chaos is pc0,
and the difference (Pc0 - pc*) is the measure of the existence of political instability to create
further problems in the future. At this point a question arises: is it possible that the value of re
stays at re* with the value pc0? The answer is no. Sooner or later re will be moving to re1 with still
Pc0. This means that the central bank will not be able to stabilise the exchange rate rather it will
aggravate the situation with frequent ups and downs in the exchange rate. This shows why the
two measures - allowing Taka to appreciate and allowing import liberalisation to neutralise the
effect of bulging foreign exchange reserves on currency - are not symmetric at all though both
measures bring the change in the exchange rate to re*. The import liberalisation step will do so for
a very short period and the central bank will not able to sustain the value re* by such steps. But
by allowing the currency to appreciate following the negative relationship embodied in J function,
the central bank will able to stabilise the value of re at re* and once this is achieved, the value of
re will not anyway move from re* unless something other
happens.
The above illustrative discourse indicates why Keynesian intervention can't be justified in this
circumstance as well. This point can be analysed more clearly going back to the J and J1functions
respectively. If we allow the variables to adjust by setting a relationship as embodied in J, we
don't need the Keynesian intervention. But if we allow the economy to adjust by setting a
relationship as embodied in J1, we need the Keynesian intervention.
As mentioned above, the matter is not whether we need the Keynesian intervention or not but
rather whether it is justified or not given the source and origin of the problem. For the same
reasons outlined above, Keynesian measure can't be justified at all because such a measure will be
able to solve the problem for a very short time but will leave a permanent infliction on the
economy exactly like the unstable exchange rate.

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06The potential of BCIM economic corridor


The visit of Yunnan Province Governor Li Jiheng to Bangladesh has brought to the fore the
mega project of an economic corridor innovated by China and solidly backed by Indian
Prime Minister Dr Manmohan Singh. Li Jheng, during his stay here, elaborated in details to
the Bangladesh leaders about the concept of Bangladesh, China, India, Myanmar (BCIM)
economic cooperation (EC). Bilaterally the economic cooperation between Bangladesh
and China is gradually rising.
But what's the BCIM-EC all about? How are the potential and prospects of such an
economic bloc which aims at reviving the old Silk Route that had once served as an
economic corridor?
It was Chinese President Xi Jinping who had first floated the idea during his visits to
Kazakhstan and Indonesia in September and October 2013. He called for joint
development of an 'Economic Belt along the Silk Road' and a 'Maritime Silk Road of the
21st Century' (the 'Belt' and the 'Road'). These are two major initiatives that China has
made to deepen reform and opening-up and advance its neighbourhood diplomacy, which
have been enthusiastically received both at home and abroad.
Dr Manmohan Singh was ebullient over the corridor and reportedly said in excitement: "I
dream of a dayone can have breakfast in Amritsar, lunch in Lahore, and dinner in
Kabul." But what's about Dhaka? Chinese Ambassador to Bangladesh Li Jun did not miss it
when he talked about the initiative. He recently wrote: "We can dream of a world where
one can have breakfast in Kunming, lunch in Dhaka, and dinner in Kolkata."
A dream is the first step towards materialisation of any project. There is nothing wrong in
dreaming. The BCIM-EC could really be an effective engine of growth if it could proceed
from the confines of files to reality. But reality sometimes appears to be grim. The BCIMEC can only flourish if it means business seriously. But if politics creeps into it with regard
to the present-day global polarisation, it will meet the fate of the eight-nation South Asian
Association for Regional Cooperation which is now in limbo. Not much is being heard of
the SAARC in making strides in several core areas of cooperation, collaboration and
implementation of its projects. The same is true about the BIMSTEC whose summit was
held in Myanmar recently.
Bangladesh's support to the BCIM-EC is total. Prime Minister Sheikh Hasina is on record
having appreciated China's 'proactive role' in establishing the economic corridor through
BCIM-EC while greeting her Chinese counterpart on the occasion of the 'Chinese New
Year'.

12

The corridor is expected to ease the flow of goods between the world's two largest
economies, India and China, and providing greater economic resources to the burgeoning
markets of Bangladesh and Myanmar. The four member countries, with their total GDP of
$9,300 billion, have the potential to become a strong block in global economy. The
present Bangladesh government, prefering regional relations to distant Western friends,
has also backed the BCIM initiative as mentioned by the Commerce Minister Tofail
Ahmed. "We cannot work with the SAARC and SAFTA the way we want to. I think, we will
benefit more if we can go ahead with the BCIM properly," he said. Finance Minister Abul
Maal Abdul Muhith also said that the country is laying a greater emphasis on relations
with China because of its global economic influence.
The BCIM has four main objectives to implement. It focuses on result-oriented and
project-based cooperation, all aimed at bringing tangible benefits to the people in the
region. The first 'link' is policy. The second 'link' is road. The third 'link' is trade. The fourth
'link' is currency. The BCIM-EC would promote greater trade settlement in local currencies
and more currency swap schemes, strengthen bilateral and multilateral financial
cooperation, set up financial arms for regional development, and make the region's
economy more competitive globally.
The fifth 'link' is people. China and the neighbouring countries need to shore up popular
support for their state-to-state relations, promote inter-civilisation dialogue, and enhance
exchanges, understanding and friendship among different peoples.
The four nations have for the first time drawn up a specific timetable on taking forward
the long discussed plan, emphasising the need to quickly improve physical connectivity in
the region, over two days of talks in the south-western Chinese city of Kunming -- the
provincial capital of Yunnan, which borders Myanmar.
The corridor, it was agreed, will run from Kunming to Kolkata, linking Mandalay in
Myanmar as well as Dhaka and Chittagong in Bangladesh. The plan would "advance multimodal connectivity, harness the economic complementarities, promote investment and
trade and facilitate people-to-people contacts", the four nations said following the Joint
Study Group session.
China, officials say, sees the corridor as a platform to not only boost strategic ties with
India, but also as a means to inject vitality into its landlocked southwestern provinces,
which have the highest poverty rates in China.
Both India and China held separate consultations with Bangladesh and Myanmar, agreeing
to hold a first official meeting in China. India was represented at the talks by Joint
Secretary (East Asia) at the Indian Ministry of External Affairs, who was joined by the
Deputy Planning Minister of Bangladesh, the Vice Chairman of China's National

13

Development and Reform Commission, and a senior economic affairs official from
Myanmar.
To underline that no country will dominate the initiative, the four nations said the
corridor will be taken forward on "the principles of mutual trust and respect, mutual
interest, equitable sharing of mutual benefits".
Bangladesh, in order to benefit from the BCIM road connectivity, needs to prepare itself
for the corridor which will facilitate both exports and imports. Both Chinese and Indian
markets are so huge that the country's traditional and non-traditional exports can have a
good market in terms of their prices. As labour cost is still low compared to that of China
and India, Bangladeshi goods can have an easy sailing in those markets. Export product
diversification needs to be given high priority with particular emphasis on standardisation.

07 Significance of small river dredging


Recently print media reported that the government of Bangladesh has undertaken a
project to dredge 24 major river routes by June 2018. A total of 101.4 million cubic metre
areas will be dredged which will cost Taka 18.73 billion. On completion of the project,
heavy water vessels will be able to ply throughout the year, that will facilitate movement
of passengers and goods at minimum cost.
Thanks to the government for taking such a significant responsibility that needed to be
taken much early.
As a sequel to the project, meanwhile, major rivers will likely to drive away water from
small rivers leading the latter to dry up in dry season. Water transport, fish culture as well
as irrigation covering the areas adjacent to the small rivers will then be in great problem.
Hence, to have the full benefit from the dredging work, the small rivers which are
connected to the 24 major rivers, are to be included in the project as well. In other words,
a supplementary project needed to be undertaken to include dredging of small rivers
which are connected with the major rivers concerned. It will facilitate irrigation to
agricultural lands, plying boats and fish culture in all seasons. Indeed, we cannot create
one crucial problem while addressing another significant problem.

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08 Drawing up a regional plan to check river erosion


River erosion is one of the deadliest natural disasters that some of the member-countries
of the South Asian Association for Regional Cooperation (SAARC) like Bangladesh and
India face today. Its consequences are catastrophic in both the countries. But Bangladesh
being much smaller than India in size (it's even smaller than some of the latter's states),
damage that is caused to its fertile lands and human habitations is whopping. It is in
recognition of this that the Delhi-based SAARC Disaster Management Centre has chosen
Dhaka as the venue for its week-long training programme on 'River Erosion and
Embankment Safety Management in South Asia Region 2014' which began at Dhaka
University on March 29. At the inaugural session, experts have called for a regional
approach to tackle erosion of river banks.
It augurs well that 26 experts from the SAARC countries have been taking part in the
week-long training course on the subject. River erosion has already cost Bangladesh
heavily. It has caused serious damage to its fast-shrinking fertile lands and rendered
hundreds of thousands homeless. Statistics say more than 250,000 people in Bangladesh
become victims of river erosion every year. The annual economic loss, according to a
rough reckoning, stands at Tk 10 billion. An Asian Development Bank (ADB) report said
river erosion makes at least 1,00,000 people landless every year in Bangladesh. Most
alarming is the fact that over 1,000 hectares of lands of the country are lost to rivers every
year. Only two rivers, the Jamuna and the Padma have engulfed 156,780 hectares of land
since 1973, and 2,842 hectares of farmlands are likely to disappear into these rivers in the
not too distant future. According to a projection, the country will lose one-fourth of its
total cultivable land by 2020 if erosion is not checked.
Erosion of river banks has already caused enormous socio-economic and environmental
problems. At the national level, it is hindering economic growth and is leading to
impoverishment and marginalisation. At the household level, it is leading to malnutrition,
poverty and miseries.
The authorities in Bangladesh appear to be helpless in containing river erosion. The
Bangladesh Water Development Board (BWDB) has so far used concrete blocks placed on
the banks to stop erosion. But according to experts, if the blocks are not of the required
size and strength, these will be just a wastage of money when considered in the context of
dreadful strength of the river currents and waves that cut banks not along the surface but
much below where no concrete block is placed. Most often it is reported that blocks have
been washed away during rainy season as these did in case of Chandpur.
Bangladesh will gain a lot if it seriously takes note of deliberations of 26 expert-level
participants in the training course. The country can also seek SAARC cooperation for a
lasting solution of the river erosion problem in view of its gradual shrinkage of fertile
15

lands and ever increasing population depending on lands. Huge expenditures on use of
boulders or other short-cut methods will simply go down the drain if scientific solution is
not found at the earliest. The experts at the training course can give appropriate
guidelines and help forge a SAARC plan to end the curse once for all.

09 Foreign exchange reserves, investment and import


Prolonged political instability in the country has been adversely affecting the investment
situation. New investment has almost come to a halt. In the absence of new investment,
demand for capital machinery as well as overall import has gone down. Lesser import
means lesser demand of foreign currency; and decreased demand of foreign currency
enhanced the foreign exchange reserves. In December 19, 2013, the Bangladesh Bank
announced that the foreign exchange reserves stood at Tk 18 billion, the highest ever.
There has hardly been any investment in the country for quite long resulting in the fall of
import. Each month records smaller volume of import compared to previous year.
Accordingly, many banks are facing problems with remittance inflow. Because of lesser
demand in market, banks are selling foreign currency to the Bangladesh Bank. Bangladesh
Bank purchased about $4.54 billion in 2012 and $1.49 billion during the first quarter of the
current fiscal year. The process of purchasing dollar from the banks continues. This way
the foreign exchange reserves of the Bangladesh Bank are fattening.
Many banks collect remittances from overseas on a competition basis. As the demand for
dollar in the local market is low, banks come to the central bank. But Bangladesh Bank can
not provide taka against dollar. In that case Bangladesh Bank provides bonds to the banks.
That is why, reserve management cost is increasing.
It is clear that, banks are unable to hold all the foreign currency they actually earn. The
central bank says if there exists more dollar than the maximum balance, banks must sell
them in the market. If selling in the market is not possible, banks have to sell those dollars
to the Bangladesh Bank. Because of investment instability, demand for dollar is too low
and that is why banks have surplus volume of dollar. If dollar is purchased from
Bangladesh Bank, money circulation is increased in the market. Considering this, in 2010,
Bangladesh Bank increased the dollar holding rule to 15 per cent from 9.0 per cent for
banks. In that situation, many banks hold more dollars than before. If this phenomenon
goes on, banks will face serious problems. Considering this, the Bangladesh Bank is
purchasing more dollars and consequently foreign exchange reserve is increasing at a
rapid pace.
Reasons for increasing foreign exchange reserves are: first, import has decreased due to
the decreasing demand for investment. Second, in recent years, commodity import has
16

decreased as there was sufficient domestic production. Third, banks have become unable
to utilise the remittances that they actually earn.

10 Agriculture call centre and CSR finance


According to the report published in the FE, the government is going to introduce a free
agriculture call centre soon under a Public Private Partnership (PPP) initiative. The help
line for farmers will be the first of its kind, benefiting nearly 20 million farmers across
Bangladesh. The farmers will get information and suggestions on agriculture free of cost
by dialling a short code on any mobile phone. The importance of such a centre can hardly
be overemphasised. In neighbouring India such information centres have been in
operation for long.
Let us hope that the call centre will start operation as scheduled. We are always
apprehensive about the timely start of a project and what is haunting me is the comment
of Hamlet to his friend Horatio that there is many-a-slip between the cup and the lip. The
proposed project is going to have some unique features. First of all, it is going to be a PPP
project. Finance Minister AMA Muhith spoke very loudly about the PPP project in his first
budget speech in 2009-2010 of the previous grand alliance government. Subsequently, he
admitted in the parliament that performance in the area had been far from satisfactory.
Bureaucratic inhibition was one of the main reasons for this failure. In this dismal
condition the proposed agriculture call centre is going to see the light of the day.
The PPP venture is definitely a laudable achievement. Subsidy is provided to the farmers,
no doubt, and they give the due return by harvesting bumper crop yield under strenuous
circumstances overcoming all odds including natural calamities. The level of concern of
politicians about the farmers is not at all satisfactory. Political parties coddle those
organisations that can either put up resistance against their programmes or serve their
political purposes. In the share market the so-called investors (better called the traders)
go for making profit. There is a famous comment about these people of Mr. J K Galbraith,
a famous economist and diplomat of the U. S.A. In the book The Great Crash 1929, he
wrote: "No one was responsible for the great Wall Street crash. No one engineered the
speculation that preceded it. Both were the product of the free choice and decisions of
the thousands of individuals. The latter were not led to the slaughter. There were
impelled to it by the seminal lunacy which has always seized people who are seized in turn
with the notion that they can become very rich. There were many wall streeters who
helped to foster their insanity".
In Bangladesh, the government becomes highly sensitive to any kind of reaction in the
share market without going deep into it to judge whether the hiccup is reasonable or not.
Similarly, the opposition political parties try to gain political mileage out of this situation.
17

But neither the ruling party nor the opposition bothers with the sufferings of the hapless
farmers as they are not organised to serve their mischievous political purposes. During the
last protracted political turbulence the vegetable growers suffered heavily and they
incurred heavy losses, as they could not sell their produce. But the politicians in their
harangues have hardly mentioned these sufferings.
Back to the proposed agriculture call centre. This may act as the beacon of hope. Mobile
phone operates such Teletalk, Banglalink, Grameenphone, Robi, Citycell and Airtel are
taking part in providing these telephone services. These activities will be within the
purview of the corporate social responsibilities (CSR). This scribe would like to say that
this is the most noble and finest CSR activity. It will benefit millions of people, so it can
easily be termed a national service.
The call centre can offer a tremendous service. Their area of operation is vast. There is an
immense opportunity to render services to various sections of people so long unattended.
Let this scribe cite a specific case. A few weeks back he met a young entrepreneur, Mir
Shahid of Jamalpur. The area from where he hails is a tomato-growing area. During the
peak production season prices fall far below the production cost and buyers are not
available even at throwaway prices. The growers bewail and throw the tomatoes into
drains of their local markets. This man with a view to helping the tomato growers has set
up a classified cold storage. Farmers have seized the storage facility. But first of all, it
cannot be kept there for more than six weeks. Another serious problem is the tomatoes
gather spots on them, thereby affecting the quality. Mir Shahid approached the local
agriculture extension department. But maintaining their bureaucratic tradition they did
not address the problem. Maybe, they do not have the knowledge as to how to solve the
problem or to give any suggestion. They could have referred the matter to Bangladesh
Agriculture University in Mymensingh on an urgent basis. The agriculture university might
have solved the problem. But the bureaucratic vanity prevented them from taking any
such action.
It was just one problem this scribe came across by chance. There are many other such
problems. We hope the call centre will have a sufficient number of experts covering every
area of the agriculture sector. We further hope and believe that their services will not be
limited to the telephonic response only. Definitely there will be an arrangement for
prompt and on-the-spot verification by the experts who may move either from the centre
or from any assigned research institution.

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11 Streamlining manpower export sector


The Malaysian Home Minister's assurance of regularising illegal Bangladeshi workers in his
country does, no doubt, reflect strong goodwill Kuala Lumpur has for Dhaka. After holding
a meeting with the Expatriates' Welfare and Overseas Employment Minister last Monday,
he indicated the possibilities for wider job opportunities for the Bangladeshi workers in
Malaysia. So far so good at a time when employment opportunities in other countries in
the Middle East or elsewhere have virtually shrunk either due to internal problems of the
host countries or owing to lack of intensified drive for exploring job markets abroad or for
reasons of other irritants.
Meanwhile, some private recruiting agencies in Bangladesh have, as was reported in the
FE last Sunday, stepped up lobbying to scuttle the existing government-to-government (Gto-G) system for manpower export to Malaysia. There is no denying that the recruiting
agencies were instrumental in boosting the country's manpower export. Such agencies
spent a substantial amount of money for overseas trips by their representatives to explore
the prospects for the Bangladeshi workers' jobs and made strenuous efforts to come to
agreements with employers of a good number of the host countries. That was exactly why
manpower export today has emerged as the second biggest foreign exchange earner after
the readymade garments, in gross aggregate terms.
However, the government's valid concerns over high migration costs as well as unsafe job
placements in many cases must also be equally taken note of, in a positive perspective. It
is duty-bound to safeguard and guarantee the workers' interests, more so in view of many
tragic incidents involving many Bangladeshi migrant workers and their miserable plight in
a number of countries. In this context, the G-to-G system has largely been welcomed as
the employers in several countries like Malaysia have been insisting upon putting it in
place. Such a system is intended to provide otherwise a shield against malpractices and
harassment by a section of unscrupulous recruiting agencies, in league with their overseas
fraudulent partners. But sadly, Bangladesh appears to be set to miss the bus due to
bureaucratic tangles. Only 3,000 workers could go to Malaysia officially so far, although
the demand was much higher. Relevant officials and employees of the government have
furthermore been reported to be prone to corruption. As a result, real migration cost
stands at a much higher level than what was or is officially considered to be reasonable,
under the G-to-G system. The G-to-G system can still be there in place but honest private
sector agencies, having a better track record about their performance, should equally be
engaged for the purpose.
The expatriate welfare and overseas employment ministry is expected to frame well-knit
guidelines for the private sector manpower exporters to follow, in matters of completing
their task of recruitment. The ministry should take tough steps to ensure that such
19

agencies do their job in a transparent manner, shunning all irregularities. The nexus
between any errant private sector recruiting agency and the corrupt section of the
officialdom must be broken. A relatively hassle-free system needs to be evolved for the
purpose. Unless dynamism is injected into the manpower export sector with private
sector involvement to take advantage of its experience and efficiency, the country is likely
to find it difficult to keep the golden goose alive to lay golden eggs. The imperatives for
pro-active measures by the government on this count can hardly be over-emphasised
because the overseas workers' remittances have already emerged as the lifeblood of the
Bangladesh economy.

12 Remittance shortfall amid lower outflow of migrant


workers
Bangladesh is likely to face a remittance shortfall this fiscal ranging between nearly $ 800
million and $ 1.0 billion compared to last fiscal's earnings of $ 14.46 billion. The lower
outflow of migrant workers is mainly responsible for such a declining trend in remittance
inflow.
In fact, country's manpower export has been witnessing a slow trend since August 2012
following suspension of visa issuance by the United Arab Emirates (UAE) to Bangladeshi
workers. Only 96,068 Bangladeshis entered the international markets with jobs during the
last three months of the calendar year 2014, according to Bureau of Manpower,
Employment and Training (BMET).
It is to be noted here that some 409,253 Bangladeshis got overseas jobs in 2013 while the
number was 607,798 in 2012 and 568,062 in 2011. The private recruiting agents blamed
the government for its poor or ineffective initiatives to raise manpower export under the
present circumstances. They claimed that Bangladesh could not properly take advantage
of the job opportunities in Malaysia, Qatar and Bahrain. The country is also unable to
open the 'closed' markets of Saudi Arabia, UAE and Kuwait, they alleged.
Persistent declining trend in the overseas jobs is taking a heavy toll on the country's
remittance earnings. The overall inward remittances could significantly be lower this fiscal
year than that of the last fiscal. Since the country's remittance witnessed a 5.77 per cent
negative growth in the first three quarters of this FY over the corresponding period of the
last fiscal, it appears quite difficult to reach the last fiscal's earnings during the remaining
quarter.
According to Bangladesh Bank (BB) data, Bangladeshi migrants remitted a total of US$
10.48 billion during the July-March period of the FY 2013-14. The same was $11.12 billion
during the corresponding period of FY 2012-13.
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The government is reportedly taking various efforts in order to reverse the existing trend
of overseas jobs. For raising the trend of increased labour migration, senior officials of the
government recently held a meeting with the Bangladeshi ambassadors in various
potential job markets in the Middle East and Libya. Another such meeting is expected to
be held this month. The government is also trying to explore markets in Europe, Russia
and Belarus as there is potential demand for foreign workers in those countries. The
government, in the meantime, has increased the number of labour wings in the overseas
Missions from 16 to 28 in the worker receiving countries. At present, around 8.6 million
Bangladeshis are working in 159 countries. Workers' remittance constitutes 12 per cent of
the country's gross domestic product (GDP).
Manpower export started declining since 2009. What is worrying is that a large number of
migrant workers returned home after job losses. The number of returnees has been rising
followed by no worthwhile efforts in terms of either rehabilitating them or sending out
fresh hands. The manpower and expatriate welfare ministry is now faced with the dual
challenges of riding out the tide of job losses, shortening of contract periods or the
tendency on the part of the employers not to renew service contracts on the one hand,
and of exploring new job markets on the other. The standing committee on manpower
export blamed flawed policies of the expatriate welfare ministry and the laid-back
attitude of the country's Missions for the declining trends.
When Malaysia suspended work visa of 55,000 Bangladeshi workers in 2009, there was no
state-level intervention to resolve the issue. Since then, Malaysian authorities recruited a
large number of workers from Nepal. Similarly, Saudi government has shown keen
interest to hire Indian and Nepalese workers for its various emerging sectors. The
question thus arises: why are Nepali workers in high demand there?
It is argued that the Nepalese government had successfully propagated their people's
image as hard working and loyal to the employers. And it is the failure of the Bangladesh
government in projecting the true image of the nation abroad. A section of local media
and government officials are unnecessarily active in projecting the country as a terrorist
state. Such projection tends to leave a serious impact on overseas recruitment, as none
would like to employ foreign nationals who belong to a society vulnerable to terrorism.
It is also a failure of the state-agencies to project the true image of the nation in the
outside world. On its part, the government did something good for the welfare of the
migrant workers. It has set up an expatriate welfare bank. This, no doubt, is a positive
step towards looking after the welfare of the migrant workers. The authorities have
established 30 new technical training centres and five new marine technology institutes in
35 districts, that are expected to produce 0.1 million skilled workers each year.

21

In fact, the manpower export sector deserves necessary incentives so that it can flourish
and add substantially to the country's foreign currency reserve. The incidence of
fradulence by a section of unscrupulous agents must be dealt with strictly.
What is important at this stage is that the manpower agents and the government should
join hands not only to revive the demand for Bangladeshi workers in traditional
destinations but also to explore new markets. However, it is to be noted here that most
manpower-importing countries are interested more in employing skilled workers. The
authorities should take pragmatic steps to create a productive manpower, properly
trained in trades that are in high demand in those countries.
Experts say the government should take effective measures to resume the Saudi Arabian
and the UAE markets. At the same time, it should come out from the government-togovernment migration process in sending workers to Malaysia. They say, if the present
migration trend continues for long, the country's remittances will be affected severely and
the rate of unemployment will increase remarkably.
In order to stop the falling trend of manpower export, it is necessary to launch a vigorous
diplomatic drive to persuade the traditional manpower importing countries to open their
doors to the Bangladeshi workers. The Bangladesh Missions need to be restructured with
a view to effectively dealing with the emerging situation.

14 Redefining small and medium enterprises


The Bangladesh economy has undoubtedly passed through a considerable transformation
over the last few decades from an agricultural base to an industrial thrust. Now the
economy needs to intensify its industry-based activities. In order to achieve Vision 2021,
we also need to shift to a knowledge-based economy.
Small and medium-sized enterprises (SMEs) are called the engine of an economy. These
provide jobs, create entrepreneurial spirit and innovation and are thus crucial for
fostering competitiveness. However, these enterprises are often confronted with market
imperfections.
SMEs frequently have difficulties in obtaining capital or credit, particularly in the early
start-up phase. Their restricted resources may also reduce their access to new
technologies or innovation. Therefore, support for SMEs is one of the country's priorities
for economic growth, job creation and economic and social cohesion. The Bangladesh
Bank (BB) plays dual role i.e regulatory and development, in promoting the SMEs in
Bangladesh.

22

Most academicians and economic policy-makers claim SMEs as the backbone and at the
same time we often see statement that 'there appears to be no universally accepted
definition of SMEs'. Both these claims are true. At one level, the issue of SME definition
comes down to eligibility for special support. National governments, multilateral and
bilateral development institutions, and NGOs support SME development with a varied
menu of interventions, including pumping billions of dollars in special credit lines and loan
guarantees, firm level business development services and technical assistance, and fiscal
incentives.
The presumed intention of the SME policy in Bangladesh is to provide this assistance to
enterprises that need them most and are able to use assistance in order to help grow
further under adverse conditions for the good of our economy. Most of the large
companies in Bangladesh as well as global institutions like Microsoft, Apple, Ford Motor
Company and Federal Express began in a small way. Therefore, definition of SME is a very
vital policy issue for the economy.
CURRENT DEFINITION: The government agencies such as the Bangladesh Bureau of
Statistics (BBS), the Ministry of Industries and the Bangladesh Bank provided varying
definitions of large, medium, small, micro and cottage industries in the past. Past
industrial policies from 1973 to 2005, the Industrial Policy 2010, the SME Policy Strategy
2005 and the Bangladesh Bank SME Credit Policies and Programmes 2010 are sources of
such definitions.
However, SME definition formulated by the Ministry of Industry vide its Industrial Policy
2010 is now being followed by all concerned because of its legal status. The BB on the
basis of the Industrial Policy 2010 circulated SME definition for compliance of all banks, FIs
and their SME clients. All cottage, micro, small and medium enterprises, falling under
manufacturing, service and trade under a circular on SME definition will come under
purview of SME financing. The definitions of SME vide BB circular no. 01/2011 dated June
19, 2011 is as follows:
The new circular gives emphasis on the following:
* Cottage and micro enterprises have been brought under purview of banks and FIs'
financing along with small and medium enterprises.
As success of manufacturing depends on trading of products, trade has been included in
the definition of SME issued by the BB.

Generally, there is no accepted worldwide definition of SMEs. However, in Bangladesh the


above definition is used which is mainly based on head count or value of fixed asset
excluding land and factory building. There are two parts of the above definition. One is
23

measurement indicators like value of fixed assets or number of persons employed and the
other is threshold level of each indicator like 100-250 persons.

LIMITATIONS: When we talk about definition, it seems meaningful if we could define


SMEs by their functional and behavioural attributes. Given the impracticability of
quantifying such attributes for a large number of companies or firms, reasonable proxy
measurements used worldwide are as follows: employees (head count), assets (size) and
turnover (size).
First of all, the very important indicator turnover is missing. Why turnover is important is
discussed in the later part of the write-up. Secondly, it is not clear which indicator or
threshold is compulsory. Thirdly, it is to be found whether both indicators are qualifying
indicators. Fourthly, there is no linkage with loan limit. Fifthly, what's about group or
linked enterprises? Sixthly, what will happen if SME Unit goes above a particular threshold
for a point of time and revert back say for example by next 13 months? In that case, will it
lose its SME status between the periods?
THREE MEASUREMENT INDICATORS: Defining SMEs by the number of employees suggests,
may be incorrectly that the larger an enterprise is, the more employees it will have, and
that to grow, it must take on more employees. This latter notion would certainly not be
welcome by many analysts worldwide.
Many publications argue that cross-country studies and multi-country policies that use
numbers of employees to define SMEs run the risk of classifying businesses by their
inefficiency or their lack of value addition. Despite almost all the definitions used
worldwide number of employment is used as a measurement indicator for defining SMEs.
However, definition of employed persons needs to be clarified such as officers, full time
labourers, part-time labourers, 'consultants' or 'students'.
Despite few deficiencies of the method, the asset criterion for defining business size is
also used worldwide. But the threshold level varies from country to country. The
deficiencies of this method are the following:
* SMEs rarely have a precise estimate of the value of their fixed assets
* Where there is inflation, local currency values for various fixed assets are likely to be
understating the 'true value' of the assets, as a regular restatement of such assets is
generally not required.
* The asset base of an increasing share of growth-oriented companies will be defined by
rapidly depreciating assets. In these situations, the value of fixed assets can decline even
as revenues and employment increase.
24

* Just as employment-based definitions tend not to recognise labour efficiency, assetbased definitions tend not to recognise capital efficiency.
If you ask any entrepreneur (assuming you are not a tax inspector) how big his or her
business is, the response is not likely to be, "I'm having 100 employees now," or "My asset
value is up to 3 million." Rather, you are more likely hear, "We had 30 million in sales last
year."
If you are trying to sell a business that has recently graduated from SME to large size, you
will surely not promote it on the basis of how many people it employs. Rather, as
investment professionals who have actually sold such businesses will tell you, you will
pitch it first on the basis of its growth in sales and market share, and only later, in more
detailed negotiations, will the focus turn to multiples and net asset values.
In Bangladesh, where employment figures and profits are often seriously blurred by tax
considerations, one might say that sales are the measure of all things. A definition based
on turnover would seem to be both realistically measurable and meaningful.

Of the three conventional tools, measurement of business size by turnover also most
closely reflects functional and behavioural attributes. If we measure something which
does not reflect the typical SME, we should not be surprised if what we find as a result of
analysis does not have relevance for the typical SME either. Turnover information may not
always be accurate, but the magnitude of turnover is generally either available or
relatively easy to extrapolate. And as we have seen, gaining information as to
employment or assets is fraught with many problems.
PROPOSED DEFINITION: The European Commission has adopted the following new SME
definition. It says, 'The category of micro, small and medium-sized enterprises (SMEs) is
made up of enterprises which employ fewer than 250 persons and which have an annual
turnover not exceeding 50 million euro, and/or an annual balance sheet total not
exceeding 43 million euro." The new SME definition, which entered into force on 1
January 2005, represents a major step towards an improved business environment for
SMEs and aims at promoting entrepreneurship, investment and growth.

Based on pros and cons as elaborated, it is proposed that our policymakers revisit the
definition of SME according to the following three criteria: employee (staff headcount),
annual turnover (size) and fixed asset (size).
Major Challenges:

25

* Determining turnover threshold: Once we agree to incorporate turnover in our SME


definition, then the major challenge would be to determine the threshold level for each
category of SME. Tom Gibson and H J van der Vaart propose a formula for defining SME in
terms of annual turnover: 'An SME is a formal enterprise with annual turnover, in U.S.
dollar terms, of between 10 and 1000 times the mean per capita gross national income, at
purchasing power parity, of the country in which it operates." It is a matter of discussion;
however, it captures the relative measures of the economy.

* Exceeding threshold on a point of time: What happens if SME Unit goes above a
particular threshold? Through a clear policy we may resolve the issue. For example, if SME
exceeds the headcount or financial ceiling during the course of the reference year, this will
not immediately affect the situation. SME Unit will retain the SME status with which it
began the year. However, it will lose the status if it exceeds the ceiling over two
consecutive accounting periods. Conversely, it will gain SME status if it were previously a
big enterprise, but then fall below the ceilings for two consecutive accounting periods.

* Group or linked enterprises: We need to define autonomous enterprise, partner


enterprise, linked enterprise and group enterprise. Say for example, enterprise A is linked
to enterprise B through the holding of 60 per cent but B also has two partners, enterprises
C and D, which own respectively 32 per cent and 25 per cent of B. After defining
enterprises, an appropriate calculation mechanism needs to be developed to determine
the size of each enterprise. If an individual proprietor has 5 separate concerns and among
which 2 concerns fall under SME and remaining 3 fall under corporate, in such case what is
the status of proprietor?
Objectives of Proposed Changes:
* To ensure that only those enterprises which genuinely fall under the category get the
benefit of SME status
* To track the migration of one segment to another with respect to economic activity and
GDP contribution * To promote real SMEs.
* To take account of different relationships between enterprises.
* To include real SMEs into various public schemes and regulations i.e risk weight, rating
scale, notch and methodologies are different for SMEs compared to corporate.

26

* To establish a clear picture of an enterprise's economic situation and to exclude those


that are not genuine SMEs
* To make it easy for the stakeholders to identify SMEs

15 Higher education tailored to economic development


According to UNESCO, Higher education includes all types of studies, training, or training
for research at the post-secondary level, provided by universities or other educational
establishments that are approved as institutions of higher education by the competent
state authorities. In Bangladesh higher education begins after 12 years of successful
schooling. This definition of higher education is used in this article. The author argues that
without a critical minimum mass of human resources empowered with higher education
and training, no nation can achieve economic development. Particularly, higher education
in science and technology is more important. By implication, higher education needs to be
given higher priority than it has received in the past in national development plan. The
author also argues that higher education should be promoted and provided in such a way
as to achieve the required level of economic development. To provide higher education in
a planned way, the country needs to prepare national manpower plans. Therefore,
Bangladesh Five Year Plans should contain a separate chapter on national manpower
planning matching various targets of economic development. For rapid economic
development, higher education should get higher priority than it has received in t

16 Importance of Higher Education


Higher education, particularly in science and technology, is the most important
prerequisite of economic development. In fact, it is the prerequisite of all other
developments, namely, political, social, cultural, etc. It is to be noted that economic
development includes industrial, agricultural, technological and all service sectors
development. The graduates produced by both public and private universities and
colleges under National University (assuming that they get high quality and relevant
education and training) work as powerful engines of economic development. The
graduates of world class universities can provide the most important ingredients of
development, namely, required knowledge, skills, leadership, innovation and changes.
The higher the quality of education, the better is the performance of the graduates at job
situation. The universities and other institutions of higher learning are established to
impart top quality education and produce top quality graduates who stand out as
27

professional leaders in their respective fields. However, it is not the quality of graduates
alone that is necessary for economic growth and development; the quantity is equally
important. The number of employable graduates produced by the universities must be
large enough to meet the requirements of all the sub-sectors that contribute to overall
economic development. The universities or the institutions of higher learning are
required to produce highly skilled manpower equipped with education and training in all
relevant disciplines. Economic development happens with inputs or services of scientists
including agricultural and medical scientists, engineers, IT experts, computer engineers,
economists, business executives, management experts, accountants, biotechnologists,
teachers/ professors, etc. Economic development is synonymous with knowledgeeconomy. Here lies the importance of higher education.

17 Need for Manpower Planning


Bangladesh does not have a higher education system that supplies manpower in a
planned way. What we have is a supply-driven pool of human resources. The supply is a
function of the production capacity of the producers, namely, universities
and colleges. Often supply (university graduates) does not match the demand for
graduates with qualifications the employers look for. This happens due to lack of
manpower planning.
Our National Five Year Plans (FYP) indicate the vision, mission, goals and targets of
primarily economic, social and cultural development. Bangladesh does not have a
separate manpower plan. It is essential that Five-Year Plan includes a separate chapter on
a manpower plan. This plan needs to indicate the categories and number of skilled
manpower necessary to implement the FYP. Manpower planning exercise will indicate, for
example, how many computer engineers, IT experts /technicians and how many
Universities of Science and Technology and colleges will be required to produce the
required number of skilled human resources to implement a sustainable Digital
Bangladesh program. Similarly, the export potential of shipbuilding industry of
Bangladesh is quite promising. The export of ships built in Bangladesh is growing rapidly.
The government can alert the universities of Engineering and Technology to prepare
themselves to produce an increasing number of shipbuilding engineers and naval
architects. Similar exercise may be carried out to meet the demand for engineers in the
field of power generation, transmission and distribution; and engineers of different
specializations keeping in view the construction of large bridges like Padma bridge, and
the network of flyovers in major cities. Furthermore, to make our efforts successful to
establish a sustainable food security program, we need to strengthen the agricultural
universities and research institutes so that they can increase the supply of agricultural
research scientists. The manpower plan under reference should include projection of the
categories and number of the scientists that will be required in future. Similarly, for health
sector, the demand for additional medical doctors of required specializations should be
28

estimated. These are only few examples. There are many more types of manpower
required for economic development for which estimates must be made. Then the number
of institutions of higher learning (general, sciences, medical, agricultural, engineering and
technical) with their capacities to produce graduates with relevant education will have to
be estimated. These institutions / universities will supply the required types and number
of graduates keeping in view the national manpower; otherwise, lopsided development of
universities will be unavoidable. Absence of such a manpower planning tends to lead to a
mismatch between supply and demand of human resources which may result in slowing
down economic progress.

18 Revisiting the Education System is Necessary


In Bangladesh there are 38 public universities and 78 private universities. These
universities supply skilled manpower to man all economic activities. Until recently, public
universities were the sole suppliers of highly skilled manpower. Situation has changed
with the emergence of private universities. Graduates of some reputable private
universities compete with those of the good public universities. But mismatch between
the demand and supply continues. This happens because there is no coordination
between national Planning Commission, UGC and universities. This causes conspicuous
lopsidedness in the development of higher education in Bangladesh. Besides, in most
cases quality of education is poor. There is no dearth of graduates, but most of them are
not suitable for the positions the employers can offer.

The above implies that the institutions of higher learning must impart relevant and high
quality education and training matching the national manpower plan.

It is to be noted that higher education is one of the three major components of the total
education system, the other two being primary and secondary. These three are
interdependent. One cannot discuss the quality of higher education without reference to
that of the primary and secondary education because both secondary and primary
education form the foundation of higher education. On the other hand, the quality of
education imparted at primary and secondary schools depends on the quality of education
and training the teachers of primary and secondary schools receive at the tertiary level. If
these teachers are not well educated and trained, most of the children (students of the
primary schools) do not attain the target level literacy. Consequently, the foundation of
their basic education continues to be weak. There are some other weaknesses that reduce
quality at primary level education. Often teachers do not complete the syllabi because
many schools do not have required number of class rooms or seating places, sometimes
students do not have text books, schools do not have required teaching aids, occasionally
29

teachers remain absent and some students do not attend the classes regularly. As a result,
although the boys and girls pass the school tests and spend five years in the schools, many
of them are found not prepared to study at the secondary schools. Quality of their
education remains poor. When they are promoted to the secondary level, they continue
to carry the burden of inadequacies and weak foundation. As in the primary schools,
many of the secondary schools do not have well qualified teachers. On the top of it, their
number is less than required. The weaker students who come from the primary schools
continue to remain weaker at the secondary level as well. Excepting a smaller percentage,
the weaker students continue up to the college and university level and get their degrees.
To be sure, one must note that all schools, colleges and universities (public and private) do
not provide low quality education. There are very good schools, colleges and universities
in Bangladesh. When graduates of these institutions of higher learning go to the
employment market, meritocracy prevails. The brilliant and meritorious graduates get
attractive jobs quickly at high salaries. Less brilliant and meritorious graduates also get
jobs; however, they take time and of course get low paid jobs. Some graduates opt for
entrepreneurship. But these graduates are not necessarily less brilliant or graduates of
poor colleges or universities. However, only brilliant and meritorious graduates can
expedite the process of economic development. This means, economic development can
hardly be achieved without high quality higher education. As the country progresses
economically, the demand for higher education increases also. For this, higher priority
must be given to higher education than it has received in the past. Given the public fund
constraints, the government should provide various incentives to motivate entrepreneurs
to establish better quality private universities.

19 Private Universities and Quality Improvement


Given the above situation, an important question is: how to improve the quality of higher
education? I chose to discuss the quality assurance questions with reference to private
universities only, although quality of education imparted by the public universities and
the colleges under National University needs to be improved.

In Bangladesh, higher education in various forms is imparted by the degree colleges,


university colleges, universities both public and private, and also the government
approved institutions of technical education and or training that admit students who have
completed 12 years of formal schooling. Here universities are mainly focused. A well
established university is a comprehensive research university that integrates three major
functions, within a single institutional framework: teaching-learning, research and public
service. At the initial stage, a university is likely to be exclusively a teaching-learning
institution. With acquiring increasing effectiveness in teaching, a university tends to add

30

research activities as its second major functions. The advancement of knowledge through
research is an essential function of all systems of higher education.
Of the 78 private universities, about 60 universities do not provide internationally
acceptable quality education. To meet the expectations of the students and also for the
benefit of the country, these universities are morally, if not legally, bound to enhance the
quality of education they impart. To provide high quality education, a university must
meet the following conditions:

1. To design and offer academic degree programs that are internationally acceptable and
relevant to the Bangladeshi economy and society. After the students successfully finish a
program, they should be employable both in Bangladesh and abroad. Those universities
that want to be internationally reputable must equip their graduates with the ability to
compete in the international job markets. This calls for substantial enhancement of
quality.

2. To hire high profile professors and scholars who are sufficiently qualified to undertake
research, and teach the courses included in the degree programs. In addition to
internationally reputable professors, adequate number of associate professors, assistant
professors and lecturers should be recruited. Standard teacher- student ratio needs to be
maintained.

3. To admit highly promising young minds (brilliant students) who have demonstrated
academic achievements and leadership quality and will be able to complete the degree
programs successfully.

4. To ensure availability of necessary infrastructural facilities like well designed campus


buildings, class rooms well-equipped with computer terminals and power point facilities,
completely digitized libraries, computer centers, laboratories for relevant disciplines,
auditoriums, cafeteria, recreation centers for students and faculties, playground, etc. that
create academic atmosphere.

5. Research and publications should be made compulsory for all teachers. All teachers
should have a computer terminal and a designated computer equipped with latest
internet facility and software necessary to do advanced research.

6. All teachers should be provided with a Faculty Manual that states what the teachers are
required to do and what they cannot do. Deans and Chairmen of the departments should
31

form a team to monitor the performances of the teachers. Non-compliant teachers should
be punished and the compliant teachers rewarded.

7. Institutionalized best management practices and an over arching good governance


system must be in place. This is necessary to make happen all the things listed at # 1
through # 6 above.
Conclusion
The level of education is important, but its quality is more important. Without a critical
minimum mass of human resources empowered with relevant education and training no
nation can achieve economic development. Higher education and national development
are interdependent. To accelerate the pace of development a country must acquire ability
to impart high quality higher education and to acquire the ability to impart quality higher
education a country must develop economically to generate necessary resources. In fact,
education system must be integrated with development process. Higher education should
be promoted and provided in such a way as to achieve the required level of economic
development. To provide higher education in a planned way, the country needs to
prepare national manpower plans. Therefore, Bangladesh's Five Year Plans should contain
a separate chapter on national manpower planning matching various targets of economic
development. Higher education needs to be given higher priority than it has received in
the past in national development plan.
Enrolment in the private universities is much higher than that of the public universities.
If quality of education imparted by all the private universities is improved at the desired
level, their graduates will be able to help accelerate economic development of
Bangladesh. Various incentives should be provided to increase private investment in
higher education. Both public and private universities and other institutions of higher
learning will operate simultaneously to produce skilled graduates to promote economic
development.

20 Ensuring effective implementation of ADP


The approval of Taka 860-billion Annual Development Programme (ADP) for the upcoming
fiscal 2014-15 by the National Economic Council (NEC) at its Tuesday's meeting with Prime
Minister Sheikh Hasina in the chair, marks the completion of the substantial part of the
budget-making exercise by the Finance Minister. The main task of this exercise now at this
stage will be the finalisation of the resource mobilisation programme and allocation of
funds for different ministries and their relevant affiliated bodies, for meeting their
recurring (both current or revenue and non-development) expenditures. Ensuring the
availability of resources for funding the ADP, after meeting the revenue expenditures that
have otherwise been bulging over the years and footing the bill for other nondevelopment current expenditures, is the main challenge before the Finance Minister.

32

Meanwhile, the proposed ADP for the next fiscal year (FY) that will be about 32 per cent
higher than the revised one for the current one, in its financial size, does reflect the
priority of the government for raising the level of public investment in different sectors.
These include transportation, education, power, physical infrastructure, water supply,
public housing, rural development and institutions, agriculture, health, nutrition,
population control, family welfare etc. There is no debate over the needs for increasing
public investments in such sectors, considering their critical relevance to meeting the
national development goals and objectives.
Furthermore, there is also no denying that the economy, at its current stage of
development, needs a big push in public investment when private investment is showing a
sluggish trend. Efficient use of public investment funds can have a positive impact on
private investments if the former, in qualitative terms, helps 'crowding-in', not 'crowdingout', the latter. There are lots of things to be done for the purpose. The capacity for
execution of ADP projects has to be strengthened. The focus has to be unmistakably
placed on timely completion of the major on-going projects without leaving scope for cost
over-runs. Resources should likewise be made available for ADP projects without
generating pressures on macro-economic management or strains on the price situation.
The ADP projects, therefore, need to be prioritised under a sound economic rationale.
Inclusion of non-essential projects to accommodate the pressures of the vested political
interests has to be avoided so that resources are not thinned out to cover an
unmanageable kit. Technical assistance projects should also yield the desired results. In
tandem with all such actions, there must be more vigorous efforts for utilisation of
external resources from the 'aid pipeline' because such funds are less costly and their
optimum utilisation can make Bangladesh's case stronger for obtaining new aid
commitments by multilateral and bilateral capital donors.

The points that have been noted above merit an urgent attention in view of Bangladesh's
unsavoury experiences with ADP implementation, pruning its size substantially through its
revised version, year-end rush for release of its funds following earlier slacks in
implementation etc. Such problems must be overcome with determined efforts, if the
ADP is to serve its intended goals and meet its stated objectives. Here, the size of the ADP
should not be a matter of controversy in view of the facts that the country's economy has
expanded in size and the ratio of public investment to its gross domestic product (GDP) is
still low -- at about 5.5 per cent. What matters most is the quality of public investments so
that the capacity of the national economy to help support its sustained, accelerated
growth performance is strengthened. A physical performance matrix for execution of ADP
33

projects and arrangements for its routine, periodic reviews to relate inputs with outputs
and to assess their effectiveness, in terms of costs and benefits, need to be
institutionalised on a priority basis.

21 Debate on effective ADP implementation


There has always been a debate about implementation of Annual Development
Programme (ADP). Its slow implementation and the irregularities involved give rise to
such a debate. It is found that the original ADP is revised and its size is squeezed.
Moreover, a new ADP is found to contain almost 80 per cent of its projects brought
forward from the previous Revised Annual Development Programme (RADP). The issue
can be discussed from different angles.
Since the successive governments of Bangladesh have long been pursuing the pro-poor
growth strategy, the priorities of all the development programmes are written almost in
the same words. In every development programme, one would find the chronological
priorities like macro-economic stability, rapid economic growth, creation of employment
opportunities, increasing the supply of electricity and gas, human resource development,
enhanced agriculture production, ensuring health services and education for all,
strengthening local government institutions, development of rural infrastructure,
sanitation and supply of safe water, women's empowerment, control of crimes and good
governance. During this term of the present government, one more priority has been
added, namely, expansion and development of digital information and communication
technology (ICT). Successful implementation of the ADP would certainly play a pioneering
role in achieving the priorities set in the plan documents. The success, both in quantitative
and qualitative terms, depends on administrative and financial efficiency of the agencies
concerned. Unfortunately, thorough studies are not made to see how far the priorities
have been fulfilled.
Every year the ADP is revised. It is a legacy. The original ADP for the fiscal year (FY) 201213 had an outlay of Tk 550 billion (55,000 crore). Last week the Executive Committee of
National Economic Council (ECNEC) revised it and reduced its size to Tk 523.66 billion
(52,366 crore). A proposal was there to lower it to Tk 503.66 billion (50,366 crore). But in
view of the ensuing general election the ECNEC did not go for a large cut. While the
resources decreased, the number of projects increased to 1,190 in the RADP from 1,033 in
the original ADP. Generally it happens due to political consideration. There is also a list of
600 unapproved projects without allocation. These projects have been listed to appease
the public representatives.

34

There has been a drastic cut in project aid implying inability of the concerned ministries
and agencies to utilise donor money. The allocation of project aid and local money has
declined by 14 per cent and 4.5 per cent respectively. This is also reflected in the Japanese
Debt Cancellation Fund (JDCF). It is a fund of interests on Japanese loans which Japan
gives back as donation. The ministries and agencies have the incapacity to utilise this
fund. Interestingly enough, allocation from the JDCF has been reduced from Tk 13.38
billion (1,338 crore) to Tk 7.89 billion for the FY 2012-13. Although, agriculture and health
sectors deserve priority, the allocations are only 5.5 per cent and 7.9 per cent of the total
ADP outlay respectively. Moreover, attention has not been given to the regional disparity
and to 15 million downtrodden people living in char (reclaimed land) and coastal areas.
Only Tk 170 million (17 crore) has been earmarked in the RADP for such special areas. A
list of 26 projects under the Public Private Partnership (PPP) initiative has been included in
the RADP with no allocation. Successive ADPs over the last four years were aimed at
launching projects under the PPP without success.

So far as implementation of ADP is concerned, the Planning Commission was satisfied


with the project execution performance of 44 per cent during the period of July 2012February 2013, which was 6.0 per cent higher than the performance in the corresponding
period of the FY 2011-12. A total of 23 ministries and divisions recorded the
implementation progress ranging from 44 to 61 per cent, 16 ministries and divisions saw it
within the range of 30-43 per cent and 10 ministries and divisions 21 to 28 per cent. The
remaining four ministries and divisions saw it within the range of 4-17 per cent. The worst
performers were the Ministry of Foreign Affairs with 4.0 per cent and the Bridge Division
10 per cent.
ADP implementation in Bangladesh has always been criticised over the years. Data show a
trend where, with some exceptions, the implementation of revised ADPs has been found
to be around 90 per cent. The exceptions were: 104 per cent for the FY 1977-78, 100 per
cent for 1980-81, 101 per cent for 1988-89, 112 per cent for 1989-90 and 100 per cent for
1999-2000. Only in the FY 1988-89, utilisation of the original ADP outlay was 100 per cent.
Still many projects were found to have seen time and cost overrun.
A meticulous observation makes evident the problems with effective implementation of
development projects in Bangladesh. The problems are there at four stages: (i)
preparation and approval of projects, (ii) their inclusion in the ADP, (iii) problems during
project implementation, and (iv) the post-implementation problems.

The problems at the first stage include an ad-hoc approach, prompting completion of
work hurriedly, poor knowledge about resources and disregard for time limit of project
preparation. At the inclusion stage, many projects are hurriedly considered, for which the

35

financial implication and consistency with national development objectives are ignored.
So, many projects cannot be completed in time.
Several common problems are there at the implementation stage. Acquisition of land
takes time. It may even take two/three years. Full-time and experienced project directors
are not appointed timely. Even if appointed, they are frequently transferred. The
procurement of goods and services for the project takes a long time. In cases of big
procurements, it generally takes two quarters (six months) for preparation of tender
documents, notification, acceptance, evaluation, approval, awarding of the job and
signing of contracts. These simply lead to time extension and escalation of costs.

At the end of the fiscal year, therefore, there is a competition for spending the allocated
money when the formalities are not followed properly. This leads to irregularities and
corruption. Moreover, it is mandatory to surrender the unspent money to the treasury at
the end of the financial year, but the agencies usually fail to do so.
After implementation of projects, the main problem lies with the maintenance work. As a
result, buildings, roads, bridges and culverts constructed under development projects
become risky or unusable after some time. Also, the infrastructure built under
development projects remains unutilised for a long time. This happens usually in the case
of hospitals and educational institutions.
Who is to blame for such anomalies? Certainly, they are the ministries and agencies
involved in preparation, implementation and monitoring of development projects and,
more importantly, the people behind them.
The writer is an economist

22 Whither rural credit market?


For the sake of simplicity, an expression of willingness on the part of a household to
borrow money from any source would be taken as a proxy for demand for credit by that
household. During a census by BRAC in 62 villages in 2013, and through a dichotomous
question (Yes or No), households were asked about their interest in taking loan. In
response to this question, three-fourths of the respondents reported willingness; only
one-fourths signalled no interest. There appears to be little variations across farm size or
tenurial class on this.
Again, since credit and extension should go hand in hand, an additional question was put
before the households about their access to government extension services. In response
to this question, roughly four-fifths reported no contact whatsoever with government
36

extension workers in the year preceding the census; a small proportion reported to have
met extension workers once or twice a year.

Arguably then, a huge proportion of households in rural areas, including the poorer ones,
have been deprived of both credit and extension services. The observation is reinforced by
the information that, roughly four-fifths of the respondents from pure tenant households
have expressed their willingness to accessing credit, and they performed relatively worse
in terms of accessing extension services.
That a large proportion of rural households aspire for an access to credit market is not a
surprise. The reason lies in emerging changes in the rural inputs and output markets as
well as in vastly expanding non-farm activities. For example, with the introduction of
expensive HYV package in rice production, the demand for working capital has grown
many folds. A move from subsistence to commercial agriculture has necessitated more
financial capital that is difficult to meet from own savings. Second, and perhaps more
importantly, growing mechanisation in some areas has compelled farmers 'cash in hand'
to pay for hiring machines for cultivation or threshing. Particularly in recent years, cash
payment for inputs has greased the seasonal demand for cash money. Third, many rural
households need now credit to mortgage-in land or operate land under fixed-rent tenancy
both of which require financial access. And finally, running trade/business, and transport,
rearing livestock/poultry for income generation also need financial capital in excess of
own savings.
While demand is there, supply doesn't seem to match demand as revealed by statistics
that only 44 per cent of all rural households reported to have accessed credit in 2013. A
survey on households in 62 villages in earlier decades put the ratio at 37 per cent.
Appreciably then, accessibility to credit has increased over time but, sordidly, 60 per
cent of the rural households still remain outside the reach of rural credit networks - be it
formal or informal. This implies that provisions for cost-effective and inclusive financial
facilities in rural areas that is heard about, doesn't tally with the realities on the ground.
Of course, a little room for comfort awaits elsewhere, and it is the most discernible and
dramatic change in the structure of rural credit market to benefit the poor borrowers.
Rural credit market in developing countries is generally dubbed as fragmented and dual.
Fortunately for Bangladesh, the credit market could possibly grow over time by shedding
some of its dual and fragmented features. One way towards this was the shift from noninstitutional to institutional sources of credit. Metaphorically speaking, the former
witnessed a sunset and the latter a sunrise over time. It would not be an exaggeration to
say that the transformation in the credit market is a 'golden chapter' where roughly onethird of rural households in 2013 reported to have borrowed money (on average $352)
from institutional sources. More importantly, the lion share of the total loans available to

37

rural households now flows from institutional sources like banks and NGOs (nongovernmental organizations).
However, the cloud gathers at the disaggregated level. Data show that only 2.0 per cent of
households have accessed credit from commercial banks, and banks' share is only 13 per
cent in total credit of households. This observation perhaps implies that credit from banks
is yet to reach a respectable proportion of households in rural areas - an allegation
looming large in the horizon for a pretty long time. This means that all said isn't all done
particularly when pitted against commitments of successive governments in establishing
cost-effective credit supply chain in rural areas.
Another eyesore is the distributional aspect of bank credit. More often than not, banks
are alleged to bypass the poor in the delivery of credit. Although it is difficult to test this
hypothesis with short and focused census questionnaire, results from three rounds of
sample surveys conducted in 1988, 2000 and 2008 lead almost to the conclusion that
bank credit went mostly to land-rich households who could provide collateral. There is
another supportive evidence - the average size of the bank loan at $1,156 hints that only
large and medium ones could access to lumpy loans.
However, this is undoubtedly an eyebrow-raising news but should be interpreted with
some caution. Many commercial banks - without branches in rural areas - are reported to
channel credit through NGOs working with rural households. Since census data were
generated from household receiving loans from NGOs, the contribution of banks could
have remained suppressed by some margin.

The dominant players in rural credit market are the NGOs - mostly operating under the
umbrella of micro credit. Roughly one-third of all households borrow 60 per cent of their
total institutional credit from them. Thus it indicates that NGOs, not banks, are the
vanguard of channeling institutional credit in rural areas. The average size of the NGO-led
loan at about $300, reminds us, first, that their main clients are functionally landless
households with low absorptive capacity and second, the smaller loan size also points to
the demand constraint that might have discouraged banks and other institutional
arrangements to reach rural households, especially the poorer ones.
From Shakespeare's Merchant of Venice to Rabindranath Tagore's Duibigha Jomi - all
depict heart-breaking episodes that non-institutional credit has allegedly created. This
source has been a bane rather than boon for households. But one would be struck by the
surprise that, even today roughly 12 per cent of rural households go for non-institutional
credit to access about one-third of their total credit . The mind-boggling question is: why
do households lean on these sources embracing an exorbitant rate of interest (say 10 per
cent per month) and inter-linked transactions?

38

There could be many reasons behind this but we would pick up four important ones: (a)
access to non-institutional sources of credit involves almost no transaction cost - readily
available to serve as a friend in need; (b) the average size of loan provided by this source
is higher than that of the NGOs. Thus, households requiring a moderate sized capital
without any transaction cost might prefer to knock at non-institutional doors; (c) a big
chunk of non-institutional credit is provided by friends and relatives, but many of them
don't charge any interest rate on the loaned money, and (d) backward areas with poor
infrastructure, backward agriculture and rudimentary financial facilities are safe havens of
these sources.
What is the size of the rural credit market? Taking the average size of loan at $411 for all
rural households tend to suggest that the size of the rural credit market in 2013 was to the
tune of about Tk 400 billion (40, 000 crores) which is 5.0 per cent of the gross domestic
product (GDP).

23 BB's refinancing facility for jute industry


The move by the Bangladesh Bank (BB) to create a Tk 2.0-billion fund for refinancing the
country's jute mills - both state-owned and private - and raw jute traders has merit but is
fraught with risks. This follows the government's refusal to provide a payment guarantee
against the scheme. Against the backdrop of incurring heavy losses by jute mills under the
Bangladesh Jute Mills Association (BJMA) despite the earlier injection of Tk 5.0 billion into
the body for resuscitating its units under a 20-year programme, the government's refusal
to provide further such guarantee is understandable. Now, will the fresh fund to be
disbursed through commercial banks at as low an interest rate as 9.0 per cent improve the
performance of the loss-making units? If this is just a desperate attempt to save the dying
factories, what should count most is the viability of those units. A comprehensive
assessment of the factories is well in order to see if they can survive after further injection
of funds.
Common sense dictates that jute mills should not incur losses in normal situations,
particularly at a time when people the world over have made known their preference for
natural fibre to artificial ones. Jute has staged a comeback in more ways than was
imaginable a few years ago. In the Indian state of Paschimbango, it is now a thriving
industry and farmers at the grass-roots level too feel encouraged to cultivate jute there
because of the proceeds from the crop. Why it is completely reverse in the case of
Bangladesh is beyond comprehension. When Bangladesh produces the best quality of
jute, superior to that produced in Paschimbango, the sluggish demand for jute at the
farmers' level and the losses incurred by jute mills here point at problems at the level of
policy-making and management. How the central bank proposes to lift the sector from

39

this moribund state is not yet clear. But about one thing there is no doubt that immediate
closure of factories will be suicidal.
Already farmers have lost their interest in jute cultivation because of uncertainties over
sale of their crop and price tags. If the 20 per cent loans of the Tk 2.0 billion fund
earmarked for jute traders are properly used for jute procurement, at least jute farmers
are not expected to face trouble in disposing of their produce at a reasonable, or some
cost-plus, price. But how is it to be ensured that the money will be used for the intended
purpose? Conditions attached to loan sanctioning have to be all-inclusive and stringent so
that the exercise does not add to the country's default culture. All will agree that revival
of the jute sector at this juncture of civilisation concerned with environmental backlash
will be a plus point for Bangladesh. But the people running the show at the manufacturing
level seem to be busy with things other than their main job -that is to make the units
profitable. If people across the border can capture the international market, there is no
reason why Bangladesh should fail to claim its rightful share.

24 Challenges for the new banks


Over the past decade, Bangladesh economy enjoyed favourable economic environment
and grew at approximately 6.0 per cent with tolerable inflation. Major economic
indicators like gross domestic product (GDP), exports and imports have tripled in the last
ten years; industrialisation and trade have soared to unprecedented heights. Growth in
the "real" economy has fuelled the growth of the country's banking sector which has seen
an increase in deposits by over 400 per cent and assets by around 500 per cent in the last
ten years. Simultaneously, per capita GDP has more than doubled and yet more than half
the population is still unbanked.
The central bank's decision to allow licenses to nine new banks is not without merit.
Regardless of political motivations, a logical argument can be made beyond the unbanked
population argument -- that more competition will improve service quality and ultimately
benefit the consumers. From the sponsors' standpoint, beyond the ego factor of
sponsoring a bank, a logical argument can be made about the potential economic benefit
for the sponsors based upon past record, which is estimated to be 25 per cent+ over 10
years from inception of a bank, approximately 15 per cent higher than the risk-free rate in
Bangladesh.
PAST PERFORMANCE DO NOT GUARANTEE FUTURE RETURNS: This is all-sounds-great in
theory but the ground reality is different and challenges faced by the management and
shareholders of new banks cannot be minimised. Banking industry is already highly
competitive with many well-established local and international banks having a firm grip

40

on the target market. Therefore, unless these new banks get their act together fast,
shareholders could suffer a major set back and even worse some could face extinction.
SHOW ME THE MONEY: Let us refresh our memory about how banks make profit. Banks
make money by primarily three ways. First, earning a spread between the deposit rate
and the lending rate. Second, fee income from various products and services, and the
third, from proprietary investments. This is obviously overly simplified. However, all these
modes of earning potential is possible to some extent provided the demand is growing,
banks are well-capitalised and have the proper human resource and the rest happens
automatically. So what are the challenges?
IT IS ALL ABOUT PEOPLE: At present the banking sector is suffering from an acute shortage
of skilled and adept professionals which significantly dent operational efficiency,
prospects for long-term growth and not to mention corporate governance challenges.
Beyond a few foreign and local banks, unfortunately the quality of staff beyond the Chief
Executive Officer (CEO), Managing Director and Deputy Managing Director (DMD) levels
the quality drops drastically. Depth and breadth of knowledge unfortunately are poor.
This is an ominous sign for the industry since professional human resource is essential for
the growth and development of the industry let alone the shareholder's interests. There
are weaknesses at every level of the banking industry starting from leadership to product
development, operations, and risk management. These weaknesses obviously facilitate
frauds, mismanagement, and value destruction for shareholders and encourage and breed
substandard corporate governance culture in the financial sector.
The first challenge for the new banks will be attracting the right leadership and support
teams from a shrinking pool of candidates. It will not be easy to attract talents for a newly
established entity. The most likely outcomes are: either you end up recruiting an
unqualified team due to budget constraints or you end up paying a significant premium
for talents. Compromising on recruiting professionals probably would be the biggest
mistake the sponsors can make in the current competitive market. If you recruit weak
managers, then they end up attracting even weaker subordinates and we all know how
that works.
ATTRACTING DEPOSITS: While, most banks offer similar commodity type products, they
are combating with each other in most cases on price/yield, realistically, the new entrants
can gain an initial advantage and capture market share by offering higher deposit rates.
Falling deposit rates at present driven by recent political uncertainty, risk averseness, lack
of demand for loans and recent spike in demand for short-term government securities
provide a lower rate environment. But this provides no relative advantage to the new
banks. Therefore, needless to say, attracting deposits will be a great challenge and only
offering higher rates and better service may facilitate deposit growth of the new banks.

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LENDING TO THE RIGHT CLIENTS: Contrary to popular belief that aggressive marketing, or
in this case aggressive lending, may help quickly capture market share and drive banks'
profitability, in reality the long-run success of these new banks depends on ensuring that
they lend to the right clients. Most of us are aware of the result of aggressive growth in
the lending portfolios. As a lender, you only get the stated interest and the principal
within the maturity date at best and you have no upside like equity investors. This is why
one must wonder why many banks even today lend to entities with no real capital or a
sliver of capital created from revaluation and other financial engineering. If the new banks
fall into this temptation this could be the first nail in the coffin. Chasing yield and risking
principal are the fastest ways to go bankrupt. Therefore, logically to attract strong credit
worthy corporations, the new banks will be under pressure to attract by offering lower
borrowing rates again compressing the margins/spreads further.
TAPPING THE UNTAPPED: With around half the population unbanked, the biggest
opportunity for new banks exists for targeting unbanked rural populations offering them
the right products and services. Opening cost-efficient branches and nimble service
centres in suburban and rural areas can substantially boost asset size and simultaneously,
bring the much-needed diversification that every lender requires to spread out its risk.
However, bricks and mortar are expensive and expansion initiatives must be done after
due diligence and return on risk capital considerations.
LAST MOVER ADVANTAGE: Despite the challenges, new banks have some vantage points
comparing to the existing banks. Currently the industry maintains non-performing loans
(NPL) of 8.93 per cent+ which is similar to the levels back in 2007. While all the other
government and private commercial banks have been working hard to clean their books,
new banks have the luxury to formulate carefully thought-out strategies for market
penetration. It is a well-established fact that many of the existing players are required to
recapitalisation to maintain minimum capital adequacy. It is a daunting challenge to
concentrate both on business expansion and recapitalisation effectively. Moreover, it is
more likely that banks will become cautious in further lending that can be an opportunity
for new entrants -- a definite blessing in disguise. For past ten years - in the backdrop of
consistent economic growth driven by export and remittance, balance sheets of banks
have inflated due to aggressive lending, stock market and real-estate bubble and finally,
the head-wind -- the sector is now facing serious challenges due to poor balance sheet - all
these incidents provide a road map of do's and don'ts for a new bank.
EMBRACING NEW TECHNOLOGY: The biggest advantage for a new bank is the opportunity
to embrace technologies to get an edge over the existing players. We expect disruptive
technologies to impact banking globally and also to some extent in Bangladesh. For
instance, the growth and advancement of mobile technology now provide the plumbing
for delivering products and services unthinkable even a few years back. In Bangladesh,
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more than 70 per cent of the population lives in rural areas, where financial services are
generally inaccessible. Furthermore, with the advent of 3G technology in Bangladesh,
internet penetration promises to grow exponentially in the coming years. Lessons can be
learnt from organisations such as bKash, which has proven how financial services can be
delivered conveniently and at a low cost. We believe this is just the beginning and more
game changing technologies are expected. Essentially, incorporating technology in
disseminating financial services, will allow these entities to tap into the core as well as the
periphery of the market.
A proponent of free market would think that, increased supply of banks is generally good
for the consumers. However, the road to success is not smooth at all - and is expected to
be even more challenging in the future. It is not an option but essential to invest in
intellectual capital, attracting deposits at competitive rates, focusing on unbanked
population, selecting right clients, learning from past mistakes, embracing new
technologies and most importantly, developing effective leadership. How well these new
banks execute on these dimensions will finally determine their fate in the future.

25 Ensuring economic security


Threats to economic security of Bangladesh emanate from both internal and external
sources. Internal insecurity comes mainly from massive poverty and while the external
one originates mainly from the process of globalisation. Substantial dependence on
external assistance and smuggling also are two other important sources of economic
insecurity.
Bangladesh is a small country with a territory of 1,47,570 square km having a population
of about 160 million. It is one of the most densely-populated countries in the world.
Shortage of food had been a usual phenomenon. The country now has to import food
almost every year at the cost of valuable foreign exchange. This is despite the fact that
Bangladesh is making considerable progress in achieving food security, for example, by
increasing the annual per capita availability of food grains by 35 per cent over the last 20
years.
However, the population increase and the external shocks may hamper this achievement,
as did the price hike in 2008. At the end of 2008, it was estimated that 45 per cent of the
country's population was still suffering from undernourishment, while nearly a quarter
was facing severe undernourishment having access to less than 85 per cent of the daily
requirement.
A low resources base, poor economy, lack of good governance and high incidence of
natural disasters, characterise Bangladesh. All these factors have adverse implications on
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economic growth, poverty situation, food security and hunger. Different sources say that
about 20 per cent of the population (32 million) is ultra poor, being defined as absolutely
landless people, living on Khas land or lands belonging to others and not having any
productive vocation. They face continuous and severe food insecurity and suffer from
hunger and malnutrition.
During the last ten to 15 years, there has been a significant diversification in the rural
economy. Small trade, services and off-farm processing and manufacturing increased in
importance. However, agriculture and fisheries remain critical to the livelihoods of many
poor, both for self and wage employment. Further, the process of diversification of the
rural economy and livelihood options is still greatly dependent on growth of agriculture
and productivity of natural resources including land, water, fisheries, forestry etc.
Bangladesh achieved considerable success in the last two decades in terms of economic
growth and progress towards some critical Millennium Development Goals (MDGs). The
Gross Domestic Product (GDP) in Bangladesh grew by 6.01 per cent in the fiscal year 20122013 from the previous year. Bangladesh was one of several Asian economies enjoying a
sustained growth spurt over two decades.
But there is a widespread perception, even in Bangladesh, that in terms of governance
and aspects of well-being related to human security, performance has not improved over
this period. Some aspects of human security may even be deteriorating. Personal security
and the security of property are serious concerns for many Bangladeshis. Political violence
and instability also remain persistent drivers of insecurity despite the hopes raised at the
time of Bangladesh's transition to democracy in 1991.
There is clearly an anomalous relationship in Bangladesh and in many other developing
countries between economic growth and progress towards the MDGs and other aspects of
human security. We need a better understanding of these relationships, and in particular
of the drivers of a range of critical human security conditions that go beyond governance
conditions.
The definition of social security has been a contentious issue with several connotations of
the term being prevalent in the literature on the subject. The interpretation given to the
term assumes overwhelming importance as it shapes the type of public policy that is
implemented in a country. The issue becomes particularly problematic when the concept
is applied to widely diverse situations in differing socio-economic contexts.
The restructuring of the industrial sector in countries like Bangladesh and its consequent
change in levels as well as structure of employment generated intense debate among
researchers as well as leading international development agencies on meaning of the term
'social security'. Apart from being a large country in terms of population, Bangladesh also
has a considerable proportion of the poor about 31 per cent still below the officially
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declared poverty line. The ongoing programme of economic reforms means considerable
restructuring of the manufacturing sector leading to changes in the level as well as
conditions of employment, social security and standing.
The persisting internal political instability, political violence, increasing population,
entrenched poverty and lack of good governance are posing serious threat to the
economic security of Bangladesh. Indeed such problems multiply everyday with added
dimensions with the changing atmosphere.

26 Human rights disclosures and RMG sector


The readymade garment sector (RMG) has been the backbone of the country's economy
for a considerable period of time. The garment manufacturers in Bangladesh have time
and again proved their entrepreneurial capabilities and innovative management skills.
Consequently, the sector has flourished despite frequent political turbulences and natural
calamities. Bangladesh is currently the second largest exporter of readymade garment
products in the world. If the trend continues, the country is expected to take over the
leading manufacturer's mantle from China in due course of time. However, to sustain this
phenomenal success, the RMG sector has to respond to concerns raised by foreign buyers
regarding supply chain management.
Arguably, Bangladesh has the capacity to produce the cheapest RMG products among its
competitors. However, this competitive advantage is sometimes potentially offset by a
few shattering incidents that are capable of creating negative perceptions in the minds of
the foreign buyers. Perceptions are important, especially for the big multinational
companies which use Bangladesh as an important supply chain.
Investors, who provide the capital for the large multinationals, are often wary of ethical
trading norms, especially when it comes to dealing with manufacturers from developing
countries. From the buyers' point of view, therefore, it is important to be able to assure
their investors that their supply chains are managed ethically, and this is where incidents
such as Rana Plaza collapse certainly do not help. If the foreign buyers perceive the risks
of buying products from Bangladesh to be higher than the benefits received from cheap
outsourcing, they may simply go elsewhere. The onus, therefore, is on the Bangladeshi
manufacturers of RMG products to address the concerns about ethical issues so that the
buyers are more confident of a sustainable supply chain. This is where extended financial
reporting can make an important contribution.
Admittedly, the quality of financial reporting has never been one of the strongest features
of the Bangladeshi corporate sector. The highly concentrated family-ownership structure
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prevailing in many Bangladeshi companies has led to the development of a corporate


culture where the role of important corporate governance mechanisms, such as external
auditing, is usually undermined. The investors in the capital market rarely use company
financial reports as an important basis for their investment decisions, and share prices do
not appear to have much relationship with the accounting figures being reported, making
such reports somewhat symbolic. Due to the absence of such 'direct' benefits, the
company management is reluctant to pay high audit fees or to make effective use of other
corporate governance mechanisms.
The case of extended reporting relating to human rights issues, however, is different, and
has special relevance for the RMG sector. When the main users of audited financial
statements in Bangladesh are family owners and the company managements do not
depend on the capital market for their finances, in case of the RMG sector, the foreign
buyers are the more powerful stakeholder group. Although these buyers have no concerns
as far as the financial health of the manufacturing companies are concerned, they would
need to be assured that ethical practices are being followed in the local RMG companies
so that the lenders of their (foreign buyers) capital continue to provide financial support.
Therefore, the local RMG companies have sufficient incentives to provide additional
financial reporting disclosures relating to human rights issues.
Human right reporting is a relatively recent development in the area of financial reporting.
The reporting landscape is driven by guiding principles issued by the International Labour
Organisation (ILO) and the Organisation for Economic Cooperation and Development
(OECD). However, guiding principles of both the ILO and the OECD relating to reporting on
corporate human rights issues were aimed at multinational companies only. In 2011, the
United Nations issued a set of guiding principles relating to corporate human rights
reporting. These guiding principles, embedded in a framework referred to as 'protectrespect-remedy', are applicable for all businesses.
According to the UN guiding principles (2011), all businesses should make disclosures
regarding a human rights policy, incorporating elements such as non-discrimination in the
workplaces, use of child labour, presence of collective bargaining agents (CBA) for
workers, working conditions and the payment of fair wages to the workers. In accordance
with the guiding principles, major multinational companies in the world have already
produced human rights policies and have disclosed these either in their annual reports or
on their websites. For example, companies such as Walmart and Primark, both important
buyers of Bangladeshi RMG products, have designated web pages regarding ethical
trading in Bangladesh. Such disclosures are made with a view to allaying concerns of
important stakeholder groups, and there is no reason why companies operating in the
RMG sector in Bangladesh cannot do so, especially as some of the elements in the human
rights policy could actually be used to portray a more positive image about the sector.

46

The RMG sector in Bangladesh has managed to change the lives of an astonishing number
of women workers. However, this rarely attracts the attention of the important global
media, whereas incidents such as the Rana Plaza collapse easily hit the headlines.
Providing disclosures relating to such 'positive' discrimination in the RMG sector,
therefore, could be beneficial for the sector.
Also, disclosing the fact that the labour law in Bangladesh explicitly prohibits the use of
child labour, and actually requires the presence of collective bargaining agents for
protecting workers' rights (except in EPZs) can provide important assurance to the buyers.
It is true that many of the elements of the UN guiding principles are embedded in western
values, and the socio-cultural environment in many developing nations can be
significantly different. For example, in western countries, if a worker is a member or a
leader of a CBA, it is deemed to be more ethical and responsible, as he has voluntarily
opted for working on issues that help protect the rights of their fellow members.
Unfortunately, in the case of Bangladesh, many CBAs do not have a positive image. This is
mainly due to the political culture of the country where CBA leaders are expected to have
a political affiliation, and consequently, end up being partisans. Interestingly, the UN
guiding principles do not actually require such presence. Rather, it actually gives
companies the opportunity to use such disclosures to explain legitimate reasons for the
non-existence of CBAs in some cases.
Overall, making disclosures relating to human rights issues can go a long way towards
mitigating some of the concerns of the foreign buyers and maintaining the competitive
advantage created by the low-cost structure that Bangladesh suppliers are able to offer.
However, for any such disclosures to be effective, it is important to ensure that any
disclosures being made by RMG manufactures are authentic and not just mere claims.
Therefore, such disclosures would need to be certified by an independent assurance
provider. In many countries, such services are provided by audit firms as well as other
non-audit assurance suppliers. Bangladesh has a good number of audit firms and this may
become an important source of revenue for these firms. However, for providing these
types of assurance services, the audit firms also need to be trained in aspects of human
rights disclosures.
The RMG sector is crucial for the country's economic success and we cannot afford any
stagnancy or negative growth in this sector. Bangladesh already has the advantage of
being able to offer the lowest-cost RMG products in the world. It is important to ensure
that we can cash in on such competitive advantage, and it is not offset by concerns
regarding ethical supply chains, which can be avoided. This is where extended disclosures
relating to corporate human rights policies can certainly make a contribution.

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27 Self-regulation and good governance


Free market economy demands less or zero government interference. From this concept
emanates the theory of self-regulation. It is presumed that the business organisations will
regulate themselves by following the rules of games. That is why they are also known as
self-regulatory organisations (SROs).
First of all, let us discuss the case for the developed countries, virtually the protagonists of
free market economy. In spite of the freedom enjoyed by the business houses, there are a
number of various strong regulatory authorities which oversee the activities of the
business organisations. Apart from these, the government issues instruction from time to
time.
Today the publicly traded companies are to include independent directors in the Board of
the Directors of a company. Earlier, all of them were elected by the shareholders at the
annual general meeting (AGM). As common practice, the minority shareholders hardly
had any say in the formal election of the directors. It was because the controlling
shareholders would have already selected directors outside the AGM. After the mega
corporate scam in 2001 in the USA, the then President George W Bush issued the
instruction for inclusion of independent directors. This has now become a global order.
The independent director is one who will not have any kind of financial stake in the
company.
\In the USA, the issue of monopoly is directly handled by the government. Comcast,
Americas largest cable company, announced that it would buy Time Warner Cable, the
largest provider of TV and broadband after Comcast, for about US$ 45 billion. Market
observers apprehend that it would create a Goliath because it would have more than 30
million TV subscribers and 33 per cent of broadband customers. So, American regulators
should block Comcast's proposed deal with Time Warner Cable. The matter will be settled
at President Obama's level.
Now let us come back to our own country. There are various trade bodies and associations
known as self-regulatory organizations (SROs). What is their performance? In the
insurance sector, a chaotic situation is prevailing. Removal of two ills can improve the
situation. These are the stoppage of the credit business, and the heavy undercut of
premiums. A decade back, Bangladesh Insurance Association (BIA) framed some rules for
smooth running of business in the sector. In presence of the then Commerce Minister, the
rules were put into operation and the members of the BIA were loud in their promise. But
subsequently, it was more honoured in breach than observance. The government set up
Insurance Development and Regulatory Authority (IDRA) to bring back the insurance
sector on right track. A section of insurance mandarins left no stone unturned to make it a
failed organisation.
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The Finance Minister openly expressed his indignation at their activities. Decades back,
Dhaka Vegetable Oil Company, an edible oil company, was sold to a high-profile
businessman for implementing the policy of privatisation. When the company was under
a government corporation, it was making huge profits. It was traded at the stock exchange
as a blue chip issue. The company was shut down under the private ownership. Is it
believable that a company, which was earning huge profits under the government
management, would collapse after it was taken up by a well established businessman? It
is reported that the industry possessed huge landed property and priority was given to
that sector.
Before the introduction of the Securities and Exchange Commission Act, the affairs of the
capital market were conducted under the Capital Issues Act 1947. Usually, a joint
secretary of the Ministry of Finance performed as the chief controller of the Capital Issues
Act. It was a highly regressive Act. A listed company could not issue any right/bonus
shares or enhance the salary of the chief executive, let alone raising of capital without the
prior permission of the chief Controller of Capital Issues (CCI). When Mamunur Rashid, the
erstwhile CSP, was the CCI, he removed all these obstructions and every thing was left at
the hand of the company. Taking the advantage, a company issued rights shares at the
rate of 125 against one. Probably, this might be a world record in the corporate sector.
The SEC was compelled to step in and restricted the issue probably at 10.

In 2001 in the USA, the world famous energy company Enron and a few other companies
collapsed and the audit giant Anderson was the villain. So, in spite of improved and
acceptable audit system, President Bush had to set up an accounting authority known as
Public Company Accounting Oversight Board.
In Bangladesh, the Finance Minister while presenting the budget for financial year 20112012, informed parliament that the Financial Reporting Act would be passed with a view
to ensuring transparency and maximum disclosure of the accounts of the publicly traded
companies. This would safeguard the interest of the general investors. The Act is yet to
be passed. A few days back the Finance Minister said that it would be placed in the next
session of parliament.
Earlier, representatives from the Asian Bank Development (ADB) visited Bangladesh. They
expressed satisfaction over the performance of the economy but categorically stated that
they would not release any further fund unless the proposed Financial Reporting Act was
passed and implemented . We do not know when the odyssey of the Act would be over. It
is natural that the Institute of Chartered Accountants of Bangladesh (ICAB) would be
antagonised but the government should do what is necessary to do.
Bureaucracy and delay are synonymous in Bangladesh. This kind of delay has given birth
to a wonderful term in the budget expenditure known as June final. June 30 is the
49

valedictory day of an ongoing financial year. Unspent amount is shown as spent one in a
dubious manner and these irregular expenditures are carried out up to
August/September.
We have respect for trade bodies, associations and other related organisations. They will
continue their status as SROs. But they have limitations also. They can hardly control and
restrain any member from the activities which may be violation of rules and laws. The
government machineries are to act in accordance with laws and the trade organisations
should fully cooperate. The garments sector may be discussed in this connection. This
scribe acted as a director, marketing in a garment house at the early stage of the sector.
The employees were not given any appointment letter. They were provided with identity
cards which were to be deposited at the time of entering the factory. A worker might have
worked for years but if the authorities wanted he or she would simply be asked not to
come to the factory from the next day. The victim had nothing to show that he or she
worked for long and would be deprived of any benefits provided in the laws.
Government authorities did not look into the matters and supervise safety measures likely
to be taken by the company. Negligence by the government machineries is one of the
majors reasons for the chaotic situation in the sector. The result has been withdrawal of
GSP (Generalised System of Preferences) facilities and constant monitoring, supervision
and even reprimand by the foreigners. We, as an independent nation, could not discharge
our responsibilities. We could not ensure good governance. Good governance does not
mean undue interference or creation of hindrance. Its only function is to see that the
existing laws, rules and regulations are followed.

28 Restoration of US GSP: Some observations


We have for some time been locked in rhetoric and war of words over the temporary 'loss'
of trade benefits under US Generalised System of Preferences (GSP). Emotional outbursts
have taken centre-stage in the country on the modalities of winning back the lost
privileges, with the US still sticking to the suspension. It is often said that Bangladesh will
get back the trade facilities if the issue is not 'politically twisted'. In support of this claim,
the oft-repeated argument being put forward is that out of 16 prescriptions, 13 have been
followed --- with the rest three being at the completion stage. Any encouraging response,
however, from the US side has yet to be forthcoming.
Let us say a few words with reference to the GSP regime. It encompasses a unique offer to
lift the less developed countries from the vicious cycle of economic backwardness and
bring about economic development there. The benefits accruable under the GSP facility
are unilateral, non-reciprocal and non-discriminatory for developing countries including
special measures in favour of the least developed countries (LDCs). All products of a
country are not covered under a GSP regime.
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Only those products which are included in the Rules of Origin of a particular scheme are
eligible to enjoy differential and zero rate of duty to enhance a country's competitive
edge. Bangladesh, being an LDC, almost all its eligible products enjoy entry into the export
destinations on zero duty. Exception is that for Bangladesh, ready-made garment (RMG)
items are not duty-free under the US GSP scheme, and more than 12 per cent import duty
is imposed on all apparel products that enter the ports of that country. The unique
feature of the scheme is that the benefits are extended with no strings attached, and the
donor country does not ask for similar benefits from a beneficiary country. Rather, a
donor country sacrifices a good chunk of revenue income in the form of customs duties on
imports from the beneficiary countries. This exceptional offer may be termed a kind of aid
through allowing trade into a donor country duty-free.
This remunerative offer from the developed countries does not guarantee free rides for
the beneficiaries. Availing of benefits without interruption is contingent upon fulfilling
certain obligations, which have been enunciated in the US Trade and Tariff Act of 1984.
Section 507(4) of the Act provides a definition of internationally recognised workers'
rights which includes protection of Intellectual Property Rights, the right to association,
the right to organise and bargain collectively, acceptable conditions of work with respect
to minimum wages, hours of work, occupational safety and health. A country can lose
some or all the GSP privileges if it continuously fails to meet these requirements.
IT DID NOT TAKE PLACE ALL ON A SUDDEN: It would be pertinent to go for an in-depth
look at the problems that continuously had afflicted Bangladesh in the past. The
suspension of GSP benefits for Bangladesh has not occurred all on a sudden and abruptly.
We have a long history of utter negligence and inability to abide by the prescribed
conditions for years together. For the last 23 years, the American Federation of Labour
and Congress of Industrial Organization (AFL-CIO), a very powerful and influential labour
organization, has been repeatedly hammering the office of the United States Trade
Representative (USTR), an agency responsible for developing trade and recommending US
trade policy to the President, for suspension of the GSP benefits for Bangladesh since
1990. The AFL-CIO filed 'country practice petition' against Bangladesh to USTR in 1990,
1999, 2004, 2005, and, lastly, in 2007 complaining about flagrant violation of labour rights
and labour rights limitations in the EPZs. In the last petition, AFL-CIO unequivocally stated,
"The government of Bangladesh has been too neglectful for too long shirking the duty to
protect workers who are the backbone of Bangladesh economy" The suspension of
benefits under GSP for Bangladesh expedited with the murder of labour activist Aminul
Islam in 2012, and the shocking fire accident at Tazreen Fashions. The last nail was put
into the coffin after the collapse of Rana Plaza building killing over 1100 workers in the
worst industrial accident in Bangladesh, which moved the world conscience.
The above scenario adequately suggests that the suspension of GSP facility was not
politically motivated. Rather over the last several years, Bangladesh did not take the
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whole gamut of the issue in right earnest for implementing compliances in the RMG
sector. Every government over the years took the issue casually, and resorted to
procrastination when it came to remedial measures on the factory premises. Thus, the
problems snowballed into insurmountable proportions and the inevitability ultimately
could not be averted.

A SUCCESS STORY: Here we would like to refer to a success story that the government was
able to bring forth in the past. During the early part of the 1990s, employment of child
labour in the RMG units in Bangladesh created a lot of uproars throughout the world. This
prompted US Senator Tom Harkin to introduce a Bill in the Senate for enactment of 'The
Child Labour Deterrence Act' which is popularly known as the Harkin Bill. The Act banned
import into the USA the products made by children in whole or in part. The government
played an active role in the formulation of a Memorandum of Understanding (MoU),
which was signed between ILO, UNICEF and BGMEA for summary dismissal of child
workers removing them from the factories and placing them in schools. In the process,
over 50,000 child workers were removed, making the RMG sector child-free.
Suspending the eligibility of Bangladesh for tariff benefits under GSP programme on June
27, 2013, the US Administration invited Bangladesh for initiating fresh discussions for
taking steps to improve the working environment in the RMG factories in the line with
'guidelines' as enumerated in the US Trade and Tariff Act 1984, so that GSP benefits could
be restored. The US Administration has also asked for appointment of 200 factory
inspectors, punitive actions for violation of building and fire safety rules, creating publicly
accessible data-base for all garment factories containing workers, fire and building
inspection, establishing an effective mechanism through which workers can report on
violations of fire, building safety and labour rights confidentially. It called for setting up
more fire stations in the areas dense with garment factories, separate law for workers
inside the Export Processing Zones (EPZs), permitting the workers to demonstrate for
realising their demands and safeguarding the interest of the workers in the shrimps
factories.
WHAT MATTERS MORE: It is often said that Bangladesh would be able to win back the GSP
benefits conforming to the requirements set by the USA, if the political motive does not
work in this case. The violation of GSP conditionalities provides that the US can use
international political leverage to preserve its foreign and commercial interests in the
form of 'penalties'. However, there is less likelihood for the use of 'disqualifications' as
contained under Section 507(4) of US Trade and Tariff Act as political tool by the US. As a
matter of fact, the US Administration has allowed a long span of time ignoring the
continued pressure from the AFL-CIO so that Bangladesh can bring about desired
improvements in its apparel industry. Now for Bangladesh, compliance of the prescribed
doables matters most.
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At one stage, the BGMEA has demanded re-fixation of standards in line with the national
building code as the standard set by the retailers is too costly and time-consuming. Such a
negative development brings to the fore an ominous sign when we are supposed to go to
any length to reclaim the lost GSP benefits from the USA. The Bangladesh Garment
Manufacturers and Exporters Association (BGMEA) members might have in the back of
their mind that apparels are not covered under the US GSP, and hence they have nothing
to lose even if the trade benefits are not reinstated. It is worth mentioning that the
European Union (EU) also joined the US for tangible action to make the apparel industry
compliant. The impact might be far-reaching if the EU is influenced to follow suit. The
BGMEA should not be forgetful of the fact that that the 'Sword of Damocles' is hanging
over our head and the non-compliance in any form might wreak a great havoc on the
garments trade in the country if the EU considers that continuation of benefits for
Bangladesh under GSP is not warranted any more. In that event, the country would lose
duty-free entry into the enlarged EU market and its aftershock will be unbearable for the
country's trade.
On February 09, 2014, a newspaper published an investigative report on some factories in
Bangladesh as reported by ITV, a British television network. Their findings include verbal
and physical abuse of workers, slapping and kicking of workers for not working faster and
forcing child workers as young as 13 years to work for 11 hours. Managers of some
factories intimidate, mistreat and threaten to kill the workers if they are involved in
setting up unions. Unions' organisers are beaten and they even lose their jobs and are
made to resign in the process. Some factory owners employ local gangsters to threaten or
attack the workers outside workplaces. These are not auspicious signs and should not be
taken lightly. The BGMEA must identify these non-compliant factories and take action
against the RMG unit owners to weed out such irregularities from the factories. If such
incidents continue unabated, this may stand in the way of getting back the GSP benefits
from the USA.
NO ALTERNATIVE: There is no alternative to regaining the US GSP benefits. Since the
benefits are extended unilaterally, it is the exclusive jurisdiction of the US Administration
to revive the GSP benefits for Bangladesh or withhold it. No preposterous arguments will
yield any positive result. Reinstatement of privileges by the US solely depends on
satisfactory remedial steps in the apparel factories. What is now required is to bring the
USTR into confidence demonstrating satisfactory compliance in the apparel industry, as
outlined by the US Administration.
April 15, 2014 is the deadline by which time Bangladesh is required to submit to the USTR
its compliance report. The government may specifically look into the Labour Law,
amended in 2013, which, in the observation of the USA, contains severe restrictions on
collective bargaining both inside EPZs and outside. If some of the USTR requirements
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remain unfulfilled within the time-frame, officials concerned of the Ministry of Commerce
may sit with the BGMEA, and the US representatives in Bangladesh in an atmosphere of
cordiality seeking further time for smooth compliance

29 Good governance needed for social progress


Bangladesh has been doing better in socio-economic front for over more than last two
decades. The gross domestic product (GDP) has been growing at a steady rate resulting in
per capita GDP of about US $940. The economy has been bestowed with the benefits of
RMG exports and foreign remittances. The longevity of life has increased to an average of
64 years. The literacy rate has increased. Gender parity has been achieved in primary and
secondary level. Women enjoy more freedom in socio-political field. Sanitation has
improved. Child mortality and maternal mortality have been reduced. Bangladesh has
achieved remarkable progress as per certain parameters of the Millennium Development
Goals (MDGs) including poverty reduction.
A Washington-based organisation Social Progress Imperative released a multi-country
analysis report titled the Social Progress Index on April 3. According to this index
Bangladesh was ranked 99 among 132 countries. Among the South Asian countries
Bangladesh scored higher than India, Nepal and Pakistan while lagging behind only to Sri
Lanka.
A multi-country analysis of common standards has been made to see in general whether a
country has the ability to provide its citizens with basic needs, creates scopes for
development of full potentials of the citizens and improve their standard of life.
The strengths of the Bangladesh society have been categorised as reduced child mortality
rate, reduced deaths from infectious diseases, gender parity in secondary enrollment,
reduced human trafficking and child marriage, increased demand for contraception,
respectful treatment of women and improvement in life expectancy. In the context of
Bangladesh , it has enumerated the weaknesses covering less press freedom , less
freedom of religion , religious intolerance , higher still birth rate , less community safety
nets , higher levels of violent crimes and etc. The report has portrayed that Bangladesh's
position in the field of slavery, child marriage, human trafficking and sanitation is
relatively better than that of India. The situation of gender parity in secondary education
is also better in Bangladesh than in Pakistan and Nepal.
Bangladesh can boast of its ranking. But social progress entails many things. It refers to
citizens' access to education, health services, water and sanitation, power and energy,

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freedom of thought, press and assembly, law and order situation and availability of
employment.
Unfortunately, there are dropouts in every level of education. There is lack of quality
education and a discriminatory education system is prevailing. About 75 per cent of
secondary and higher secondary pass-outs get GPA-5 but most of them cannot qualify to
get admission in undergraduate and graduate levels of education. There are different
brands of education like British, American, Canadian, Australian, private and public.
Education is very costly in private educational institutions. This has denied access to
thousands of aspirants.
Medicare on the other hand is very costly for the large majority of the population. In
almost every public health centres and hospitals, patients get free prescriptions. But they
have to bear the cost of medicines and medical tests There is dearth of doctors and nurses
in many health centres and complexes. Many of the doctors posted in the rural areas
remain on deputation in Dhaka and elsewhere. Serious patients, getting no medical
facilities in districts and sub-districts, succumb to death on their way to Dhaka due to
traffic hazards.
Safe drinking water is scarce and more than 40 per cent of population lacks sanitation
facilities. Rivers are being polluted. Electricity still could not reach 60 per cent of
population. There is frequent load shedding. Industries and factories are not getting
required gas and electricity. There are serious traffic hazards. There are road accidents.
Deaths and injuries are galore every day. There are killings including extra-judicial ones.
There are extortions. There is a lot of allegations against law enforcers.
Political uncertainty, some accidents in the RMG sector and overall law and order
situation dampen investment, both foreign and local. The rate of employment generation
is, therefore, poor. Half of the working force is unemployed or under-employed.
Unemployed youngsters become inclined to party politics resulting in many untoward
incidents. In recent times, the situation has come to such a pass that people were denied
their rights of franchise in both national and local elections. All these factors have direct
bearing on social progress.
Bangladesh has achieved a lot. The head count poverty has come down to 25 per cent of
the population. Gender parity in secondary level education has been achieved. Child
mortality has been reduced. There is a wide network of health service institutions in the
country. There is a health and sanitation campaign. But alas ! The service delivery is poor.
People do not have easy access to most of the services. Investors do not feel secure in
investment. Employment generation is meager. A sense of insecurity prevails in the
society. All these point to mis-governance. Good governance having people's trust can
pave the way for development of the people's full potential, meeting their basic needs
and ushering in scopes for better life. And this is what social progress connotes.
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30 Addressing newer challenges to manpower export


Decline in inward remittance in recent times has brought to light issues that call for
immediate attention to devise ways for addressing them. Critical among the problems
include emerging issues in manpower migration which, observers believe, can only be
remedied by a thorough recasting of the existing policies and adopting effective
mechanism. The key problem at the moment is decline in the pool of migrant workers,
accompanied by increasing number of returnees, especially from the Middle Eastern
countries.

As a result of the compound effect, remittance inflow declined about 5.0 per cent in the
first ten months of the current fiscal year. Between July last and April this year, the
country received $11.73 billion in workers' remittance compared to $12.31 billion during
the corresponding period of the last fiscal year. Concerned quarters have attributed this
decline to government's failure in re-opening labour markets in Saudi Arabia, UAE and
Kuwait. These key destinations of Bangladesh's workforce have kept their doors shut to
Bangladesh because of the alleged involvement of some Bangladeshi workers in criminal
activities. Besides, setbacks experienced in the government-to-government (G-to-G)
arrangement to send workers to Malaysia have also caused the overall situation to turn
worse. It is by now well known that despite the pious intent of relieving the workers of
much of their plight at a reduced cost with welfare benefits in their workplaces through Gto-G system, the results so far have remained far short of what was desired. Because of
the known constraints, all that the government should have done was to set the
procedures in place and ask the private sector recruiters to follow.

This has not happened. The government monopoly, while restricting the operation of the
private recruiters, has narrowed the scope for exploring avenues of manpower export. In
this situation, desperate jobseekers are being increasingly deceived by unscrupulous
elements. The number of the incidents of illegal trafficking has also increased. The newly
elected president of the Bangladesh private recruiters association has reportedly
suggested that the government in order to reenergise expatriate workers' migration may
work out a strictly enforceable policy of migration including setting a reasonable cost of
migration, in keeping with the practices in Pakistan, Nepal, Indonesia and Myanmar.

In view of the less than expected success of the G-to-G arrangement, the government
should recast its manpower export policy in a realistic and effective manner in
consultation with the stakeholders. The role of diplomacy, often referred to as being vital
to address the workers' migration issue, has barely been up to the mark. While diplomacy
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at the state level is important, overseas Bangladesh Missions should also be tasked to
remain constantly focused to be able to monitor the situation and also suggest timely
actions. Given the crucial contribution of inward remittance to the economy, the country
can ill afford to see its prospects slide. The picture, as the indicators suggest, is beginning
to look murky. Right steps may still hold things from falling apart.

31 Budget: The spectre of instabilty


Finance Minister AMA Muhith is expected to present the national budget for 2014-15 in
parliament next month. The budget of a country is an account of government's income
and expenditure and a projection of growth for the incoming fiscal year. The budget
speech of the Finance Minister thus is viewed as a check-up report on the overall health of
the economy.
As an individual, Mr Muhith can genuinely take pride in presenting six budgets in a row;
his government can duly claim credit for enlarging the budget size to Tk 2.5 trillion or
more. Again, some appreciable changes in terms of internal resource mobilisation, and
undertaking reforms in some key areas are also worth noting. To many, the most
important advancement has been in the area of energy - more power generation and less
load-shedding than in the past - although criticisms regarding rental power still cast a
shadow on the path of success. Netting out the odds from the evens, the economic
growth rate - an important indicator of the economy's health - in the current fiscal is
estimated to hover around 5.4 per cent to 5.6 per cent under different shades of
assumptions (the government sticks to 6.2 per cent plus). It may be mentioned here that
Bangladesh has been passing through a zone of 6.0 per cent-6.7 per cent growth rate for
the last one decade as compared to 4.0 per cent for the initial decades after
independence. This possibly tells us that economic reforms that helped graduate from 4.0
per cent to 6.0 per cent plus may not be effective in pushing the growth trajectory to 7.0
per cent-8.0 per cent which is direly needed for eradicating poverty.

The most disconcerting note for the last decade is that the rate of private investment
centred round 26-27 per cent of GDP (gross domestic product). Private investment
stagnated while public investment showed a marginal upward trend. With the present
capital-output ratio of 4, the economic growth rate could hardly exceed 6.0 per cent. The
question is without investment rate going up, how we could expect a rise in the growth
rate and a fall in the poverty rate. One could also argue that the attained economic
growth is adduced mostly to the informal sector, contributed by corruption and
environmental hazards making it unsustainable.

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By any stretch of imagination, the outgoing fiscal year was not a normal year. It was
adversely affected by political turmoil of an unprecedented scale in Bangladesh's history.
Political instability paralysed almost half of the fiscal year, and has seriously hit many
sectors, especially services, below the belt. These sectors contribute a larger slice to our
growth. Such heinous happenings not only affected the quantity of growth but also its
quality. It appears that the political sky is still shrouded with cloud and thunderstorms to
threaten another bout of instability that we witnessed before. But life has to roll on and
the Finance Minister has to show the nation the signs of solace.

Undoubtedly, the upcoming budget is going to be the most challenging one at least
compared to the ones that Mr. Muhith has presented so far. Quite obviously, and given
his long experience in bureaucracy and politics, he could see the road ahead and drive us
safely home.

But as a common citizen of the country, we would like to make a few points. In the budget
in the offing the Finance Minister should give topmost priority to improving governance.
That there has been serious deterioration in governance is revealed by many studies, and
we can also watch its wane by looking around us. Unless governance can be improved, it
would be a futile exercise to boost investment and thus growth.
The Finance Minister should continue giving emphasis on infrastructural development.
Infrastructure development and connectivity expansion are the most important way of
attracting investment.
We are happy to note that the Finance Minister has expressed his vow to improve the
quality of human capital base. After decades of emphasis on quantity of enrolment in
educational and other institutions, time has come to look at the quality of education.
Progress in and potential of decentralisation of power, privatisation of loss-making stateowned enterprises and further reforms in revenue collection and administration should
get emphasis in his budget speech.
The million-dollar question at the moment is how to boost private investment. To answer
this question, we need to know the perceptions of enterprises about the constraints they
tend to face, and the perceptions appear to change over time. For example, in a World
Bank survey in 2007, 15 per cent of the sample enterprises viewed political instability as
the main concern of the private sector but in 2013 survey, the share rose to 45 per cent!
While electricity was considered a big constraint by 45 per cent of sample enterprises in
2007, it declined to 28 per cent in 2013. Similarly, access to finance appeared as a major
concern by 40 per cent in 2007; it was reduced to 15 per cent in 2013.
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Finally, more enterprises see corruption as a major obstacle to investment than in the
past. If the survey results are taken with a grain of salt, political instability and corruption
lurk in the horizon as major impediments to increased private investment.
It can possibly be assumed that the government has made progress in reducing the
barriers of access to finance and electricity over time but corruption and political
instability are posing as threats to negate overall investment. We can only hope that the
Finance Minister would suggest ways and means of handling such crises through a
judicious policy-mix. There is no doubt that Bangladesh has made strides in helping the
economy take a positive turn but to raise the investment rate to 30 per cent of GDP is a
very big challenge that could only be faced with a new generation of economic and
administrative reforms. It also needs firm political commitment to rule of law for all and
relaxation for none.

32 Remove barriers to the economy


Recent trend of our economy shows that it has got a sluggish motion. It is reported in the
media that all the indicators of our economy show disappointing trend. There is negative
trend in investment, especially foreign direct investment, though there is no politically
untoward situation prevailing in the country at present. Foreign investors are closely
observing our political situation and are cautious in taking decisions on investment. They
are sceptical as the present political scenario may go unstable anytime. So, it is the fear
that still persists. Besides sluggish investment, inflow of foreign remittance by our
expatriate labours has slumped in recent times. Export of manpower has also declined.
The government might not achieve the targeted goal for this fiscal year due to the above
mentioned reasons. While this will affect the projected growth of GDP in this fiscal, the
target of achieving Middle Income Country (MIS) status by the year 2021 would also be
badly affected. We have to achieve GDP growth 7.6 per cent for upcoming successive
years in order to be a middle income country.

The party in power came up with 'Vision 2021' in its last tenure that envisaged many
goals. The government should take urgent steps towards removing hindrances to meet
those goals.

33 Reducing poverty in urban areas


With the share of agriculture in the country's gross domestic product (GDP) gradually
falling, a large number of rural people today crowd urban centres for shelter as well as for
livelihood. Bangladesh now has an urban population of about 35 million, or just over 25
per cent of its total population. Moreover, the urban population has been growing very
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rapidly at over 3.5 per cent annually.


According to a projection, Bangladesh is likely to have an urban population approaching
50 million by 2015.This rapid growth will be due primarily to migration by the rural poor,
particularly to large metropolitan areas. On arrival, these poor migrants routinely turn to
slums and squatter settlements for shelter. All major urban centres in Bangladesh have
slums and squatter settlements, the largest concentrations being in Dhaka, followed by
Chittagong, Khulna, and Rajshahi.
While the major thrust of poverty reduction schemes of the government and development
agencies like the Grameen Bank (GB) and the Bangladesh Rural Advancement Committee
(BRAC) is on rural areas, some development partners have also focused their attention on
urban poverty.
Dhaka is the largest city in the country. It comprises 34 per cent of the overall national
urban population and is unrivalled among Bangladeshi cities in terms of its economic,
social and political opportunities. Dhaka has been growing very rapidly over the last five
decades, particularly due to rural to urban migration and urbanisation.
The visiting regional director of UNDP has acclaimed Bangladesh's success in reducing
urban poverty by 13 per cent during the last four years. Urban poverty in seven major
cities and towns came down from 42 per cent to 29 per cent during the period, a UNDP
report said. Behind such a success is Urban Partnership for Poverty Reduction Project
(UPPR) of the UNDP, along with the governments of Bangladesh and the United Kingdom
and the UN Habitat. The project aims to lift three million urban poor out of poverty.
The programme's unique feature is that it is participatory. More than 800,000 households
have joined roughly 2,500 community development committees, mostly led by women.
About 166,000 households are now accessing improved water sources while 143,000
households have new toilets. Over 90 per cent of households report being satisfied with
such improvements.
On the other hand, more than 88,000 extremely poor women have been supported to set
up their own businesses through small enterprise grants. Furthermore, 376,000
households now participate in savings and credit groups. The UPPR was instrumental in
establishing the Bangladesh Urban Forum. This is the only forum where urban sector
stakeholders can share their views and shape pro-poor urban policies in Bangladesh.
Bangladesh, through this project, has succeeded in alleviating poverty in the urban
communities through community empowerment and capacity building for local
government, non-government organisations (NGOs) and community-based bodies. This is
being done with direct financial support for community-level basic services and
infrastructure, skills training and group businesses. By the project's end, partner

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communities were healthier and more integrated into the social and economic networks
of the urban areas.
Bangladesh is getting urbanised rapidly, yet this growth is not being matched by a
corresponding growth in services. While poverty reduction efforts are making some
progress and urbanisation rates are slowing down, the sheer number of the rural poor
migrating to the cities and towns makes urban poverty an increasingly important issue. It
is estimated that about 35 per cent of the population in the six largest cities live in slums,
20 and 23 per cent of whom are poor and extreme poor, respectively.
The strategy to cut down urban poverty needs to be well-thought-out. That is why any
project aiming at improving the lot of urban poor needs to incorporate components that
are relevant to building their capacity to manage and improve their own way of living. The
UNDP project offers precious lessons for other agencies working to alleviate urban
poverty in Bangladesh.

34 Economic toll of gas crisis


If and when asked, one can instantly mention a long list of hurdles to industrialisation of
Bangladesh. And the gas and power crisis, along with real or perceived sense of political
instability, will surely be placed at the top of that list. The problem of power has largely
been resolved, albeit in an expensive manner. Besides, efforts are on to find out a lasting
as well as cheaper solution to the power crisis. But, unfortunately, the problem with the
supply of natural gas appears to be unrelenting and indications are strong that the crisis
might aggravate in the coming days.
In the meanwhile, gas shortage has been taking a huge toll on the economy in general and
on industries in particular. Many existing gas-based industries are either closed or running
well below their capacity. A good number of units -- an estimate by the Federation of
Bangladesh Chambers of Commerce and Industry (FBCCI) puts the figure at around 500 -have not been able to start production for non-availability of gas connections. These
industrial units have invested funds worth billions of Taka. The government since 2009 has
put on hold gas connections to new industries. There is a high-powered committee at the
Prime Minister's Office (PMO) to decide on the gas connections to industrial units. But it
has reportedly not met even for once during last eight months.
Leaders of a number of chamber bodies, while talking to this paper recently, highlighted
the plight of entrepreneurs who had borrowed funds from banks to get their industrial
units installed. The delay in launching their industrial units is punishing them, both
financially and psychologically. They are counting bank interests in substantial amounts of
money every month. In fact, most industries that are starved of gas have become sick
even before their going into operation. These units would not be burden on their owners
alone. The banks too would be victims of the inordinate delay in making available gas to
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many industrial units across the country.


However, a part of the blame for the current deplorable situation goes to the
entrepreneurs concerned also. The owners of the old industries that are not getting
sufficient gas have no option but to suffer. But the sponsors of new industrial units could
have avoided their sufferings, for the crisis of gas is nothing new as it had surfaced acutely
in the early 2000s. They should have thought twice before embarking on gas-based
industries. The government agencies concerned should have also discouraged the
entrepreneurs from setting up gas-based industries under the prevailing circumstances.
As it seems, the gas supply situation is unlikely to improve anytime soon. The on-shore
exploration activities are virtually non-existent. The prospect of any early start of offshore
exploration is remote. The reported refusal by a US oil company to sign deal on an
offshore block has actually made things difficult for the Petrobangla. The government,
however, cannot allow the energy crisis to become unmanageable and should engage
itself without further delay in the task of making available alternative sources of energy at
an affordable cost.

35 Merits and demerits of TICFA for Bangladesh


It is reported that Bangladesh has signed the Trade and Investment Co-operation
Framework Agreement (TICFA) with the US in Washington DC on November 25.
Bangladesh Commerce Secretary and Deputy USTR Wendy Cutler signed it on behalf of
their countries. The Bangladesh cabinet endorsed TICFA in June after negotiating with
Washington for almost a decade.
It cannot be denied that Bangladesh seeks trade and investment from the US and other
countries. Most economists say that investment up to 34% of GDP (currently GDP of
Bangladesh stands at $130 billion) is needed in the next three to five years to cut poverty
and to become a middle-income country by 2021. In this respect, private international
capital flows, particularly foreign direct investment (FDI) are vital complements to
national development efforts.
During the last forty two years, as per the latest Bangladesh Bank survey report, foreign
direct investment (FDI) from the US stands 7th position with $25.6 million in January-June
2012. Majority of the FDI came in the gas and petroleum sectors ($13.5 million) followed
by banking ($8.9 million).
Legal status of TICFA
The TICFA is not a binding contract. It is a framework for establishing a forum between the
US and Bangladesh to tap business and investment potentials of both countries. Bilateral
meeting will be held once a year between the two governments under this institutional
platform
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The agreement emphasises on prohibition of protectionist trade policies, and in the 16parargraph preamble, the protection of intellectual property rights, the role of the
international anti-corruption convention and its importance, the protection of labour
rights (including in the EPZ areas) and WTO commitments of both countries are stipulated
Merits
To promote trade and attract investment from the US, it is desirable to have an
institutional bilateral forum in which both sides at least annually can sit to explore the
potentials for furthering trade and investment in Bangladesh. In its absence the US argues
that trade and investment to Bangladesh will be slow. They also argue that they have
established such bilateral forums with many countries including Sri Lanka.
According to some economists, the TICFA will
Work to remove impediments to bilateral trade and investment
Increase US investment
Promote technological know-how in Bangladesh
Promote labour rights according to ILO standards
Make efforts to curb corruption
Those who are in favour of this agreement argues that there needs to be a forum where
the two countries may discuss trade-related and investment issues on a regular basis and
it is up to the skill and capacity of negotiators of Bangladesh how to get favourable
facilities from the US. The US cannot unilaterally impose unfavourable facilities on
Bangladesh. It is amply demonstrated that Bangladesh can negotiate with the US since
2002 on this issue and the US had to change the name of TIFA to TICFA to suit Bangladesh.
Therefore they argue that the US cannot impose unilaterally on Bangladesh as it wishes.
It is reported that both parties are to meet in January in Dhaka to discuss the future
course of US investment and trade-related issues. Bangladesh may also raise the duty-free
and quota-free entry of ready made garments to the US market. The suspension by the US
of GSP facilities to Bangladesh will come up in December but if the decision is negative
then this issue will also come up for discussion in the January meeting.
If Washington provides Bangladesh the duty-free and quota-free access to its products
enjoyed by more than 30 other least developed countries, the U.S. would at a stroke
contribute more to economic security and womens empowerment than it has with years
of aid shipments. There is no guarantee in the TICFA regarding duty free access of
garments to the US.

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With regard to trade with the US, during the fiscal year 2011-12 the bilateral trade
volume was reported to be $5.8 billion with the second-highest position with a trade
surplus of $4.4 billion, constituting 25% of total exports and imported from the US goods
worth about $1.09 billion. The balance of trade is heavily in Bangladeshs favour.
Despite being a LDC, it is noted Bangladeshi garment exporters continue to pay about
15.3% duties to the US. It is reported that in 2012, these tariffs have yielded Washington
$749.7 million from Bangladesh which pays more to the US as duties than it gets aid
annually from the US. China and France pay much less tariffs (5%) for their goods to the
US. It sounds illogical but it is true.
Demerits
Any agreement between unequal powers raises many concerns and suspicions about the
intentions and objectives of the stronger power. Furthermore, the party which provides
the draft agreement has always the edge over the other party in negotiating an
agreement. In this case both apply to TICFA agreement.
About the necessity of signing TICFA, it is always disadvantageous for Bangladesh to sign a
trade agreement outside the WTO. Multilateral trade agreements are always beneficial
than a bilateral agreement.
The word Trade occurs in the TICFA title, but it seems the US has given more emphasis
on services sector in which the private sector of the US is interested to invest in
Bangladesh. Service sector includes banking and insurance. This remains a concern to
Bangladesh investors. In Bangladesh economy services sector plays a significant role and
at present this sector constitutes 49% of the economy.
Although the government argues that Bangladesh can raise the matter on entry of quotafree and duty free ready-made garments from Bangladesh under TICFA to the US as the US
has allowed African and Caribbean LDCs, critics say that the US administration cannot
provide these facilities and only the US Congress (law-making body) has to pass a law and
given the priorities of the Congress, it may not come at all.
The GSP facilities which the US suspended for Bangladesh in June over the issue of
workers rights will come up for decision in the US in December but some say given the
existing situation of the amended Labour Law of 2013, GSP suspension may continue until
the Labour Law is further amended to meet the demands of the US.
The TICFA has not exempted Bangladesh, being a LDC from the obligation to enforce
TRIPS (Trade Related Intellectual Property Rights) under the WTO rules, for which
Bangladesh got relaxation until 2021 under WTO Agreements.
Critics argue that the enforcement of TRIPS under TICFA will adversely affect the
pharmaceutical and ICT industries in the country with the result that costs of medicine
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and IT items will increase. Consequently it will curtail access of healthcare and ICT
facilities to majority of people in Bangladesh.
TICFA will be able to protect the intellectual property rights (IPR) for the US companies in
the country. In its absence, the US companies have been losing profits through piracy of
copyright
In agriculture many genetically modified seeds will be eligible to be exported to
Bangladesh under TICFA threatening the seed industries in Bangladesh. The US will able
to export cotton to Bangladesh market which was not possible until now because of nontariff barrier.
The US signed similar agreement with Sri Lanka. Saman Kelegama, the executive director
of the Institute of Policy Studies of Sri Lanka, in one of his articles titled North-South
Regional Trading Arrangements in South Asia, rightly observed that the southern
countries most often ignore the details of the trade arrangement at the start and thereby
undermine the cost of market access. In the article he explained how US policy makers
had imposed conditionality on Sri Lanka in getting access for its readymade garment
products to the US markets. One of the conditions imposed by the US included fulfilling
the stipulated rules of origin with a provision of reverse purchase of US fabrics.
Critics allege that Bangladesh has signed TICFA this time to please the US and it is a
politically motivated decision ahead of the polls in the country. However the Commerce
Minister of Bangladesh rejected this allegation to a media saying that it was delayed
because of the Foreign Ministrys dilly dally.
Finally in the TICFA, there is a provision that either party has the right to opt out of the
Agreement after giving 180-daysl notice in writing. If Bangladesh suffers under TICFA, it
may terminate the agreement. But some say that Bangladesh may not be able to do it
because of adverse impact on bilateral relations with the US.

36 Raising tax revenue


The upcoming national budget is set to give a mighty thrust on collections of direct tax
revenues and value added tax (VAT), as media reports suggest. With the gradual shift in
revenue collection world over prompted by massive trade liberalisation the key
source of government revenues today ceases to be customs duties. It is thus the incomes
of individuals and business houses that constitute the main source of government
receipts, and rightly so given the economic rationale. The target of income tax revenue
collection for the next fiscal year will reportedly be set at Tk. 600 billion, which is 35 per
cent higher than the current year's revised level. It has furthermore been reported that
around 38 per cent of the projected aggregate tax receipts of the National Board of
Revenue (NBR) in the upcoming national budget will come from income tax, while the
share of VAT (Value Added Tax) and customs duties will be 35 per cent and 27 per cent
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respectably. This clearly shows that the lion's share of receipts in government revenues
will be met from income tax source.

In preparing for an aggressive tax collection drive, the authorities, as the available
indications suggest, are planning to mainly focus on the tax-dodging affluent sections of
society. The wealthy sections of society here, as elsewhere, are habitual tax evaders.
Efforts to unearth their assets for the purpose of tax assessment are indeed welcome. The
NBR is also reportedly contemplating on imposing surcharge on wealth for realising more
tax from the rich. The existing slabs for levying of surcharges, as the available indicators
suggest, may be raised. Changes may likewise be brought in the system of asset valuation
so that higher taxes could be collected from the rich.

In this context, it remains to be said that the country's existing tax structure is still urbancentric, and as a result, a large number of people, mostly small traders and property
owners who are otherwise eligible to pay taxes, are not under NBR's tax scanner. Echoing
this spirit, the NBR Chairman mentioned the other day that a huge potential in revenue
earnings, mostly from income tax, was still untapped due to lack of proper focus. This
understandably calls for recasting the modus operandi of tax collection as a whole. The
parliamentary standing committee on the ministry of finance has reportedly advised the
government to form a high-powered technical committee or a national taskforce that
would recommend ways to bring more people under the tax net.
While lauding the move to bring rich tax dodgers into the tax net, one feels that there is a
critical need to expand the tax net to bring in more people who are eligible to pay taxes.
This, no doubt, will require a cautious approach. Given the prevailing practice of tax
collection in the country, it is important to bring a change in the mindset of the common
people. Widening the tax net will then be found rewarding in realising higher revenues as
well as ushering in a culture of taxation where taxpayers from a wide array of social
segments - big or small - will participate.

37 Improving standard of public examinations


The results of the Secondary School Certificate (SSC) and equivalent examinations
published on May 17 evoked a mixed reaction from all stakeholders. Whatever the type of
reaction is, the young learners, who passed and all those who contributed to the national
achievement directly or indirectly, deserve thanks. But the public perception about the
results is unpalatable. People raise questions about the credibility of the results because
of some factors that lead people to think that the improved results of a good number of
students are not the full reflection of their merit and hard work. The factors such as
question leaks, solving problems in the exam halls with the help of invigilators or fellow
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examinees, examiners' generosity in giving marks and so on give rise to doubt about
genuineness of the high level of success of students in public examinations. Personally,
this scribe does not underestimate the students' ability, because this scribe believes firmly
that they possess immense power to do many good things, if they have proper guidance.
The Education Minister claimed that both the pass rate and the number of the students
who passed were high because of the successful implementation of the creative question
system, holding extra classes in about 8,000 schools by providing extra money to the
teachers under the government project SEQAEP, use of technology in teaching and
learning and extensive teacher training under different projects. All these certainly
contributed to better the results of the students. Apart from the initiatives of the
government, the guardians are also more careful about their children's education. Their
ability and willingness to invest money in their education and a far different approach of
trained teachers have contributed to the improved results, no doubt.
There is a question mark on the high pass rate and the large number of GPA-5 holders, but
the better results are not unexpected. It happens, when a nation improves in the area of
education. A gradual improvement in results is natural. The improved results seem
unusual when there is a public perception that primary and secondary educational
institutions are not functioning well and as a result, guardians have to buy education for
their children from coaching centres and individual teachers to satisfy their children's
needs, which could not be met by the educational institutions. Above all, there are
rumours of leaks of question papers that cast a shadow on the brilliance of the students
who fared quite well in the exams. The administration can take the allegations into
cognizance or just ignore them by saying that there is no proof that the questions were
leaked out. If the authorities take the second view, it will in future bring more disgrace to
those who will pass the examinations and those who will be in charge of holding the
examinations. Why will the authorities wear the crown of discredit, when they can easily
avoid it?
It is easy to stop the anomalies in an examination hall. But it is difficult to fight the
question paper leaks because of the deep-rooted corruption at all levels from the top to
the bottom. Still there are people who are honest enough. Sometimes they remain honest
even at the risk of their lives.
The leaks take place, when the questions are set. They can also be leaked out by
moderators, composers, printers, distributors or packers. Probably it is not difficult to find
out who are involved in the process. They must be identified and punished for the sake of
establishing an improved culture of education in the country - for the sake of building a
better nation.

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The purpose of education is to humanise all the systems. But knowingly or unknowingly
we are leaving dehumanising effects on our new generation involving them in stealing,
cheating, fraudulent practices, corruption and many other unethical activities. Sometimes
we, the parents and the teachers, create pressure on or encourage the learners to have a
look at leaked questions or to adopt unfair means in examinations. Thus every day we are
weakening the moral base of the younger generation, these practices make some offences
quite normal to the children.
We, who work in the arena of education holding high or low positions, cannot avoid our
responsibility. If we fail to solve the stated problems, the future generation will not
forgive us. It is time to search for the honest employees to work in the important
positions. It is time to rethink about some postings. Most of the people, who abuse their
power for holding particular posts, do it with some ill motives. Some of them target such
posts to earn illegal money or to achieve something else. Because of the connection of
corrupt employees with power quarters, the administration cannot bridle them.
Otherwise, how do the corrupt get saved? Are the corrupt people more powerful than the
ministry of education or the government? Of course, not. They must abide by the law of
the land. They have no right to destroy an established governance system and to buy
infamy for the government as well as the nation.
Alternative ways can be explored to stop the question leaks. The education boards or
other organisations concerned can prepare several sets of question papers and send them
secretly to the examination centres just before any exam. If there are five or six sets of
question papers, then in the event of any leaks the students will be confused about which
one is the original set. The corrupt people then will not be able to cash in on it. The second
option can be the open book examination. Students will be allowed to bring in their
textbooks and other reference books. In that case, if they use the books to answer the
questions, they will not get the time to answer all the questions. Thus only those who
study well throughout the year will get better results and the others will just pass. The
third option is assessment of the students' merit at schools. Educational institutions can
be directed to assess the students' merit continuously and then send the results to the
boards for tallying up the final results. The education boards can take only a
comprehensive test on the whole syllabus. If students are assessed in the educational
institutions, their performances in the areas of sports, music etc. can also be assessed. Of
course, the options have some negative sides but we will have to have a way out.

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38 Budget 2014-2015: The priority of private


investments
Generally a budget denotes the anticipation of income and expenditure for a given period.
A budget is also known as the annual financial statement of a country. The national
budget is not far different from an individual's budget. Ideally a budget-be it for an
individual or the nation-may be balanced or it may be a surplus or deficit budget. In a
balanced budget revenue earnings and expenditure are equal. On the other hand, a
surplus budget indicates more revenue earnings than expenditure while a deficit budget is
just the opposite where expenditure exceeds earnings. The national budget is passed by
the parliament after threadbare discussion. It has been learnt that the budget for the next
fiscal will be presented on June 5. This will be the 8th budget to be presented by the
incumbent finance minister Abul Maal Abdul Muhith. The finance minister told media that
the size of the next budget would be around Tk 2.5 trillion against Tk 2.2 trillion in the
fiscal year 2013-14. Pre-budget discussions have already started where most trade bodies
demand lowering the existing tax and VAT rates. Some of them also demand
enhancement of taxes on such imported items which are produced locally as well. This is
indeed a justified proposal. To encourage the domestic products we need to restrict
import of such products.
We concentrate more on the gross domestic product (GDP) growth, but show little
concern about investments, the prerequisite for GDP growth. Government investments in
large infrastructure projects should be increased. There should be a clear indication in the
budget regarding the Padma bridge, mono rails, the deep-sea port, flyovers, four-lane
highways, electricity, water management and other big projects. At the same time, there
should be stability in the country. Without stability, particularly in the political field, it will
be difficult to maintain the existing growth. We have already experienced lower revenue
collection for the current financial year.
Private investment is the main catalyst of our economy. So the government must work for
creating a congenial atmosphere to boost investments. Private investors are still in a
dilemma and they are following the 'wait and see' policy. It is the responsibility of the
government to restore confidence of the investors.
It is a common belief that there is a big amount of black money in the country. The source
of black money must be detected and plugged. There should be no concession for the
black money holders in the coming budget. The tax net should be increased without
increasing the existing tax rate. The National Board of Revenue (NBR) may bring all the
landowners and flat owners under the tax net. The tax collection process needs to be
modernised and simplified. Good governance in all stages has to be ensured and
corruption has to be contained. Corruption is the single component which is not only
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keeping us caught in a vicious cycle but also tarnishing our image in the international
arena. Let us hope for a good budget by the government at the outset of its new term.

39 The incidence of abductions


Now-a-days, incidents of forced disappearance, extortion and abduction are on the rise
across the country. Recently, seven persons including Narayanganj City Corporation panel
mayor Nazrul Islam disappeared, along with his aides and a senior lawyer, from
Narayanganj area on being abducted in broad daylight. They were later found dead in the
Sitalakkya river. This was not the first traumatic experience in our country. Prior to this,
BNP leader Ilias Ali too disappeared but it still could not be known whether he is alive or
dead.

Bangladesh is an now over-populated country. So the nature and the number of crimes
have increased. It is feared that extortions, killings, abductions etc, will increase day by
day. Some terrorist groups are involved in these heinous activities. After abduction, the
kidnappers demand ransom from the victims' families. These groups target some people
like wealthy persons and political leaders. Most of the crimes take place in broad day light
and some of these are clandestine. If anyone fails to pay ransom, death for the victims is
inevitable. But a month ago, captors freed Abu Bakar Siddique, a victim of forced
disappearance from Narayanganj area, without any ransom and without physical injury.
At that time, the administration also put in all-out efforts to rescue him. His freedom is
indeed a piece of good news for us.
Now the question arises, who are the culprits and who are instigators? We came to know
from print media, a section of law-enforcing personnel also keep secret links with terrorist
groups as an instigator of abductions. If this is true, it is really ominous for the nation.
Extortion has emerged as a common phenomenon in our locality. If any one sets up an
industry or builds a home or purchase one land, s/he must pay extortion. Otherwise s/he
will face threats over phone from some local terrorist groups. Extent of such a menace
varies from area to area.
It is not possible for the government alone to stop disappearances. All political parties,
law-enforcement agencies, human rights groups and common people must also assist the
government in containing these heinous crimes. We must work together irrespective of
political affiliations against crimes. Finally, the government should act strongly against all
kinds of crimes and control it an iron hand so that the rule of law could be established in
our country. Let general people of our county lead their lives peacefully without any fear
and panic.
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40 Exploring sea resources


Exploring the seas not just for adventure but for seeking sustainable means for economic
uplift is gaining increased prominence, as many countries consider their territorial waters
reservoirs of precious resources capable of doing miracles. Since Bangladesh's
independence, no planned steps have been taken to exploit the potential of its oceanic
resources or what is called the blue economy. To make the point more precise, exploring
resources in the seas calls for investment in the first place, and Bangladesh has not as yet
seriously contemplated on investing in this sector. This explains Bangladesh's failure to
exploit the territorial sea waters as of now.
The picture is quite different in case of the neighbouring countries which are
systematically at work on how best to capitalise on the blue economy, albeit through
meaningful investment. Besides, substantial budgetary allocations for oceanographic and
related research, India, Sri Lanka and Myanmar are working on long-term plans to be
lucratively benefited from their sea waters. Decades of research have opened up for them
newer prospects of exploration in a host of areas. Each of these countries has been
procuring precious minerals such as zircon, ilemenite and magnetite from their sea
waters, while Bangladesh is content with fishing and that, too, on a limited scale.
0ne pretext that the authorities in Bangladesh may resort to, is the absence of a detailed
map of its maritime boundary that deterred taking up specific plans to explore and utilise
sea resources. However, following the verdict on the long-standing maritime dispute with
Myanmar at the international maritime court in 2012, the problem has been resolved to a
great extent. Similar solution to the Bangladesh-India maritime boundary issue would
further ease the prevailing difficulties. The 2012 maritime court verdict, to recall, has
awarded Bangladesh ample opportunities to develop exclusive economic zone on a vast
expanse of the Bay of Bengal. While this will facilitate oil and gas exploration, research on
exploring mineral resources should equally be inspiring to motivate the authorities
concerned.
Experts as well as the concerned authorities agree that while the range of fishing activities
should be much more organised, exploratory research on a wide range of areas should
also be strengthened. In order to set things in place, one vital requirement for which
Bangladesh is clearly not well poised is the dearth of sufficient research and knowledge
that should have grown from the academic circuit. The university curriculum, as the
experts say, is too inadequate in this respect.
In this context, it is heartening to note that the government has, of late, decided to chart
plans for proper utilisation of sea resources with a number of ministries involved in the
task. At a recent inter-ministerial meeting, eight areas were prioritised to work on with
support from, and coordination among, the relevant ministries. These, among others,
include coastal communication, cargo transportation, fishing, procurement of minerals,
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energy security etc. Now, identifying the areas may look like a good move, but pursuing
continuous work would obviously involve a clear mapping of the course of action ahead.

41 Integrating climate change into development


THE development partners and the climate change experts of the globe have recommended
integration of climate change into development. The whole world is now busy in setting the
Sustainable Development Goals (SDGs) far beyond 2015-MDGs (Millennium Development Goals).
Ban Ki Moon, Secretary-General of the United Nations rightly said, "The MDGs have proved that
focused global development objectives can make a profound difference. Success in the next 1,000
days will not only improve the lives of millions, it will add momentum as we plan far beyond 2015
and the challenge of sustainable development."

The global experts are planning to include many issues in the SDGs, and climate change to get
their priorities right. Because human-induced climate change raised many questions not only for
the developing countries, but also for the developed countries to explore the ways on how to
survive, and how to save lives and livelihoods.
The IPCC WGII AR5 Summary for policy makers titled 'Climate Change2014: Impacts, Adaptation,
and Vulnerability' mentioned that in recent decades, changes in climate have caused impacts on
natural and human systems in all continents and across the oceans. Evidence of climate change
impacts is strongest and most comprehensive for natural systems. Some impacts on human
systems have also been attributed to climate change, with a major or minor contribution of
climate change distinguishable from other influences.
In many regions, changing precipitation or melting snow and ice are altering hydrological systems,
affecting water resources in terms of quantity and quality. Glaciers continue to shrink almost
worldwide due to climate change, affecting runoff and water resources downstream. Climate
change is causing permafrost warming and thawing in high-latitude regions and in high-elevation
regions. Many terrestrial, freshwater, and marine species have shifted their geographic ranges,
seasonal activities, migration patterns, abundances, and species interactions in response to
ongoing climate change.
The human interference with the climate system is occurring, and climate change poses risks for
human and natural systems. Climate change involves complex interactions and changing
likelihoods of diverse impacts.

42 The Collaborative Adaptation Research Initiative in


Africa and Asia
Globally, there is an emerging concern that the negative effects of climate change will be
disproportionately experienced by those who are economically and socially disadvantaged, further
widening the gap between them and more advantaged population groups. However, the
relationship between climate change impact, and social disadvantage remains little investigated.
Considering all those issues, to understand the risks, community and organizational resilience,
adaptive strategies, regional implications etc in some of the most vulnerable regions in Africa and
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Asia, the Collaborative Adaptation Research Initiative in Africa and Asia (CARIAA) was launched in
Kathmandu, Nepal on April 30, 2014. It is a seven-year, research initiative. This writer had the
opportunity to attend the program.
Through this initiative, four consortia will conduct research in three 'hot spots'. The regions where
demographic trends, socio-economic development pathways, and strong climate signals put large
numbers of people and their livelihoods at risk are - semi-arid regions, deltas, and Himalayan river
basins. The initiative brings together experts from a variety of disciplines, and links North and
South institutions to seek innovative solutions to the problems facing each hot spot. This will
enable greater sharing of knowledge and experience, and encourage innovation. CARIAA's
research agenda addresses gaps and priorities highlighted in the latest report of the
Intergovernmental Panel on Climate Change (IPCC) on Impacts, Adaptation and Vulnerability (IPCC
AR5 Working Group II). A number of CARIAA researchers have contributed to this report, which
was released in March 2014.
Canada's International Development Research Centre (IDRC) and the UK's Department for
International Development (DFID) announced that the Asian institutions would be part of four
new multi-partner research consortia for tackling the impacts of climate change in Africa and Asia.
CARIAA's research in South and Central Asia is very timely, as demonstrated by the call for action
coming out of the 8th Conference on Community Based Adaptation that concluded on April 30,
2014 in Kathmandu, Nepal. CARIAA's consortium on the Himalayan river basins is led by the
International Centre for Integrated Mountain Development (ICIMOD) based in Kathmandu. Its
partners in Asia are the Bangladesh Centre for Advanced Studies (BCAS), The Energy and
Resources Institute (TERI) in India, and the Pakistan Agricultural Research Council (PARC). It will
include case studies in Bangladesh, India, Nepal and Pakistan. In addition, ALTERRA, a research
institution from the Netherlands also helps the consortium on Himalayan River Basins.
According to a statement of ICIMOD, "Many areas of Asia are highly vulnerable to climate change.
Changes in temperature and precipitation will affect snow and ice in the Hindu Kush Himalayan
region, and atmospheric circulation patterns that drive the South Asian summer monsoon. These
changes could put the livelihoods of millions at risk. Downstream, populations in South Asian
deltas are highly vulnerable to sea-level rise and to changing temperature and rainfall patterns.
The IPCC projects that without adaptation measures to safeguard populations from the risks
associated with climate change, hundreds of millions of people will be affected by coastal flooding
and will be displaced due to land loss by year 2100; the majority of those affected are from East,
Southeast and South Asia. Finally, in semi-arid parts of Asia, more frequent and prolonged
droughts threaten livestock and agriculture, a major source of food and income."
Dr David Molden, Director General of ICIMOD said, "CARIAA will provide key insights into future
water supply and into effective adaptation options available at a local, national and regional scale
in the countries dependent of the Hindu Kush Himalayas glaciers."
"Anticipated changes in the water flow patterns and glacial melt are going to affect the life and
livelihoods of the population of Bangladesh", said Dr Atiq Rahman, Executive Director of the
Bangladesh Centre for Advanced Studies. "The research undertaken by CARIAA will contribute to

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the advancement of science and to the welfare of the most vulnerable populations of
Bangladesh," he added.
According to Dr Rajendra K Pachauri, CEO of TERI, India and Chairman of the Intergovernmental
Panel on Climate Change (IPCC), "Collaboration on adaptation research holds large scale mutual
benefits to both Africa and Asia. It will enrich our knowledge on options available to help the most
vulnerable populations in wide range of countries and regions."
Dr Anindya Chatterjee, Asia Regional Director, International Development Research Centre (IDRC)
New Delhi, India said, "If there is no consensus, there is no progress. IDRC is conducting research
to get better data to implement projects on climate change adaptation. Regional cooperation is a
must for generating more funds to conduct more research."
Dr Saleemul Huq, Director, International Centre for Climate Change and Development said, "All
the stakeholders must join hands in quality research on climate change adaptation."
In fact, climate change is one of the cross-cutting issues. That is why, experts recommended more
research especially to know the key interactions across sectors, cumulative impacts and crossjurisdictional issues that will affect the development of adaptation strategies in each sector and
find out how best these cross- and multi-sectoral issues can be addressed.

43 Moving the economy forward

The topic of Bangladesh being one of the next economical hubs of the globe has been much talked
about. Powerhouses like Goldman Sachs have already certified this rich delta of Asia as one of the
next eleven biggest economical phenomena. Such positive forecast in tune with the investment
policy of the government has encouraged foreign investors again and again to consider Bangladesh
as an investment option.
The stock exchanges in Bangladesh situated in Dhaka and Chittagong have witnessed the inclusion of
MNCs such as Grameenphone, Lafarge Surma Cement along with others bolstering their capital to a
substantial margin. Over the past 20 years, apart from the rare glitches, the capital market has
shown promise to not only organisational investors but individuals too. In 2010, the combined
market capitalisation of listed companies on the Dhaka bourse stood at over $50 billion.
There are many segments of financial market including money market, stock market, bond market,
insurance market, foreign exchange market and derivatives market, etc. However, money moves
from one segment to another segment of the financial market due mostly to the relative rates of
return in different segments. Normally, money goes to the segment in which the rate of return is
higher. As long as the rate of return in a particular segment of the financial system is higher, the
volume of investment in that segment will continue to grow. If the financial market is automated,
any opportunity for arbitrage will lead to an acceleration of investment in the segment with high
rate of return and to a corresponding deceleration of investment in other segments of the financial
market. Therefore, the automation of financial market and the consequent reduced opportunities
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for arbitrage are essential for stabilising the flow of funds to different segments of the financial
market promptly and efficiently. The automation of financial market is important for healthy and
balanced growth of all the major components/pillars of the financial system and allows market
participants to realize broadly similar rates of returns after allowing for risk and tenor in different
segments of financial market.
In the context of the subcontinent, though, it may be said that there is a lot of scope for applicability
of financial market automation. With respect to Bangladesh, the financial sector industry is highly
fragmented, with limited degree of overlap among formal, semi-formal and informal markets for
credit, savings, insurance and various other non-bank financial services such as lease financing,
mutual funds and mortgages (South Asian Network of Microfinance Initiatives, 1998). Accordingly,
efficient market intermediation here is constrained by two crucial barriers-institutional and policy
environment. The institutional rigidities in place serve to constrain the operating and implementing
effectiveness while an almost obsolescent legal and regulatory framework also poses considerable
barriers to market automation. Importantly asymmetry regarding knowledge of information may be
cited as a crucial factor.
In the recent years, an integrated automation initiative was undertaken in the small but steadily
growing market of Bhutan. Driven in large part by privatisation, the government remains a major
corporate owner. However, even with steady growth, domestic investors contribute turnover and
liquidity. Twenty companies are listed on the Royal Securities Exchange of Bhutan Limited (RSEBL)
where four brokers transact on behalf of their nation-wide customers. As of June 2012, the total
market capitalisation was Nu. 15.17 billion or US$ 275.8 million. Market capitalisation has increased
steadily each year over the last decade, and was about 20 per cent per cent of GDP.
To create a more investment friendly atmosphere, global automation support companies such as
InfoTech have been offering integrated software solutions in the financial systems for a better
output from the capital market. Systems can be altered or re-mapped according to the needs of the
infrastructure or help in the creation of it. Currently, the capital market in Bhutan is equipped with
all modern systems required to promote stock investment and fund raising at next level. Technology
infrastructure is well in line with several emerging and advanced capital markets for regional
integration or exploiting potential at local. These modern systems are quite conducive in winning the
public confidence through transparency and direct market access while investment community
being the focus of whole automation. A similar approach in the Bangladesh market can be replicated
in a more complex and effective manner to ensure free flowing process of market optimisation and
ease of use for the investors.

44 Agent banking for financial inclusion


The concept of 'agent banking' is new in the country. The term is now a much-talked-about issue
in the banking industry. It may play a pragmatic role in paving the way for financial inclusion. The
central bank of the country has already introduced a guideline for 'agent banking' to be followed
by all commercial banks. Considering the importance of the matter, commercial banks have
already taken initiatives to introduce 'agent banking' with a view to bringing the un-banked
people under banking services.
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Agent banking normally means providing banking services to the customers outside the branch
premises through appointed agents. According to a Bangladesh Bank (BB) circular, "Agent banking
means providing limited-scale banking and financial services to the underserved population
through engaged agents under a valid agreement, rather than a teller/cashier. It is the owner of an
outlet, who conducts banking transactions on behalf of a bank".
Agent banking offers banking services on a limited scale to semi-urban and rural people through a
person or entity authorised under a valid agreement by a commercial bank. The appointed agents
or entities or their employees provide services to customers during the usual business hours of
scheduled banks on their own premises rather than on any bank premises or at any ATM booth.
Small-value cash deposit and withdrawal, foreign remittance, disbursement of small-value
advance and recovery, utility bill payment, cash payment under the social safety net programme
of the government, fund transfer, balance enquiry, account opening, loan application, debit and
credit card application, receiving, clearing cheques, and post-sanction monitoring of advances are
included in agent banking services.
The agents are not permitted to give final approval of account opening, issue bank cards or cheque
books, encash cheques and deal in foreign currency.
As per the BB circular, eligible banking agents are non-government organisations and microfinance institutions, cooperative societies formed under the Cooperative Society Act, 2001, post
offices, registered courier and mailing services, registered companies, agents of mobile network
operators, offices of rural and urban local government, union information and service centres and
educated individuals. Agents must maintain an account with their principal bank. Every
transaction has an impact on an agent's account with the bank. The agent must deposit a certain
amount of money in a bank in advance as security money before launching the service.
Agent banking can pave the way for inclusive growth and financial inclusion through reduction of
social cost, targeting new customer segment, especially low-income people, expanding outreach,
marketing and recommendation, credit recovery and customer care.
Agent banking is not free from some drawbacks which are risks of theft or robbery, reluctance to
utilise technology, lack of proper infrastructure, simultaneous transactions in both deposit and
withdrawal, risk of fraudulence by agents, conflict of interest with similar service providers,
agents' indifference, selection of improper agents, selection of improper business establishments
and so on. Agent banking can add an impetus to financial inclusion, if the BB, along with
commercial banks, can tap the potential of agent banking properly. The BB may encourage banks
to go for agent banking. Commercial banks, on the other hand, will have to plan and execute this
type of banking. But this is not that much easy as it appears to be.
Banks may think about selection of right places, stores, agents, ATMs and POs. But these are just
the beginning. Banks need to have their vision, mission, goals and objectives, which must fulfill the
need and requirement of their new customer base. If not, this is going to be a failed venture.
Then banks may adopt a 5/10-year strategic plan and a short-term plan as well for establishing an
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agent banking network. A dedicated team/department should be formed comprising IT experts,


financial analysts and marketers headed by high officials of banks. A few indicators i.e. business
transaction, un-banked population, checking existence of banks' branches, inward foreign
remittance, etc. need to be analysed before deploying an agent in a new area.
Most importantly, a bank will have to establish its own marketing and sales team. This will be a
sheer imprudent act to depend solely on agents for selling a new concept in remote areas, as it is
an IT-based financial service. In the Bangladesh Bank circular, marketing has also been given
priority.
According to the BB circular, marketing communication can be made in local language, while
dealing with the people in remote areas. In addition, banks may arrange drama shows with the
help of projectors in villages and marketplaces. Then the people will have a clear perception of
necessity, benefits and security aspects of agent banking. Banks may distribute leaflets showing
the steps on how to use POs, alongside other benefits. Banks should not go for TV commercials or
a big marketing campaign at the very beginning of establishing an agent banking network. But it
may be different depending on the vision of a bank. The bank should focus on proper training,
development and motivation of agents.
Another important aspect of agent banking is financial inclusion. Studies have proved that
financial inclusion is a tool for inclusive economic growth and poverty alleviation. Financial
exclusion, meaning lack of access to financial services, limits opportunities for enterprise
development and employment and imposes a premium on the cost of basic services. Financial
exclusion thus makes it difficult to reduce inequalities and alleviate poverty. According to the
Working Paper Series: WP1101 of the BB Research Department, the number of bank branches per
1000 square kilometres increased from 44.24 in 2005 to 53.34 in 2010. This is a very slow growth
because of the high cost of setting up a branch. But agent banking that involves low costs can help
enhance the financial inclusion. Moreover, customers including the poor and illiterate people will
find it easy to enjoy services from the agents.
The goal of agent banking is not mere maximization of profit. There is a far greater cause which is
to bring un-banked population under banking services for overall development of the nation. It is
an initiative that helps social inclusion, national integration and consolidation of citizenship.
Implementation of agent banking is an art, even within the stringent rules and regulations of the
BB. It is high time to popularise agent banking with a view to gearing up the initiatives of financial
inclusion for achieving the target of sustainable economic growth of the country.

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45 Concerns about economics: Time to investigate


background
Nobel laureate economist Paul Krugman in his insightful column titled Does Economics Still
Progress? in the New York Times published on September 27, 2011 fumed saying: "And all this
makes me wonder what kind of an enterprise I've devoted my life to". The enterprise Krugman is
telling about is economics. His view about the progress in economics since 1971 to the present
time is succinctly caught in the following statement: "In 1971 it was clear that economists knew a
lot that they hadn't known in 1931. Is that clear when we compare 2011 with 1971? I think you
can actually make the case that in important ways the profession knew more in 1971 than it does
now." There is a grain of truth in Krugman's statement and we will not have to wait too long to
observe the inevitability of Krugman's statement. The question arises: why can it be argued that
one can make a sense that the profession knew more in 1971 than it does now? There can be
ample reasons to claim so.

What is important is not to point out ample reasons going in divergent directions from the core
point but to single out those that converge to the core or the answer. We argue that the dilemma
that Krugman is seeing is mostly ideological. Krugman clamoured that the financial disaster
caused no intellectual discomfort for those who made their models of no allowance for it. In
particular, he is very much reluctant to call it 'Economic Science', because it is too immature as a
discipline to call itself a science. Not only Krugman is having these kinds of concern, there are a lot
of others who have such concerns.

Probably such concerns have less to do with ideological fights than with the background checking
of economists. What can we can expect from a person who after devoting his whole life studying
natural science such as physics turn out ultimately as an economist? The expectation is exactly
equivalent to our rational expectation. It is less likely that we would hear from such an economist
that market is not perfect. He would in most of the cases claim that market mechanism is exactly
equivalent to natural science mechanism where prices adjust automatically to demand and supply
to clear off the market.

There is no doubt that the market mechanism has some intrinsic truth like the natural laws but
that is not tantamount to saying that the market is perfect and is able to locate fully stable
equilibrium left on its own. If a person studies economics in this way, it is better that he studies
economics on Jupiter and Mars where no human beings exist, but matters only. So, it is better that
Paul Krugman considers the problem from the core. The core is the background checking of those
people whom universities give the entry to the graduate studies in economics such as PhD in
economics. Let us try to view the problem from this angle.

WHY SHOULD ENGINEERING STUDENTS BE DENIED OF THE OPPORTUNITY?

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It is controversial to claim that engineering students should be denied the scope of PhD studies in
pure economics. People have freedom to choose and learn. Nobody has the right to prevent them
from doing so. This kind of claim is totally irrelevant here, because freedom doesn't bear any
sense here. For example, a person studying sociology can also claim that he has the right to do a
PhD in astrophysics and university should give him the chance to study, provided that he meets
certain criteria. This is granted and creates no problem, since the person studying physics will not
be to manipulate the discipline imposing his personal beliefs and ideologies. But when a person
graduating in electrical engineering enters a graduate school to do PhD in economics, there
remains a lot of issues to address. First of all, as Krugman cited, economics is not a science. The
person who spent his whole life studying matters only which are guided by natural laws would be
more likely to think laws in economics as a reflection of natural laws. Though economics has laws
and theorems, these are more intrinsically grounded in human interactions than in matters.
Second, to study economics it is more important to know about society and its basic structures.
How does it work? What kind of vision would lead to more equality? To cite an example, an
economics PhD degree holder can view himself/herself in different ways depending on his/her
personal orientations to a society as a whole. He/she can view the service in terms of demand and
supply where he/she will deliver lectures in a university and will be paid accordingly. He/she can
view his/her service as a lecturer in terms of contribution through which he/she strives to reduce
human beings' misery by working in underprivileged and underdeveloped regions to provide good
quality education for those who are socially deprived. Furthermore, he/she can view his/her
service as a means to gather higher personal well-being only. Depending on the different course of
actions of this PhD degree holder, the market will perform in different ways.

In whole economics, nothing can be greater than this myth: Market moves on its force. Actually,
force is created by people and by their course of actions, not by market itself. Think about a
market system on the planet Jupiter. What kinds of force exist there? Who trades there? None
trades there, and, hence, no market force exists there. Market is the total reflection of the choices
individuals make and such choices are guided by the underlying motivations they carry behind
their choices.

Third, an engineering graduate is more likely to spoil economics by imposing his firm belief in the
natural laws in economics models and theories. Students from natural sciences know a lot about
mathematics but less about economics. Even then they managed to excel not because they are
finer economists but because curriculum emphasises mathematics that has become a bread and
butter for studying economics. Certainly, we cannot expect something better from the students of
natural sciences than seeing a model filled with mathematical expositions built on the basic laws
of economics where the usefulness of the model has gone beyond the reality and the
comprehension is the limit of abstraction.

Mathematics is simply a language for economics to express the basics in a clear manner, not the
bread and butter to bamboozle masses with the beauty of mathematics. What a person would
think of awarding an economist Nobel Prize for the game theory which has almost become a
playground for only mathematicians who often become champions in economics for employing
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mathematics but were total underdogs in the natural sciences? In economics, both in the present
time and in the past, we have experienced such kinds of people who fled away from the natural
sciences to become champions in economics by the mere application of mathematics. When some
graduate schools post on admission criteria that the programme is based on a higher level of
mathematical abstraction, it enjoys the fruit of attracting a lot of lemons from the natural sciences
who just aspire to become a champion in economics being boastful of mathematical knowledge.
This kind of trend of degeneration actually gives an answer to Krugman's bewildering assertion
that today we know less about economics than we knew in 1971.
In economics there is a well-defined history relating to the people who were at the same time fine
mathematicians and at the same time fine economists. John Maynard Keynes, Knut Wicksell, Paul
Samuelson, James Tobin, Kenneth Arrow, John Richard Hicks, Alfred Marshall, just to name a few.
Keynes was a student in mathematics and later studied economics. But his monumental book The
General Theory was the first revolutionary text that formidably opposed the classical selfstabilising market principle. Paul Samuelson is credited with making advances in mathematical
economics and so is true about Kenneth Arrow and Hicks. What kind of difference do we see
between an economist like James Tobin -probably the twentieth century's best Keynesian
macroeconomist - and a physics graduate-turned-economist? Perhaps there is a gulf of difference,
not because Tobin is just better because of the orientation toward economics. Perhaps, they
viewed mathematics as a language to make the theory less ambiguous and to save the conclusion
being lost in the ocean of literatures. But today, the scenario has changed a lot. Mathematics is
less likely to be seen as a language but more likely as the bread and butter without which
economics is often thought to be impossible. This kind of impoverishment has led us to the point
where it becomes a concern for us and tempts us to ask: Do we know better about economics than
we knew in 1971?

Paul Krugman in another article titled How did economists get it so wrong? in The New York Times
resented that "As I see it, the economics profession went astray because economists, as a group,
mistook beauty, clad in impressive-looking mathematics, for truth. " He added: "models are guised
up in fancy equations." To this, an economist from the University of Chicago named John H.
Cochrane, who studied physics at MIT and later moved to economics, replied in an article titled
How did Paul Krugman get it so wrong? that "Again what is the alternative? Does Krugman really
think we can make progress in economics and financial research by reverting to a literary style of
exposition and abandoning the attempt to compare theories quantitatively against data?" This
reply is at best a distortion of what Krugman implied by his comment on the use of mathematics in
economics. Perhaps, Krugman is objecting to the motivation of using mathematics in economics,
not the use of mathematics itself where Cochrane is criticising Krugman for the mere use of
mathematics.

Whatever the controversy is, Krugman's comment on the unnecessary use of mathematics to
make the models more fancy forcing them to cross the limit of reality is quite justified. What is the
use of a model equipped with fancy mathematical equations like the most literatures in the game
theory, if the model fails to capture the reality? This kind of dilemma is mostly observed in the

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case of researches of the people, who came from the natural sciences to become researchers in
economics.
To conclude, we just say that it is high time that we considered twice in welcoming people in the
graduation studies on economics from a field that has little sociological content. Economics as a
principle has some elements that people should devour long before preparing to get a graduation
degree in economics or PhD in economics. What a society can expect from a PhD in economics
who studies economics with the belief that the market is omnipotent and comes out with the
degree believing that he is an ordinary agent whose duty is just to respond to market forces?
What can we expect from such a PhD degree-holder who never mulls over why he can drink a cup
of coffee in a luxurious restaurant and others can not? Is it because of the supply and demand
only? If it is so, then we can expect only an impoverished state of economics, no better or worse.

46 Restoring US GSP: Is visibility all?

With the passage of nearly one and a half years since the Tazreen fire and about a year after the
collapse of Rana Plaza, many are concerned about knowing the current status of the works that
were to be in place in a wide range of areas. The task is a mammoth one and materialising all
actions committed by the government in this one year does not sound plausible. However, taking
stock of the works done and those under process would help understand where things actually
stand at the moment.

It may be recalled that ever since talks on factory safety and labour rights issues emerged,
reactions from various quarters have been blowing swirls of thick smoke, much to the
disadvantage of the country's highest export earner, the RMG sector.
What matters most at this stage appears to be the visibility of the actions taken in terms of
compliance with the agreements of global retailers - Alliance and Accord on the one hand and
measures suggested in the US Action Plan on the other. Visibility seems to be the key factor at the
moment. Indeed, it was the lack of visibility that the USTR (United States Trade Representative)
noted so strongly while temporarily scrapping Bangladesh's GSP benefit following the Tazreen fire
that killed more than hundred workers in November, 2012. So, all that the government is required
to do now is delineate as clear a picture as possible of the activities undertaken to be able to claim
legitimacy in the restoration of US GSP. A few days back, Commerce Minister Tofail Ahmed
commented that the government has already put in place most of the compliance measures in
keeping with the US Action Plan and that the US should count on these and consider restoring the
preferential trade benefit.
It has been learnt that the government is currently at work on the submission for the USTR in this
connection. It will be the second submission following the earlier one in November 2013. The
submission, in other words, is an assessment of the outcomes of the steps taken in improving
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labour rights and occupational safety in RMG factories. Understandably, such assessment should
take stock of works done in respect of a whole range of activities including fire, electrical and
building safety of all active RMG factories in the country, improvement in worker rights situation,
improvement in institutional mechanism for monitoring fire and building safety and workers'
rights. These being the broad outlines, materialising them through enactment of laws, formulation
of rules, recruitment of suitable manpower, evolving effective monitoring device etc., calls for a
high level of integrated effort.
The government will send its submission to the USTR in a day or two. The submission, as
mentioned, should attempt to assess the outcome of activities completed, and also mention
progress of those underway and those just initiated. In case of delayed completion, it would make
sense to mention the constraints. Concerned quarters -- critics included -- do believe that
considerable progress has taken place in some of the critical areas, and in order for those to yield
returns, efforts should be put in a well-coordinated manner to sustain the progress.
It may be noted in this context that adoption of the National Tripartite Plan of Action on fire safety
and structural integrity in the RMG factories has facilitated the government in putting under its
ambit all aspects of occupational safety and the rights issues. The plan for assessment of fire,
electrical and structural safety of all export-oriented garment factories has been in place for a
while with 30 teams of engineers from Bangladesh University of Engineering and Technology
(BUET) and inspection teams from Alliance and Accord. A common operating manual for assessing
building, fire and electrical safety the factories has been reportedly developed by Alliance, Accord
and BUET. The teams have reportedly completed inspection of around 900 factories. Upgrading
the Directorate of Inspection for Factories and Establishments (DIFE) to a Department with more
authority and manpower is a notable move. However, recruitment of inspectors has been learnt
to be delayed due to procedural requirements of the Public Service Commission (PSC). This needs
to be expedited. The government will also bank on the enactment of the Labour (amendment) Act
2013, adoption of the National Occupational Safety and Health Policy, 2013, fixation of minimum
wage for garment workers and drafting of EPZ Labour Act, 2014.
How clearly visible these steps are yet to be known. It will surely take a while to see whether
these have been well directed, and if so, whether the government apparatus is well disposed to
keeping the momentum in the days ahead. Hence, a rash attempt to assess the results or
immediate and expected results from the actions might be misleading. There is a feeling among
concerned quarters in the country that the US might not be eager to look at the GSP issue in
isolation and would like to see it as essential to its relations with the ruling party.
Speculations apart, one does feel that imposition of any form of trade embargo has more to do
with the country concerned in as much it affects its people and relevant sector of the economy
rather than the handful of those who run the country.

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47 Getting out of stereotyped education


Education is essentially a social enterprise that aims at training young minds to express
themselves and add to the knowledge and values. It does not follow the old precept of
reproducing knowledge by rote which was the earlier established practice. This old methodology is
now being replaced by current values and thinking.
This change that encompasses the global direction of education is no longer incorporated in the
overwhelming dynamics that ruled the industrial revolution in late nineteenth century. By and
large, in those days the education process was unilateral and imitation-based. Students were
guided by whatever their teachers presented in the class rooms. In contrast, today it has to be a
two-way traffic of ideas with active participation and interaction between teachers and the
taught. The depth and breadth of knowledge has greatly increased.
Today any young kid with a computer before him can get any information he desires, thanks to
'Google'. The new generation mobile phones have more computing power than the 'super
computers' that put men on the moon.
We can rationally visualise that the schools of tomorrow will advance the student's scope of the
thinking process and will not just remain limited to knowing only. About this, Albert Einstein
visualised: "Education is not the learning of facts, but the training of the mind to think". That sums
up the scope of and the way ahead for the education process.
Today's employers expect that their employees function as team players who can participate in
innovation. This needs multi-discipline-based thinking that can explore ideas and inputs from all
around them. This needs well developed communication skills.
This drive can lead our minds onwards to problem solving and for finding ways that can provide
uniqueness in the way that things are done in business and in industrial world. This is the 'elusive
something', that can immensely help the organisation to acquire the much desired 'competitive
edge' commanding the market.
To enable all this to happen in Bangladesh is unfortunately a difficult task in the education sector.
The only way ahead is to divert from the subject-specific teaching norm and to inculcate the raw
materials needed for developing individual thinking. Teachers must strongly promote the values of
trust, integrity and honesty and train students to undertake exploring mission. They must have the
sense of rational options in order to solving their problems. This needs an open and inquisitive
mind that has to be developed by trial and error with the guidance of their teachers through needbased advice. Only then can we develop an 'open mind' that is receptive to ideas which can be
analysed and tailored to suit the needs of the issue. This may need many books beside the
stereotyped text books that are our students' norm today.
Unfortunately, it is difficult today in Bangladesh where teaching by rote is the usual norm. Serious
attention to modern methods of education, especially at the primary levels in most schools is
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lacking. Today we go by the theme that anyone with a 'masters degree' can be a good school
teacher. Teaching as a profession has been relegated for those who have no other job options left
in the competitive environment of business and industry. Lastly we forget that for really improving
the quality of teachers, the education department needs more funds for training, developing tools
and setting up libraries. These problems can only be addressed with more money and
determination at the highest level.

48 Reducing poverty
Poverty is one of the main reasons for every unethical activity in the society. There are, however,
some exceptions but all the illegal and immoral activities spring from economic needs. The law
and order of a society also deteriorates due to financial indiscipline. This may lead to an increase
in incidence of poverty because the poor people do not get justice. Rule of law is essential for very
survival of the poor and weak people who have no capacity to access justice.
In a developing nation like ours, we need an honest and very smart custodian. While fund for
development is scarce, its management is crucial. One of the main goals of the election manifesto
of an elected government is to reduce poverty of people. Progress of a nation depends on
achievements of the government in several vital sectors including poverty alleviation.
Earning capacity is the main criterion to select a person under poverty line. Anyone who has no
capacity to meet the essential needs i.e. food, clothing, shelter, education and medical care, is
under the poverty line. New jobs created the government can only minimise the poverty
incidence. In this situation, there are two issues that need to be addressed. One is improving the
capacity of the job-seekers and another is to create new jobs. If the two issues can be tackled at
the same time, then the government can claim its real success and the society will get the
benefits. In a free market economy, the government is responsible for creating the business
friendly environment and ensuring justice.
According to a FE report, 'BD needs to invest $74-100b until 2020 for infrastructure development.'
The report is very timely. The main thrust in the World Bank's finding is to reduce poverty. Since
independence, all the governments had taken a lot of programmes under the Millennium
Development Goals (MDG) with assistance from foreign donors. For reducing poverty, the last goal
was to achieve 100 per cent literacy by 2014. The government is claiming that near about 100 per
cent school-age boys and girls have been enrolled in primary schools but a recent report published
by the UNESCO and the UNICEF states that 5.6 million children still are out of schooling.
Infrastructure development is essential for development but it contributes to it indirectly. Poverty
is the main hindrance to development. Direct investment and discipline in education, mainly at
the primary and secondary levels, is very much related to poverty alleviation.
Direct investment is the only way to ensure food, healthcare and education for the less privileged
group of the society and also to keep corruption in these sectors at minimum level. Otherwise, the
so-called development programmes or the Millennium Development Goals (MDG) will exist only in
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papers and documents like the programmes initiated so many years ago with the aim of 100 per
cent literacy of the people of Bangladesh by the year 2014. This is the month of April, 2014, only
nine months left for implementation of the programme. And now the government is silent.
We have to ensure jobs for all job-seekers in our country. But we are under the impression that
near about 2.5 million people are entering the job market every year with or without proper
academic background. The Higher Secondary Certificate (HSC) is the minimum criterion for
selection of a job seeker. This year the number of HSC participants is over 1.1 million. There is no
other way to improve the earning capacity by reducing poverty but education. Primary and
secondary education stages are very crucial for improvement of human capacity. The next
generation will only be better equipped for future responsibility if they get right and effective
education. But what we are doing for our future generation in this regard?

49 Role of financial sector in spurring growth


We all know Article 15 of the Bangladesh Constitution requires the country to follow the path of a
planned economy for realising its development objectives. Accordingly, to fulfill this constitutional
obligation and also to transform Bangladesh into a middle income country by 2021, the long-term
"Perspective Plan of Bangladesh (2010-2021): Making Vision 2021 a Reality", has been articulated.
The Perspective Plan is a vision for the nation that gives us a roadmap for accelerated growth and
sets out broad approaches for eradication of poverty by reducing inequality and human
deprivation. This long term development plan is being implemented under two successive fiveyear plans-the Sixth Five-year Plan (FY 2011-15) and the Seventh Five-Year Plan (FY 2016-20).

The Sixth Five-Year Plan adopted a strategic approach to development that combines all
instruments at the disposal of the government including rules, regulations, safeguards, institutions
and public investment with a view to helping secure the major development targets under the
Sixth Plan. The Seventh Plan would be seen as a continuation of the development strategy
articulated in the Sixth Plan and for successfully achieving those targets the significance of the
financial sector is indispensable. The preparation of the 7th Plan is in progress at the behest of the
National Economic Council, Planning Commission chaired by the Prime Minister.
The core targets of the Sixth Plan are: Increasing agricultural productivity, spurring manufacturing
and service sector growth, stabilising the macro-economy to reduce poverty at a faster rate. It is
well-known that economic development and maturity of the financial sector are strongly
correlated. That's why the government of Bangladesh has given immense importance to this
sector in its plan document. In the 6th Five-Year Plan emphasis was laid on improving prudential
regulations and oversight/supervision responsibility/ capacity of the central bank. It also put
emphasis on strengthening quality of the banking system as well as performance of the stateowned commercial banks (SCBs) by ensuring better management and accountability through
strengthening oversight of the Bangladesh Bank. This was because of the high ratio of NonPerforming Loans (NPL) for SCBs. Although some progress has been made in recovering loans, this
remains a major challenge for the SCBs.

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FINANCIAL SECTOR PERFORMANCE: The reason for this concern is that both state-owned and
private commercial banks are faced with a big volume of nonperforming loans due to exposure to
the stock market, stalemate in investments and partly due to strengthening of provisioning
requirements by the Bangladesh Bank. All the performance indicators of the banking sector have
shown a downward trend since December 2011. During the period, the health of public sector
banks has deteriorated at a faster rate compared to the private sector banks. The NPL ratio was
improving steadily until December 2011, after which it started to increase.
This deterioration of gross non-performing loan (NPL) ratio of the banking system as a whole and
particularly for the state-owned commercial banks causes a sharp drop in the capital adequacy
ratio also. The capital-to-asset ratio had been exhibiting an upward trend for the last two decades
until December 2011, after which there has been a downward trend for the overall banking sector
including the state-owned commercial banks. It is seen that while there was a falling trend for
both, the capital to asset ratio dropped sharply for the state-owned commercial banks from 11.68
per cent in December 2011 to 8.13 per cent in December 2012, and thereafter dropped to 1.2 per
cent in June 2013 which should be considered as alarming for the health of the financial sector.
The financial cost of the increasing non-performing loans and the corresponding provisioning
requirements impacted on the return on assets (ROA) and the return on capital (ROC) for the
whole banking system, and state-owned banks in particular. The ROAs and ROCs for all banks
including the state-owned commercial banks had been improving over the last two decades until
December 2011, when the trend reversed with continued fall in both the indicators for all
categories of banks in subsequent quarters. The deterioration was more substantial for the stateowned banks-from the peak of 1.34 per cent in 2011 it fell to -0.56 per cent in 2012. If the stock
market does not rebound very strongly, loan loss provisions and profitability of commercial banks
may deteriorate further in future.

Further deterioration of the health of the banking sector-particularly on account of higher loan
loss provisions-may lead to widening of the interest rate spread. The recent loan-loss of stateowned banks has compromised credibility as well as performance of the banks. If the performance
of state-owned banks becomes worse, their interest rate spread may be wider and the private
banks will therefore adopt similar increases in the interest rate spread in their banks, even though
the magnitude of their non-performing loans is lower. This may potentially undermine the
government's efforts to bring down the interest rate structure and the interest rate spread below
5.0 per cent for the benefit of private sector investors.

IMPROVING MACROECONOMIC SCENARIO: Over the last four years, Bangladesh showed
outstanding performance in the macroeconomic arena. The annual average growth rate of gross
domestic product (GDP) was more than 6.33 per cent. With more than 21 per cent growth in
revenue and the share of revenue in the GDP being 13.5 per cent, the country surpassed all the
previous milestones in the sector. The foreign exchange reserve reached a more than stable figure
of 19.2 billion US dollars. Moreover, the current account balance has been positive for a long time.
Despite all these promising indicators, the investment scenario in the country looks bleak.
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The sluggish rate of overall investments is a great concern. The Sixth Plan recognised the critical
importance of this growth driver and accordingly sought to increase the investment rate from 24
per cent (2009) to 32 per cent of GDP by June 2015. However, the results so far show that the
investment rate has increased only marginally to 28.7 per cent (based on the new base year 200506).
Looking forward, what really matters for investors is the general investment climate and
competitiveness of the economy. High priority needs to be given to improving the security
situation and restoring political stability in a sustainable manner for boosting private investment
and moving toward a path of economic recovery. However, the Anti-Corruption Commission (ACC)
has become quite active. A number of banking scams are coming under penalty. This may induce
some local investors to become dormant for a while. They like to wait and see to do business in a
more relaxed environment.

Despite the continuing efforts for creating an environment for protecting investors and continuing
favourable macroeconomic conditions, Bangladesh has failed to become an attractive destination
for FDI (foreign direct investment) compared to its regional competitors. Despite some recent
improvements, Bangladesh's average (5-year average) net FDI level of less than 1.0 per cent of
GDP is the lowest among the regional competitors. FDI flows in Bangladesh have been primarily
limited to telecommunications, energy and investments in export processing zones (EPZs). Recent
expansion of telecommunication networks and the thrust on the power sector have helped sustain
the growth in FDI. The reflow of foreign portfolio investments in the stock market following the
market correction and some limited merger and acquisition by foreign firms in the garment sector
outside EPZs also contributed to the increased FDI level in FY 13. Given the medium- and longterm growth prospects for Bangladesh economy and its cheaper labour force, a large number of
foreign investors are interested to invest in the EPZs and private economic zones. However, in
many instances these investors turn back and move to other destinations (Myanmar, Cambodia
and Vietnam) due to non-availability of industrial land with proper infrastructure (gas, electricity,
road connectivity, sewerage etc.). Urgent attention needs to be paid to this issue.

RESOURCE MOBILISATION TARGETS IN THE 6TH FYP: However, realisation of the Sixth Plan
objectives entailed involvement of both the private and public sectors. Although the private sector
continued to play its dominant role in the economy, the public sector was mobilised to foster an
economic environment more conducive for higher private sector production, investment,
consumption and savings. Total investments under the Plan amounted to Tk 13.47 trillion in
constant FY 2011 prices. Much of the investment was undertaken by the private sector (Tk 10.39
trillion), although the public sector investment plays a bigger role in catalysing a much greater
volume of private sector investments under the Plan. Private sector investments (including
through PPP programmes) account for 77.1 per cent of the total investment under the Plan, much
of that comes from domestic sources. External financing for private investment, primarily in the
form of foreign direct investment (FDI), is expected to grow, but will still remain modest in relative
terms at about 4.0 per cent. Of total investments, 91 per cent have been postulated to be coming
from domestic sources and the remaining 9.0 per cent would be coming from external sources.
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Like the Sixth Plan, in the Seventh Plan also the majority of public sector investment is supposed
to be financed from domestic sources comprising savings of the government sector, capital
receipts, self-financing by the public enterprises, and borrowing from the domestic banking and
non-bank sources. Use of external financing for project and budget support will be done flexibly
within the context of prudent management of the external debt. This will mostly entail loans from
the official bilateral and multilateral sources on best possible terms. The scope for limited
borrowing from the international capital market by the private sector may also be possible.
Total public sector spending under the SFYP, including spending on account of provision of public
services and transfer payments and subsidies, is projected to be Tk. 9.6 trillion or 19.6 per cent of
GDP. The Plan envisaged a significant increase in the size of the government spending in relation
to GDP in order to broaden the basic economic and social services across the country and improve
the quality of public service delivery. The size of the public sector in Bangladesh is relatively small
and the task of improving the quality and coverage of public service delivery will require a larger
and more proactive role with a bigger domestic resource base to finance it in a sustainable and
non-inflationary manner. Banks can play a significant role in this regard.
SEVENTH PLAN WILL BE A CONTINUUM OF THE SIXTH FYP: The Sixth Plan made a major change in
the approach to economic planning in Bangladesh that has served the country well. Instead of
setting detailed physical targets and milestones, the Sixth Plan adopted a flexible indicative
approach to planning. This was well suited to the needs of the present economic environment of
the country, where more than 90 per cent of the economic activities are privately-owned and
additionally more than 80 per cent of total investments are in the private sector. Like the Sixth
Five-Year Plan, the Seventh Five-year Plan will also follow the dependence more on the private
sector. While public investment is an essential complement to private investment, GDP growth,
human development and poverty reduction, policies and institutions are even more important to
stimulate the private sector and achieve a higher level of equity. Government policies and
institutions are essential to set a level-playing field for all citizens, to protect the rights and
interests of the under-privileged, and to provide an equitable mechanism for resolving all
disputes.

Ensuring adequate levels of domestic credit for the private sector during the Plan period within
the aggregate limits of the targeted broad money expansion will require containing credit to the
government (net) and other public entities within reasonable limits. The fiscal deficit targets under
the Plan, while sustainable, will however require a sizable new borrowing from the banking
system. If needed, the government may have to seek additional external financing to avoid
crowding out the private sector. Particularly important in this respect will be to limit credit to the
loss-making public enterprises which would potentially crowd out the private sector credit and at
the same time lead to the accumulation of nonperforming assets of the SCBs. Loan provisioning to
the SCBs also needs to be gradually reduced by the Finance Division.
FOCUSED INITIATIVES BY THE CENTRAL BANK NEEDED: It is appreciated that to improve the
efficiency of the banking system, strengthen the financial position of banks and ensure
effectiveness of monetary policy, Bangladesh Bank has adopted Strategic Action Plans (SAPs) for
2010-14. Under those plans, the strategy 7 stresses enhancing the regulatory and supervisory
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framework against money laundering. This is supposed to be done by meeting the international
standard for AML &CFT (Anti-Money Laundering/ Combating the Financing of Terrorism),
strengthening the Financial Intelligence Unit (FIU), enhancing regional and international
cooperation, coordination among law enforcement and related agencies, taking membership of
EGMONT group. However, more careful initiatives should be taken in this regard.

The high level of reserves can play a very important role in accelerating the economic recovery of
Bangladesh. Therefore, a number of major initiatives to boost domestic economic activity in the
short term and major infrastructure projects to sustain higher growth over the medium term
should be undertaken. Any bold initiative will require massive imports and related foreign
currency-denominated financing, a part of which can be covered through use of reserves.
Additional fiscal stimulus and resurgent private sector investment demand can only be sustained
without being constrained by the external sector financing, if the foreign exchange reserve level
remains high and comfortable. The high level of reserves will also help maintain and further
improve Bangladesh's sovereign rating, which will help catalyse higher foreign direct investment
(FDI) in Bangladesh. In all respects, the high reserve level will help Bangladesh strive for attaining
the middle-income status in the post-political crisis period. However, happy days of the increase in
reserves may not be there, if there is a continuous decline in remittances, unless there is an
accelerated surge in export earnings.
Bangladesh has been able to manage a stable sovereign rating by both Moody's and S&P for four
consecutive years-2010-2013-due largely to stable economic growth supported by massive fiscal
reforms and an accommodative monetary policy. Despite double-digit inflationary pressure
throughout the FY 2011 due to external factors and substantive growth in the net foreign asset in
the previous fiscal year, the overall monetary sector registered balanced performance until 201213.
The key objective of the monetary policy during the Sixth Plan period was to allow monetary
aggregates to expand in a manner consistent with the growth and inflation targets envisaged
under the Plan. In the Seventh Plan also, monetary policy stance should target achieving higher
economic growth as well as managing inflation. It means that the broad money growth (M2),
inflation, reserve money growth, private sector credit growth, public sector credit growth,
government borrowing etc. should be targeted to achieve the growth target of the government,
not only the inflation alone. If the growth is higher then, some inflation could be accepted.
The priority for Bangladesh Bank should be to keep its focus on price stability by bringing down
inflation. Also Bangladesh Bank's on and off-site supervision needs to be strengthened and banks
need to be more cautious about the quality of loans and thereby reduce the proportion of nonperforming loans (NPL), if the interest rate spread is to be brought down in a systemic and
sustainable manner.
The core theme of the Seventh Plan is proposed to be "accelerating growth with equity". This
would suggest that utmost attention will be given to the ways the GDP growth rate could be
accelerated from the levels achieved in the Sixth Plan and how income distribution might be
significantly improved. Higher GDP growth and better income distribution will ensure a faster
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pace of poverty reduction. Emphasis will be placed on improving the growth drivers and on
policies, institutions and programmes that will support the lowering of income inequality. The
reduction in income inequality is not an easy challenge but the government is committed to
making strong efforts in this regard. The financial sector can help improve both the quantity and
quality of real investments and thereby increase income per capita and also boost credit flows to
SMEs for faster economic growth.

Considerably more effort will be needed in the Seventh Plan to accelerate the national rate of
investment. Attention will need to be put to both public and private investments. The Seventh
Plan will review the experience of the Sixth Plan in increasing the investment rate, identify the
constraints and suggest ways the investment rate could be accelerated. This will likely require its
greater attention to public resource mobilisation, including tax reforms, a well-articulated foreign
borrowing strategy to mobilise resources from official aid as well as private foreign capital, better
incentives for domestic and foreign private investments, and improvement in the planning and
implementation of public investment programmes.

In today's modern Bangladesh the availability of financial services through the banking sector is a
major determinant of private investment. The banking sector has on an average done well and
contributed to the growth in private investments. Several initiatives have also been taken to
make finance more inclusive through micro-credit and other specialised programmes of the
banking sector. Despite these efforts, the availability of credit in rural areas remains a challenge.
The Seventh Plan will take stock of the ongoing efforts to provide credit to the poor and suggest
further actions that could be taken to strengthen financial services to this target group.
FOR GROWTH FOCUS SHOULD BE ON SMES: For accelerating growth the Sixth Plan has sought to
transform the production structure of Bangladesh from a primarily agrarian one to a more modern
manufacturing and organised service-type economy. For this reason it has given emphasis to
spurring development of the SME (small and medium enterprises) sector in manufacturing.
International experience shows that during the early phase of industrialisation a dynamic SME
sector, particularly the small enterprises, is critical to push the growth in the manufacturing sector
and to create more jobs in manufacturing. If properly nurtured, the small manufacturing
enterprises in rural and urban areas can be a very good source of product diversification and
finding a niche in export markets. They are also a critical element to enhance the inclusiveness of
growth and thereby reduce income inequality. Therefore, the Seventh Plan will focus on
facilitating the growth of this subsector and financial sector can contribute a lot for boosting this
subsector.
THE DREAM DESIRE: The Vision 2021 and the associated Perspective Plan will continue to provide
the guiding principles of the Seventh Plan. In particular, the vision to achieve middle income status
by 2021 will remain a core development objective. We have seen that the macro-economy faced
challenges from overheating of the economy and adverse developments in the stock market. But
corrective policy actions minimised the damages and restored macroeconomic stability. While the
above record of progress is comforting, the government needs to understand that the reform
agenda is unfinished. The GDP growth rate is healthy but below the targeted rate in the Sixth
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Plan. Progress in improving the investment rate is less than satisfactory and must be strengthened
to accelerate the growth rate in order to achieve the middle income status envisioned in Vision
2021 and the nation's first Perspective Plan.

50 Fall in growth rate: Can it be reversed?


The Bangladesh economy was little affected and instead it showed resilience even in the most
turbulent period of the global financial crisis starting in 2007. Export of readymade garments, the
major export item of the country, could mostly avoid the onslaught of the global economic
recession followed by the world financial crisis. However, aftermath of the initial phase of the
financial crisis and subsequent global economic recession tell a different story.
Growth of the export-based economy of Bangladesh is markedly influenced by growth dynamics of
global economy, particularly by the growth trend of its export destination countries like the USA,
the UK and the EU. Global GDP growth vis--vis GDP growth of the USA, the UK and the Middle
East (ME) went down in 2013. Europe continues to be in recession with signs of improvement in
2014 and 2015. The USA and the UK would have modest growth from next year with further
pickup in 2015. (Source: Citi N.A., Economy Watch).
But recent political development in Bangladesh has raised concern over whether it would have
any bearing with the country's export destination nations and regions.
All the export destination countries and region have experienced low import demand in 2013
leading to substantial fall in export growth of Bangladesh. Higher import demand forecast for
these countries in 2014 and 2015 is a hope for higher export earnings for Bangladesh in these two
years.
The EU would enter a positive territory so far as its import growth from a negative 0.4 per cent to
positive 2.1 per cent and 2.2 per cent in 2014 and 2015 respectively.
An expected rise in the US import growth from a lower 1.8 per cent in 2013 to 5.7 per cent and 6.3
per cent in next two years is a very good signal for export growth of Bangladesh in 2014 and 2015.
However, the prospect might be lost in case Bangladesh fails to maintain a peaceful political
atmosphere. This would lead to a path of negative growth in export, import and remittance during
2014 and 2015 as forecast by different global economic watch bodies as depicted in Fig-3.
The Bangladesh economy, though not substantially affected by the on-going global recession since
the financial crisis of 2007, received first level moderate shock during FY08-09 recovering in line
with the developed countries during FY10 and FY11 and experienced second shock in FY12-FY13. A
moderate recovery is forecast again in line with the expected recovery to take place during FY14
and FY15 in the EU, the USA and Britain provided Bangladesh can capitalise the advantage.
Except a remarkable rise of export and import in FY11, foreign trade and remittance earnings by
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Bangladesh registered a sharp decline showing that the country could not ward off global spillover
effect of the recession. The situation is noticed for remittance inflow registering 2.2 per cent
negative growth and import and export having moderate 6.1 per cent and 7.1 per cent actual
growth respectively in calendar year 2013.
The downward trend in the performance may not be checked if the country cannot avoid politics
of intolerance and coercion, undermining the culture of respecting the opposition viewpoints and
the spirit of inclusivity - the basis of true democracy.

51 Monetary policy: Bangladesh experience


The mainstream monetary policy approaches of developed economies seek to impact real sector
economic activities primarily by influencing financing costs and occasionally also by influencing
liquidity volumes. It leaves sectoral flows of financing to be decided by markets according to
prevailing risk-return trade-off preferences.
Recurring cycles of financial instability and attendant spells of financial exclusion show this
mainstream monetary policy approach to be sub-optimal for both growth sustainability and
stability. In macroeconomic policy, laxity-driven liquidity surfeits like in the run-up to the last
global financial crisis, profit-focused markets tend to siphon off financing away from lower return
SME (small and medium enterprises) and green initiatives, hurting sustainable growth, towards
speculative price bubble creation in commodity and asset markets, impairing stability.
Also, entrenched interests in traditional polluting output practices always try to resist rechanneling of financing flows into adoption of new green alternatives.
The Bangladesh Bank (BB), the central bank of a low income developing economy, has opted to
deviate from the mainstream monetary policy approach of developed economies. It deliberately
imparted some directional bias in monetary and financial policies towards supporting inclusive,
sustainable growth. The growth supportiveness mandate in BB's charter lends legitimacy to this
approach, backed by the government's inclusive and sustainable growth strategy, underpinned
further by a broad social consensus for equitable, sustainable development.
The BB's inclusive and growth sustainability supportive monetary policy approach is serving the
Bangladesh economy well in upholding growth and stability. This was evidenced in decades of
steady growth performance and macro financial stability amid domestic shocks and external
turbulences, including the last global financial crisis and the subsequent global growth slowdown.
Six-plus per cent real annual GDP (gross domestic product) growth trend is continuing for well
over a decade now with CPI (consumer price index) inflation remaining in single digits, and fiscal
deficit remaining under four per cent of GDP. Double-digit export growth and workers' remittance
inflows have kept balance of payment current account in healthy surplus with rising foreign
exchange reserves already adequate for six months' imports and exceeding 20 per cent as cover of
broad money base. Steadily rising GNI (gross national income) per capita has crossed (lower)
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middle income country group threshold by June 2013, and quite a few MDGs (Millennium
Development Goals) including headcount poverty reduction have been attained well ahead of
timeline.
Mandatory environmental risk assessment routines in loan appraisal processes take account of
sustainability concerns. Promotion of SME and green financing is supported by low cost refinance
lines within monetary and credit growth envelops of price and macroeconomic stability focused
annual monetary programmes.
Green financing promotion efforts have already yielded substantial progress in solar and bio-mass
based renewable energy generation, installation of industrial effluent treatment plants,
replacement of traditional polluting brick baking kilns with energy efficient modern ones, and so
forth.
Inclusive financing is bolstering financial stability by widening and diversifying the asset and
deposit bases of lending institutions, reducing their credit and liquidity risk exposures. Inclusive
financing shielded small farms and businesses in Bangladesh from any credit crunch in the last
global financial crisis. When needed, the financial sector in Bangladesh was able to help out export
manufacturing and other sectors affected by the global crisis. Domestic demand driven output
activities remained well supported by inclusive financing, compensating for growth sluggishness in
exports.
Embedding of inclusive, sustainability supportive aspects in the BB's monetary policies and
programmes came about in a consistent package of steps. Starting with setting mindsets and
motivations right by instilling in the financial sector the ethos of socially responsible financing
focused towards supporting environmentally sustainable output activities and away from
financing of speculative profit seeking or wasteful ostentation. This has successfully enthused
banks and financial institutions into spawning new initiatives of reaching out with financial
services supporting productive and green initiatives in underserved communities and sectors.
They used cost-efficient mobile phone/smart card and other off branch service delivery channels
enabled by a BB-led massive upgrading of the financial sector IT infrastructure.
Environmental risk assessment guidelines introduced by the BB promotes green financing by
putting lower risk weights on the green options than on their polluting alternatives. This is
supplemented further by modest macro-prudential policy tweaks favouring green financing, like
mandatory high margin requirement on financing of personal cars etc., leaving mass transit
vehicles free of such conditionality.
The BB is engaging intensively with relevant domestic authorities and external development
partners in devising feasible and appropriate support schemes for various inclusive and green
financing initiatives. Further, the BB is participating proactively in international forums advancing
the causes of inclusivity and environmental sustainability like the AFI (Alliance for Financial
Inclusion), UN Global Compact, UNEP (UN Environmental Programme) etc. for mutual learning and
experience sharing.

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In fact, the BB's monetary policies and programmes explicitly include aspects supportive of
inclusive and green output initiatives. These are something the central bank sees as essential in
managing climate change related and environmental degradation related risks. Results thus far are
positive and encouraging with regard to upholding of price and macro financial stability. Monetary
policy approaches of central banks of many other developing economies have variants of similar
inclusiveness and sustainability supportive aspects. Mainstreaming of this approach in monetary
policies of developed economies as well may be warranted by the imperative and urgency of
environmental sustainability.

52 Creating and sustaining a global brand


As business has become increasingly global, the values and principles that guide managers are no
longer local. To cope with globalisation, creating a brand image is essential. According to
marketing guru Philip Kotler, "Brand image is a set of beliefs consumers hold about a particular
brand." In today's world, consumer perception gets more currency. That is why spreading of
products over the world is needed to emerge in the global market with a global brand.
Global brand, more often called global product, is the name of a product or service that is known
and sold in all parts of the world by a particular company. Presently, a new generation of global
brands is emerging. With an international business suggesting strength and stability in the fragile
economic markets, global brands are no longer being seen as dominating bogeymen. Nowadays,
global brands for global market are the combination of local and global perceptions of consumers
which also involves buyers, sellers and investors. This type of product or market is known as
'global-local' or 'glocal' market or product. Surely, a 'glocal' brand has the advantage of economies
in terms of production, recognition, and packaging.
Previously, companies offered a diversified product set, market-specific price points, localised
production and distribution and clear distinctions between the approach it takes in their own
states and internationally. But in an era of competition, if a company is new in the market it has to
be local to all over the world through its products. 'Local' is not only geographical, but also
psychological. It's local if it feels local, regardless of its logistics. It needs to feel aligned, relevant
and integrated with a space and the people in that space. Until you're welcomed as a resident,
you're still a visitor - and no local wants to buy everyday goods or necessary goods from a tourist.
How can Bangladesh produce and market global brand products? Though we have various
products renowned in the world such as tea, medicine, readymade garment (RMG) products etc,
we don't have the absolute recognition of a global brand which indicates the use of three words
'Made in Bangladesh'. It is a matter of hope that we are launching ourselves through organic
clothing, environmentally and socially responsible textile processing methods settled by the
Global Organic Textile Standard (GOTS) , which are patronised all over the world. On the other
hand, after the collapse of Rana Plaza on April 24, 2013, the world's consumers became concerned
about who are making their cheapest clothes and immediately more than 100 global brands
signed the Bangladesh Accord on fire and building safety, driven by ILO, IndustriALL Europe and
UNI Globl Union. As a result, the government, manufacturers and various associations of the
related fields have committed to improve factory safety and other conditions for regaining US GSP
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facilities.
Now, what strategies should Bangladeshi companies implement to be a global brand? In brief,
Bangladeshi companies, intending to create global brands, need to do the following: identify the
relative attractiveness of each market for your brand, conduct attitude and usage studies in each
country in which you are considering entering, identify the sequence of brand launch by
country/region of the world, know the category and brand indices in each country in which your
brand operates and establishes a branding scorecard that can be applied country to country.
There are a number of strategies that companies in Bangladesh can follow in order to build brands
in the globe. Researchers, analysts and Marketing Week, a London-based magazine, set out the
following strategies that can help companies to become a global brand BUILD A STRONG, CONSISTENT BRAND CULTURE: In the past, a rigid corporate structure was an
important element of the global brand. Local markets were in charge of developing their own
brand strategies. However, in recent years building a consistent and strong brand culture that
remains familiar to consumers wherever it is in the world has become a priority. It becomes more
important that your brand reflects your culture, rather than your guidelines.
BE BORDERLESS IN YOUR MARKETING: With abundance of digital platforms, it is no longer
possible for brands to follow different brand strategies in different countries. Marketers need to
rethink the term 'glocal'. 'Think global, act local' slogan doesn't work in a digital age. If you look at
brands like Nike, Adidas, Coca-Cola and McDonald's, they are not only everywhere and have local
strength and identity, but also consistent across markets. More than 50 private sector companies
work hand in hand with public institutions, civil societies and the media in West Africa to increase
borderless trade. By 2018, this will increase by nearly 200 per cent to $307 billion with 130 million
cross-border online shoppers.
ADOPTING A GLOCAL STRUCTURE: The ability to be both global and local is paramount for
successful international campaigns. One of the mottos of 'glocalisation' is 'local in spirit but global
in character.' Create a strong global hub, which is about managing and initiating projects where
you can share resources and create central segmentation models, but also help coordinate with
local markets. Always remember, in terms of both distance and time, consumers have the
freedom to change the brand to whatever they need. So, reflecting local attitudes, behaviour and
nuances are important to cope with the customers.
MAKNG CONSUMERS YOUR CO-CREATORS: It's all about consumers advising each other, talking to
each other, as well as talking to the brand. It all happens on a global scale and at the same time.
Social media has helped to create the perfect environment for interactions. For a new way of
operation or a new global brand, it will be a brand that is asking for opinion listening to consumers
and asks for co-creation.
DIGITAL STRATEGY: In the fields of strategic management, marketing strategy and business
strategy, digital strategy is the process of specifying an organisation's vision, goals, opportunities
and initiatives in order to maximise the business benefits of digital initiatives to the organisation.
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There are numerous approaches to conducting digital strategy, but at their core, all go through
four steps:
1) identifying the opportunities and/or challenges in a business where online assets can provide a
solution;
2) identifying the unmet needs and goals of the customers that most closely align with those key
business opportunities and/or challenges;
3) developing a vision around how the online assets will fulfill those business and customer needs,
goals, opportunities and challenges, and
4) prioritising a set of online initiatives which can deliver on this vision.
PUBLIC RELATION STRATEGY: The aim of public relations by a company often is to persuade the
public, investors, partners, employees, and other stakeholders to maintain a certain point of view
about it, its leadership, products, or of political decisions. It's possible to reach and communicate
with the real consumers. To adapt with this strategy, increasing media relation, knowing real
market, using technology, monitoring the web and creating social awareness can be the pathways.
Strategic decisions, backed by customer insight, are to be implemented effectively to spread a
business or a brand globally. For that, developing and socialising a global marketing plan early by
seeking feedback, consolidating and sharing insight for planning future activity, communicating
with available researchers, analysts, professionals and media, understanding global market needs
and developing a collaborative approach and dividing the markets into tiers could be the straight
ways for new entrance. Global marketing requires some effort to work, but, most obviously, it
should ensure consistency across territories. It allows operation more efficiently through
economies of scale of the companies. Beyond this, it enables to prioritise and optimise company's
efforts and budgets effectively to operate globally with a local presence.
Implementing the above strategies not only depend on the companies but also requires
government policies and their flexibilities for investors. Absolutely, it is Brand= Culture, as it's the
source of promise for positioning, strategy for brand plan, story for communication, freshness for
innovation and experience for culture and operations. Encouraging initiatives, low rate of interests
on loan, regular subsidies for a few years and immediate subsidies in case of loss, mobilised and
quick port facilities, sufficient steps to increase Foreign Direct Investment (FDI), continuous
monitoring should be taken in order to create a global image. And last but not least, using the
diaspora route, a strategy involving companies and proper authorities targeting immigrants from
their own country and building enough scale and sales to support a brand push can be the
cornerstone for branding Bangladesh.

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53 The trap of low growth and high inflation


Two important reports on the Bangladesh economy hit the headlines both in print and electronic
media last week. One is about inflation and the other is about forecast of growth of the GDP (gross
domestic product) for FY14. The sources are different but the reports are interlinked. Both of them
convey clear messages for our policymakers that should be heard and acted upon.
The Bangladesh Bureau of Statistics (BBS) released the inflation figures for March 2014. Overall
inflation has increased from 7.44 per cent in February to 7.48 in March. Food inflation also
increased while non-food inflation decreased.
The World Bank Dhaka Office released the revised forecast for growth of GDP for the current fiscal
year. The growth of GDP in FY14 is expected to be 5.4 per cent. The forecast for growth of GDP by
the same organisation a few months ago was 5.7 per cent. The current forecast is 0.3 percentage
point smaller than the previous one and 1.8 percentage point less than the original target set by
the government of Bangladesh in its budget announced in last June.
The first forecast was received with some criticism, many experts dubbing 5.7 per cent growth of
GDP for the current year as too pessimistic. However, the author of the present write-up had a
different view. He wrote, "Given merciless damages done in the economy in recent months, this
forecast is an optimistic one and the country should be happy if the growth rate is accomplished in
the end In fact, such an accomplishment will be a pointer to our growing economic resilience.
Not many economies of the world can accomplish a 5.7 per cent growth following what happened
in Bangladesh during last couple of months" (The Financial Express, January 19, 2014).
The same article also mentioned, "The main question is, can we really achieve a 5.7 per cent
growth this year? There is no 'yes' or 'no' answer to this question, or to any economic question for
that matter. We can achieve a 5.7 per cent growth of GDP provided that some measures are taken
to control the damage already done to the economy by the violent activities in the recent
months."
But the fact is adequate measures were not taken to revamp the economy. The inflation figure for
the month of December 2013 revealed the area where the most of the damages have occurred as
a result of political turmoil. Although the overall inflation increased in that month compared to
the previous month, the non-food inflation had actually declined during the same period. Fall in
income does not affect consumption of all items equally. If a household has to reduce the overall
consumption as a result of fall in income, consumption of non-food items would be the first one to
be compromised. Food items will be the last one to be curtailed as a result of falling income. The
observed inflation dynamics of December 2013 was a testimony to the fact that the slowdown of
economic activities and fall in household income affected the consumption of non-food items
more than the food items.
The issue of fall in or inadequate demand for non-food items has been acknowledged by the
Bangladesh Bank (BB) as well in its monetary policy statement announced in January 2014 for the
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second half of the current fiscal year. According to the monetary policy statement, bank advances
to transport and communication sector registered a negative growth of -43.54 per cent (at the end
of Q1FY14 compared to Q1FY13. Moreover, there is also evidence that retail and wholesale trade,
hotel and restaurant business, transport services and tourism faced sluggish demand due to
frequent countrywide shutdowns in H1FY14. Low growth of cement production (3.16 per cent) and
negative growth of iron and steel (-8.54 per cent) in the first two months of FY14 indicate slowing
growth of construction sub-sector with bank credit to this sector also experiencing a low growth of
8.87 per cent in Q1FY14. A sample of iron, steel and cement manufacturers reported a 50 per cent60 per cent drop in sales in Q2FY14.
After the release of the inflation figures for December 2013, this writer wrote in an article by
highlighting the issue of inadequate demand for non-food items. As remedial measures, the article
highlighted the policy options as follows: "Consumer credit is one way to promote private
consumption, especially the non-food items and consumer durables. The government has taken a
very conservative stance on consumer credits for different reasons. Conditions to get it have been
made very stringent. Recent information about the non-food inflation probably indicates that the
ground to take a conservative stance about consumer credit does not hold anymore. Therefore, a
policy revision with regard to consumer credit is required to vitalise the economy by promoting
private consumption at this depressed environment" (The Financial Express, January 14, 2014).
Unfortunately, the monetary policy taken for the second half of the current fiscal year did not pay
any attention to consumer credit. Instead, it maintained the same stringent stance about it. In a
review article of the monetary policy, the same author mentioned: "The continuance of
conservative stance on private sector credit including the consumer credit will neither curb the
food inflation nor revive the demand for non-food consumption. Alternatively, accepting the fact
inflation is an evil that has to be endured unless food production is enhanced and disruption in
supply chain is prevented, the Bangladesh Bank could ease the delivery of private sector credit,
especially the consumer credit, to avoid further sluggishness of the demand for non-food
consumption. In case of the currently taken monetary position of the Bangladesh Bank, the danger
of high inflation with low growth cannot be ruled out, whereas in case of the alternative monetary
stance high inflation with reasonably high growth could be expected" (The Financial Express,
February 03, 2014).
The latest projection of the World Bank and the inflation figures released by the Bangladesh
Bureau of Statistics indicate that the danger of high inflation with low growth is probably
becoming a reality that the Bangladesh economy has to endure this year. Unless the demand for
non-food consumption is revitalised, the trap of low growth and high inflation will continue.

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54Keeping jute mills operational


The Pubali Jute Mills was set up immediately after liberation to promote industrialisation of the
country. The mill was closed last month. About two thousand workers became unemployed.
During the last two months, five private sector mills were closed down and about 30,000 workers
lost their jobs. During last one and half months 12 jute yarn factories stopped their operation.
Yarn producers have reduced production by 50 per cent.
The number of jute and yarn mills, which were closed down in last three years, stands at 40. About
50,000 people used to work in those mills and factories.
The condition of jute traders and farmers is pitiable. Jute prices are going down and its export is
declining. Jute traders are due to get Tk 6,000 million from public and private sector mills. Several
meetings were held for keeping the losing mills operational but no action was taken. The
Bangladesh Jute Mills Corporation (BJMC) and the Bangladesh Jute Mills Association (BJMA),
which represents private sector jute mills, are saying that export subsidy of Tk 6,380 million are
not being released.
Ten million jute farmers are facing a difficult situation. Jute seed planting has started. Next jute
crop will be available in mid-July. Farmers cannot recover their arrears from the mills while jute
price is going down. Most of them cannot recover the cost of production. On the top of this, there
is unsold jute from last year.
The Awami League in its election manifesto in 2008 promised to reclaim the golden days of jute.
Five closed jute mills were reopened after spending a lot of money. But there was no visible
progress in the jute sector. All past liabilities were taken over by the government. This sector is
now fast approaching extinction. The State Minister of Textile and Jute said that meetings would
be held with all concerned so that this sector comes out from the cycle of loss. Jute mills will have
to stand on their own feet.
Crisis in international market and lack of progress in increasing the use of jute goods in domestic
market are responsible for the current bad situation in the jute sector. The government in 2010
passed a law for compulsory use of jute goods for packaging purposes. But this law has not been
implemented. Although polythene bags were banned in 2003, these bags are found in the market
in plenty. Even the government departments are not using jute goods. The Centre for Policy
Dialogue has said that it is necessary to proceed with a comprehensive policy.
This year jute production target has been fixed at seven million bales. An unsold quantity of two
million bales will be added to new production. The huge stock of jute goods will be a big burden
on the country's economy.
The BJMA President said that during 2009/2011, there was a turnaround in the jute sector. New
entrepreneurs came up. But this sector is now sinking because of crisis in the international market,
lack of new markets and absence of compulsory use of jute goods in the domestic market.
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There are 130 jute mills in the private sector. These mills export their products to Middle East,
India, Thailand and Europe. Because of Middle East crisis and instability in Thailand, jute export to
these countries has declined. In view of rise in dollar price in India, they have stopped jute import
from Bangladesh. During 2012/2013, export of raw jute and jute goods rose to almost Tk 70
billion. Up to February of the current fiscal year, jute export stood at Tk 32.33 billion. It may at
best reach Tk 45 billion by next June.
Price of raw jute is going down continuously. During 2010/11, a farmer could sell one 'maund' of
raw jute between Tk 2,000/4,000. At present, the price has come down to Tk1000/2000. Farmers
cannot make profit unless the price is Tk 2,000 per maund. Farmers are incurring losses for the last
three years.
The lack of domestic market and shrinking exports have left millions of jute farmers and
businessmen in big troubles. Although jute fared fairly well up to 2011, it has gone into steady
decline due to multitude of reasons. The government took over the past liabilities of the BJMC.
But who will bear the current liability of the BJMC?
The Bangladesh Jute Association (BJA) has urged the government to provide certain facilities to
raw jute traders. It demanded availability of bank loans to raw jute exporters at 8.0 per cent
interest and a cut in advance income tax deducted on the value of exported raw jute. The BJA
justified the demands citing traders' losses due to export slump in the ongoing fiscal year.
Exporters bring in Tk 20 billion a year by exporting the surplus raw jute after meeting local
demand.
The BJMC is losing money for falling exports. They cannot buy raw jute for want of funds. As a
result, the farmers did not get good price for raw jute. Exports have gone down. Jute goods worth
Tk 7 billion have piled up in the BJMC mills. They have asked for Tk 2 billion support from the
government. Cost of production of BJMC products are high because of old machinery.
One option for solving the problem would be to privatise the jute mills owned by the BJMC so that
the private sector may handle their problems in a pragmatic manner. The government may give
incentives to them without taking the total liability as in the case of state-owned jute mills.
However, the next budget may address the problems of the jute sector and come out with some
solution taking into account the report of the Jute Commission.

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55Obstacles to press freedom


It is difficult for the press to remain free. The media, both print and electronic are controlled by
some financial magnates and they have to voice the views of their owners. In some cases they are
the mouthpieces of a party and must think the way the parties want them to think. Again, the
activities of the government-owned media are highly restricted. Whoever controls those limits
freedom according to his own needs and interests. In the US, the big newspapers are owned by
powerful financial syndicates; in the United Kingdom, they are in the hands of capitalists; and in
Russia, they are in the hands of the government. Of course, it is maintained for genuine reasons
that a democratic government has more rights to control a newspaper than a private individual or
a private organisation.
The question is how to ensure freedom of the press? Legislation of course should guarantee the
press against interference by the government; but apart from legislation something more seems
to be necessary. Liberal editors should be picked up to run the newspapers, and they should be
given all freedom to free expression of opinion and unhampered publication of news subject only
to the limitation that they do not publish scurrilous abuses. But real freedom of the press can exist
only where a free people can function freely in a real democratic environment. It may be asked
why there is no freedom of the press in many countries? The reason is that common people do not
have economic freedom. The press is controlled by big businessmen or they serve the interests of
wealthy people. If the media people are guaranteed freedom from want and fear of losing
employment, they can be fearless critics of misdeeds committed either by the government or by
any individual or organisation.
It is rightly claimed that in a socialist country, as the people become economically free, the
government acquires an increasingly representative and democratic character. Hence in these
countries, the press should enjoy more freedom than in other countries. However, the danger may
come from hidebound bureaucrats. The best way to ensure freedom is to collect all news from
accredited sources, to allow free ventilation of opinion to all citizens through articles and
editorials and to do away with all controls except in the interest of public safely and welfare.
At the end, freedom of the press should be a valued privilege, it is a sacred right which should be
zealously guarded and protected. Governments should create all avenues to guarantee press
freedom against all arbitrary interferences and also from vested bureaucracy or private
proprietors. Editors owe this freedom to the public standing against party or class interests. And
the people owe it to their country and defend such freedom as a priceless heritage, not to be
withheld by the caprice of any individual or organisation, but to be broadened from precedent to
precedent.
A free press is the symbol of the free people. An independent well- informed press is a powerful
check on an arbitrary government and irresponsible administrators. The acts of injustice or
oppression or maladministration that a government would otherwise have hidden away, get
exposed thanks to the media that exercise constant vigilance against such ills and misdeeds.

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56 Rural life in the science-rich world


In the age of science and technology, people realise that they need to make their life compatible
to their locality. It means people need to build a new big world which is the combination of a big
number of small communities. Development of local area is not an easy task. It needs basic change
at the initial stage and then a comprehensive change. The recent past decades were marked by
industrial proliferation destroying villages and making people move to urban areas. This turned
the rural areas undeveloped and poor. Rural people lost their production facilities and markets,
and they could not maintain their human resources as the young generation has become urban
bound.
People in villages need to explore new ways of creating wealth if they want to stop being poor.
Wealth is based on two things: the ability of nature to reproduce itself and the infinite ingenuity of
human knowledge. We do have nature, but technology knowledge is more important.
Widespread usage of modern technologies in rural communities is still looked at as impossible.
Industrialisation has almost destroyed the traditional knowledge which allowed rural people to
live up until the twentieth century. Peasants were part of nature and they knew how to handle
nature. This tacit knowledge almost disappeared and no new knowledge system for rural localities
has emerged. Village was excluded from the system of accumulating information and knowledge.
The world split into cities that were technocratic, industrial and adaptive. The city was the only
environment where technologies could be leveraged and could thrive. Cities, like a vacuum
cleaner swallowed and sucked human resources destroying villages. This continued for decades.
But things have started to change in some areas. Further technological development pulled apart
the limits of reality, stepped outside the cities, and gave local places new possibilities. It started
with the promotion of new agricultural technologies of mass production. But mass production is
not possible everywhere; It can be brought to some places; for example the remote village of Ikrail
in Faridpur district. With plenty of possibilities there, the young generation of Ikrail knows how to
utilise them. Specially designed indigenous science and technology courses introduced just after
the junior school certificate examination at Khairunnessa Technical School and College in the
village have made things possible.
Technology is now changing in breathing speed. The rapid growth of digital technologies, their
application and combination with other techniques have caused a new situation. They are smaller
in size, more productive and more accessible. They do not require huge factories. A single
individual or a few people can produce them. The equipment can be moved and installed almost
anywhere-- in a remote village or in the middle of a forest. This equipment allows one to build a
new local economy.
In most cases, people have failed to avail these advantages-- not because of lack of finances, but
because of lack of understanding, knowledge and information. Often people do not know about
the opportunity. And even if somebody tells them about it, they do not know how to take a step
forward. We need people who will initiate changes. One of the main features of any rural society
is its lack of ability to change. They are not ready for change, nor do they know how to bring
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change. As distinct from cities, where people are used to life changing all the time; rural
inhabitants are used to live the same way generation after generation.
Today the ability to change is absolutely crucial for survival. We need to think how to bring back
the young generation of the villages who moved to the cities. It is possible. To make it happen one
needs to bring brand new technologies and build a new economy. Big cities being problematic
places to live in, many would like to move to any nice old village. Village Ikrail is a suitable area for
rural development as it has real assets for developing new profession and bringing changes. Like
this village, there are a large number of unique old villages in Bangladesh.
So, there are possibilities. They do exist; but will not take place by themselves. Special efforts by
special people are needed to make it happen. Rural areas do not start to develop suddenly by
themselves. We need people who should initiate changes.
Our main task is to help local inhabitants see new possibilities and make changes step by step.
Keeping the ideas in mind, the skilled human resources are being produced by the Khairunnessa
technical institute that was established in 2001 at Ikrail. The institute is a platform for
transforming indigenous technologies to modern and effective technologies. The institute has
proved it is possible to bring change even in the remote areas if proper attention is given in time.

57Framing budget on ground realities


Every country prepares its national budget for a financial year. But the nomenclature differs from
country to country depending on the form of government it has. The capitalist and the socialist
countries have different kinds of budgets and planning processes. However, the central planning
mechanism became popular with its introduction in the now-defunct Soviet Union. Almost all
developing countries have been following central planning. Bangladesh is no exception to it. Every
country of the sub-continent has a Planning Commission. The composition and the functions of the
Planning Commission are almost the same in these countries. The exception in India is that it has a
Deputy Chairman (generally former renowned Secretary to the government or a renowned
economist) who is treated as a second powerful man after the Prime Minister. This gives the
Planning Commission of India the real authority over the development projects and programmes.
Bangladesh has been following central planning since its inception. Over time, the country has
achieved socio-economic progress. The Planning Commission has now taken an effective
institutional shape. However, over last few years, some weaknesses in the planning process of
Bangladesh have been observed. Firstly, the budget sets some targets which appear to be
imaginary. Instead of terming them as targets, one can say that those are really assumptions. For
instance, a growth target is fixed (assumed) and a revenue target is set. The experience has shown
that these two targets could not be achieved over many years. Because, these are assumed or
imposed. Every year, the Chairman of National Board of Revenue (NBR) is found to show his
reluctance to imposed revenue target in the meeting of the Resource Committee headed by the
Finance Minister. This comes to the press off and on. Proper attention is not given to foreign aid
during estimate of resources for the budget. Enough foreign aid remains in the pipeline. The
ministries do not prefer foreign aid as there are supervision and conditionalities of the donors.
Had there been rigorous exercise by concerned ministries including Economic Relations Division
(ERD), the government could ease its borrowing from the domestic banking system.
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The most striking mismatch has been found in achieving GDP (gross domestic product) growth
rate. Every year actual GDP growth rate falls short of the announced target. Multinational lending
institutions like the World Bank and the Asian Development Bank and local research organisations
like the Centre for Policy Dialogue make different growth projections every year which show less
figures than what the government or the Finance Minister claims. The fact is that there is no
serious exercise as to the setting of growth rates. It is easy to say that the growth rate will be 7.2
per cent. But there is no explanation nor any exercise how this target will be achieved. In order to
achieve this target, there must be such an exercise that will show the required growth rate of
investment and simultaneously growth in industry, agriculture and service sectors. There must be
modalities to be shown in the budget as to how these required growths are to be achieved.
Similarly when the authority says that poverty will be reduced by a certain percentage, it should
specify how this will be achieved. There should be explanation as to creation of employment and
provision of social safety net. In the case of electricity, the installed capacity and generation are
increasing every year. But the system fails to meet demands of both industries and households.
True, the demand is increasing every year. But where is the plan that the demand of industries will
be met and a certain percentage of population (say 70 per cent) will get electricity. The plan
document speaks of increasing installed capacity but it does not say about targets of meeting
demand.
Institutionally, the General Economics Division of the Planning Commission is supposed to
formulate and review general economic policies of the country. It has an important say in the
monetary and fiscal policies too. The important assignment is to develop growth models to suit
the socio-economic objectives of the government. This exercise has been found absent for a long
time. Some of the jobs are given to the Bangladesh Bank (central bank). Some figures are forecast
by the Finance Division. The central bank is found to speak in line with the government. Again
there are various factors both internal and external that affect economic activities. The budget
exercise should properly take these factors into consideration. The economy, for example,
suffered a setback due to political unrest during fiscal year 2013-14. The loss, according to World
Bank estimate, was to the tune of US $ 1.4 billion. The Finance Minister while announcing the
budget in June, 2013 did not seriously take into cognisance the issue of possible political unrest.
All these result in mismatch between announced and achieved growth rates.
This mismatch is also reflected in the annual development programme (ADP). Scores of projects
come to the Planning Commission. The amount of resources for the ADP is fixed in the meeting of
the Resource Committee. The Planning Commission then accommodates the projects within the
limit of the allocated resources. The Planning Commission cannot assert properly. The Planning
Minister or the State Minister looks forward to the Finance Minister for ADP funds.
Prudence suggests that in order to administer budget effectively for achieving set targets, a
serious look is to be given to remove its inner weaknesses.

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58Economic diplomacy and Bangladesh


Modern diplomacy refers to "the application of intelligence and tact to the conduct of official
relations between the governments of independent states." Diplomacy is the exclusive domain of
the Ministry of Foreign Affairs (MOFA). However, alternative actors in the field of diplomacy have
emerged within and outside the state and often act independent of the Ministry of Foreign Affairs.
Economic diplomacy is another kind of it, which uses the full spectrum of economic tools of the
state to achieve its national interest. Economic diplomacy includes all the economic activities, but
not limited to only export, import, investment, lending, aid, free trade agreements etc. So the
foreign policy of Bangladesh may focus on development and maintenance of friendly economic
and trade relations with other countries and fostering cooperation in the field of trade, commerce
and manpower through different regional, sub-regional, political and economic groups. A country
like Bangladesh should pursue economic diplomacy more vigorously and we need professionals
from trade and business backgrounds and a business-friendly environment to meet that end.
Usually LDCs like Bangladesh employ the same set of negotiators on every platform. As a result,
they become masters of none. The country needs to produce different sets of negotiators, having
specialisation in different fields including bilateral trade, regional trade and multilateral trade,
conversant with different World Trade Organisation agreements and other such issues.
Economic diplomacy can be used to mobilise investment, promote tourism and focus better on the
national image building. We need to develop tourist spots and the tourism infrastructure to
attract foreign tourists. For projecting a positive national image abroad, the country's political
leaders have to be responsible about what they say regarding their own country. They should
know that the world media report what they say. Their unguarded statements can damage the
image of the country. To build a good image, Bangladesh may also need promotional activities in
the world media. The missions abroad have to assess the demand for Bangladeshi products in the
host markets and facilitate government-to-government interactions to promote exports to those
countries.
Ensuring proper education and technical training of people on latest technical know-how is also
important for proper economic growth of the country. Many developed countries are providing
scholarships for higher education, short training and diploma courses to the LDC citizens. A
diplomatic mission can help more participants from Bangladesh seize these opportunities. Thus
they can play a vital role in technology transfer.
The economic diplomacy of a developing country like Bangladesh is shifting from foreign aid to
international trade, investment and credit supply. The foreign aid scenario of Bangladesh has
changed. Grants are being significantly replaced by loans. Dependence on foreign aid has also
declined, though it still meets a considerable part of fiscal deficit and the Annual Development
Programme (ADP) financing. Bangladesh also requires foreign aid to meet its Sustainable
Development Goals (SDGs). So the importance of foreign aid is immense. Foreign aid and
economic diplomacy of Bangladesh should focus on (i) enhancing the flow of aid available on
favourable terms and conditions, (ii) negotiations at the multilateral level to gain as much as
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possible, and (iii) advocating aid as a source of investment. Accelerating South-South cooperation
to gain technical assistance and complementing foreign aid from Bangladesh's development
partners are also important while climate diplomacy should be made part of the economic
diplomacy of Bangladesh.
Economic diplomacy of Bangladesh: Basically, economic diplomacy is a continuous course of
action. Its outcome may not be evident within a short time, rather it could take a decade or even
longer. Hence, economic diplomacy may not at times be successful with the global economic
scenario changing very fast and sometimes without any prior notice. Indeed, this is a dilemma.
Economic diplomacy has to be pursued as part of a long-term policy approach of a developing
country. It would facilitate economic interest. Bangladesh's economic diplomacy should be guided
by three basics: increasing exports, Foreign Direct Investment (FDI) flow and managing the regular
aid flow. The country should not separate economic diplomacy from political diplomacy.
Commercial diplomacy, on the other hand, involves the diplomatic missions working in favour of
the home country's business and financial sectors in their pursuit of economic success and
achieving the country's general objective of national development. It includes the promotion of
inward and outward investment as well as trade. Important aspects of a commercial diplomats'
work are the information given about export and investment opportunities and their role in
hosting trade missions from home. In some cases, commercial diplomats could also promote
economic ties by advising and providing support to both domestic and foreign companies on
investment decisions.
Bangladesh branding: To get a strategic platform for exploiting the multilateral regime, the
country has to prioritise Bangladesh branding. For attracting foreign investment, the country
needs to project a positive image abroad. Bangladesh branding is essential, because without a
brand image it would not be easy to get foreign investment. The government should promote the
image of the country abroad, which should be the primary part of economic diplomacy. The image
of a country is very important in the fields of trade, global politics and international relations.

The Ministry of Foreign Affairs, the embassies and diplomats of Bangladesh are responsible for
projection of a 'correct' image of the country abroad. But their capacity to project a positive image
or change the undue negative perception may be limited. The diplomats abroad have to be
proactive, rather than reactive. The foreign ministry has to give importance to promotion of trade
and development by organising trade fairs, participating in foreign exhibitions, organising
investors' conferences and holding business-to-business dialogues etc. The missions abroad have
to be facilitators of joint business councils, joint chambers, joint trade facilitator taskforces etc.
Bangladesh today is the 48th largest economy in the world with a GDP size of US$ 225 billion
based on the purchasing power parity. Bangladesh has already started moving from low-income
status to an upper middle-income economy, and we want to continue advancing to become a
middle-income nation by 2021. And this commitment of the people will be our key strength, when
we think of branding Bangladesh. Recognising the importance of our international image and
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reputation, we need to mobilise all our resources to develop and implement a positive national
brand. While a well-designed branding campaign can prove highly favourable for Bangladesh, an
effective campaign requires a high amount of cooperation among a wide range of government and
private actors. There is a great opportunity for cooperative interaction among the government
agencies, corporations, non-governmental organisations, development partners and other actors,
when it comes to brightening the national image. However, actors in diversified areas can also
prove counterproductive. So we have to underscore the common interests of all sectors involved
so that multiple branding campaigns can work. As Bangladesh is the 2nd largest garment
manufacturer of the world after China, we can underscore our garment sector's success story and
internationally promote the 'MADE IN BANGLADESH' brand by rightly using the tagline 'WE CLOTH
THE WORLD', so that the string 'MADE IN BANGLADESH' will itself be a master brand alongside the
ready-made garment (RMG) sector. It has been well-proposed that in every 'made in Bangladesh'
product there may be a tag like: 'Made by the happy people from Bangladesh' which will create
brand equity for the Bangladesh country brand. With regards to that, we should make adequate
efforts to keep the workers really happy by ensuring their basic rights so that our buyers will feel
by their hearts that their buying means our happiness and eventually buyers will stay attached
with us psychologically. This may also be a good response to the recent tragedy in the garment
sector.
Bangladesh's position in global economic diplomacy: If we look at the global economic diplomacy,
we find that most of the jobs of the World Bank, UN, WTO, WHO and such other international
organisations are secured by Indian people. A few Bangladeshi people are engaged in less
important positions in the WB and in other UN organisations. The people, who are entrusted with
the economic diplomacy in different missions of Bangladesh abroad, are mostly posted in political
consideration. They neither have training nor have the required qualification and skills.
Representatives of the ministries like finance, commerce, expatriates' welfare and overseas
employment, religious affairs working in different missions abroad can take those responsibilities.
But there are no set rules or any system of exams other than the benchmark ACRs (annual
confidential reports), based on which they are selected. Most of the officers have no training nor
any experience in these fields. When it comes to economic diplomacy, exploration of every
economic opportunity needs skill and professionalism. One must know the disadvantages of their
own country and exploit the economic facilities in the host countries. Only touring the whole
world should not be the main purpose.

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59 Containing default loan malpractices


The financial sector reform programme has greatly and largely helped financial institutions (FIs) keep
strict credit management discipline. Particularly after introduction of the Credit Information Bureau
(CIB) of the Bangladesh Bank, the FIs when considering any credit proposal check the list of defaulter
borrowers in the country to be sure their new client is not a defaulter.
The pressure from outside and corruption inside are the root causes of the increase in classified
loans (CL) that rose many times over the years. During the period of 2012 to 2013 the CLs increased
by 17.50 per cent and such an enormous increase in CLs never happened before. This unusual
increase in CLs is due to political pressure, inside corruption, willful silence of the concerned
quarters and the indifference of board of directors.
It is not expected that a bank will achieve a 100 per cent loan recovery rate. The internationally
accepted rate of CLs is 2.50 per cent. In Bangladesh it is more than 34 per cent. But recently all banks
have rescheduled their CL portfolios as per a central bank circular. As a result, CLs of the FIs have
declined to a great extent. But the time that has been allowed to repay the loans will not be enough
for the defaulter borrowers to get out of the troubled waters.
Bankers, who have joined banks during the 1960s were not familiar with the words Classified
Borrowers, Classified Loans, Special Mentioned Account-SMA, Doubtful-DF, Bad and Loss-BL. After
the Liberation, the Bangladesh Bank possibly in the year 1979 issued a confidential letter enclosing
therewith a list of default/bad borrowers in Bangladesh. As far as this scribe's memory goes, the list
contained 19 names, out of which one borrower was a woman. Now the number of classified
borrowers might have crossed few hundred thousand.
Since 1982 the default loan culture has developed in the banking sector at an alarming rate and the
central bank miserably failed to stop the growth. An article of this scribe, titled Bank Sucker Blood
Sucker, was published in 1992 in a number of national dailies. It dwelt on default loans of banks.
Since it was the first information before the public about the bad loan culture in Bangladesh, the
defaulter borrowers became angry and discussed the issue at a public forum arranged by a trade
body and subsequently lodged a complaint against this scribe with the central bank. Resultantly he
was summoned to the central bank and cautioned verbally not to write any such article in future
that might create a problem for him. But God is always great. Next day the then President in a
meeting on financial matters referred to the article and appreciated the context. The compliment
from the highest authority encouraged this scribe to write articles one after another on default loans
such as "Pulling Banks Out of the Woods," "Character First Credit Next," "A Prescription to New
Private Banks," "Willful defaulters should be classified and blacklisted," "Willful Defaulters: The Bane
of Banking," "Characteristics of Common Bank Borrowers," "A Strong and Powerful Tribunal is
needed for realising Classified Loans," "Financial Discipline Needed," and "Evaluation of Credit
Proposal and 5Cs thereof," and many more.
After introduction of the CIB in 1989 by the Bangladesh Bank, the bad loan culture has shown a
downward trend. But during the last few years the CIB antibiotic has seemingly lost its efficacy in
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fighting the default loan culture. To cure the disease of bad loans, the Bangladesh Bank prescribed a
number of medicines for proper loan processing and effective credit analysis in order to drive down
the growth of classified loans. But in the recent past it proved a futile exercise and all honest efforts
of the central bank were in vain. Unscrupulous and dishonest quarters won and financial scams
involving Hallmark, Bismillah, Fare Trading etc. took place leading to banks swindled out of a big
amount of money.
This scribe in his articles on many occasions urged bankers to make any credit analysis about their
clients thoroughly and follow the 5Cs, CAMEL and SWOT. Recently one Mr. Tauhidul Alam Khan has
expanded 5Cs to 11 for an exquisite credit analysis before considering any credit proposal. He has
brilliantly expressed his mind. But our suggestions, thinking, recommendations etc. will never work,
unless and until all the interested parties come up with a positive approach. But regretfully all the
big cramps happened thanks to corrupt, dishonest and unscrupulous bankers who did it in their own
interest and to satisfy their politicians. Without any political influence such a big plunder of bank
money cannot take place. Since political involvement was there, no punitive action has been taken
so far. In fact, banks have been facing political pressure over disbursement of loans since 1982. The
loans disbursed under political pressure are never repaid and get stuck up.
Banks are the custodians of depositors' money and they must pay back the money on demand by
their clients and depositors. The default loan culture cannot continue as a regular phenomenon for
an indefinite period. The concerned authorities must take some appropriate actions to stop this
malpractice at any cost. However, this scribe has some more suggestions which can be followed
alongside the proper and strong credit analysis before disbursement of a loan:
1) Bankers must be honest, sincere and dedicated.
2) The boards of directors of state-owned banks must consist of honest personalities like highlyeducated teachers, economists, retired bureaucrats, retired army personnel and retired high officials
of banks. But there should not be any politician.
3) A high-powered Credit Counseling Committee (CCC) headed by the Credit Management
Department should be formed in each of the banks. After getting a loan proposal, the CCC will hold a
meeting with the applicant. Based on the threadbare meeting the CCC will try to understand the
mindset of the borrowers, especially why they have applied for the loans, the purposes of the loans,
actual motive, capacity, experience and behaviour of the borrowers, marketability of the product
produced by the loan applicant, credit worthiness, etc.
4) In Bangladesh, most of the borrowers are greedy. They want to obtain loans from FIs at any cost.
Whenever any new bank is opened, the unscrupulous borrowers make their first attempts at
snatching money from those FIs. The CCC as mentioned above must find out the motive of the
borrower in the very first meeting with the applicant.
5) A team headed by a senior member of the CCC must visit the factory and office of the applicant.
6) Information about the applicant as to his character, credibility, human behaviour, family status,
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etc. should also be collected from the outside sources secretly.


7) The bank officials concerned must visit the client's office and factory regularly and keep in
constant touch with the applicant, if the loan is considered and disbursed.
8) Documentation should be completed in all respects by the legal department before disbursement
of the loan.
9) A perfect and exquisite credit analysis should be made in all respects about the applicant.
Loan cases should be handled by the management on the basis of the merit of the loan proposal
after a pragmatic analysis of the proposal in light of suggestions made in this write-up. Honest,
sincere, experienced, courageous and dedicated management is most important for running a
financial institution efficiently. If a management of a bank has this quality, it can surely achieve its
desired goal.

60 From ADP to multi-year public investment


programme
The size of the upcoming budget 2014-15 is likely to be Tk 2.5 trillion as the finance minister
already indicated a couple of weeks back. If it turns out to be so, the growth of public expenditure
would be 13.6 per cent compared to that of the outgoing budget. Stakeholders expected a further
boost in the budget to recover from one of the highest losses of public and private investment in
the history of Bangladesh due to political turmoil and place the economy on a steady growth path.
However, the upcoming budget would also remain far behind the projection of the Medium-Term
Budgetary Framework (MTBF) that raises question of its credibility, in terms of projection and
achievement of budgetary targets.
There are big challenges in attaining the growth target set in the Sixth Five-Year Plan and even in
the outgoing budget. The World Bank's projection in early April 2014 is even much lower than that
of the government, while we see a visible tug of war on the revised size of the Annual
Development Programme (ADP). Indeed, the ADP is widely regarded as instrumental to achieve
higher growth especially when large public investment is required to recover from political
ravages last year. At the same time, we must equally have a reform through transition from
traditional low-return ADP to a more systematic and high-impact multi-year public investment
programme (MYPIP).
Now, why do we need a MYPIP although the projects are multi-year in the ADP? What are the
factors that lead to poor performance of the ADP over the years?
Three major factors can be traced to the maladies afflicting the ADP. First, it is the overloaded
nature of the ADP with a thousand projects approved and nearly eight hundred unapproved ones
but kept in 'green pages' with the possibility of getting green signal by the ECENC during the fiscal
year. There are quite a large number of projects coming in politically and with informal trail of
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many MPs. This creates an apparently 'inclusive' ADP but results in unmanageable number of
public investment projects.
Second, the ADP often fails to fully conceive the goals and targets of the Outline Perspective Plan
(2010-2021 or OPP) and the Sixth Five-Year Plan (2011-2015 or SFYP). The projects undertaken do
not translate as appropriate inputs, although in theory it is apparently in line with the
government's strategic planning documents, including the OPP and the SFYP.
Third, due to the annual nature of allocation in line with resource envelope and expenditure
targets, there is a rush at the end of every fiscal year that may be termed as 'the fourth quarter
syndrome'. For example, more than 40 per cent of the ADP was spent in the fourth quarter in the
last three fiscal years while about a quarter of the ADP was spent in the month of June alone.
Coupled with the alleged high prevalence of rent- seeking and bribery within the apparatus, it
leads to considerable wastage of public resources every year which would have generated much
higher returns if these were prepared and implemented as MYPIP.
The idea behind MYPIP is quite simple. If you feel that you need a house, then you will be
estimating your resource requirement rather than building some incomplete structures of the
house, and ultimately after some years, you find that there is no house at all although you spent a
hefty amount. This is exactly what is happening with the ADP despite the fact that the country has
set some sensible time-bound targets as illustrated in 'Vision 2021'.
Currently, there is dual budgeting, emanating from weak linkages between the ADP and the MTBF
due mainly to insufficient dialogue between the Planning Commission and the Finance Division.
Inefficiency in resource allocation and project implementation is also a result of lack of a mediumterm perspective in the ADP process. Since there is an absence of sectoral planning within the
MTBF, the sector-wise budgets are merely the sum of ministry-level projects that are mainly
flagged by the planning wings of the ministries and divisions, and as a result, the objectives of the
SYFP are only weakly materialised. Surprisingly, there is no qualitative shift in development
programming even after aiming at becoming a middle-income country by 2021 through doubledigit growth.
The MYPIP should be accompanied by Sector Strategy Papers (SSPs) to help coordinate between
MDAs and deal with intra-sectoral linkages. The SSP can be a prioritisation tool guiding to
populate the MYPIP. Currently, the SFYP provides limited guidance for effective prioritisation
between and within sectors. In addition, line ministries should prepare their medium term
strategic business plan (MTSBP) within the purview of SSP to strengthen intra-sector linkages.
These two should ideally serve as reference frameworks for assessing project proposals instead of
the existing programmatic approach resulting in low returns.
Such a structural reform in the ADP process is badly needed instead of populating the ADP with
new projects, both in green and other pages, thereby offering formidable tasks for the planning
and monitoring agencies of the government. The vision document for an MYPIP can be introduced
containing structure, implementation strategy, required changes in the MDAs and capacity
development of the Planning Commission and planning wings of the line ministries.
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In addition, it requires a comprehensive document outlining the government's strategic vision, the
strategic justification for such a transition, and timing and sequencing accompanied by a precise
implementation plan. It will reduce uncertainty over the expected amount of resources and the
period of multiyear implementation. Besides significantly reducing the large number of small
projects and the 'waiting list' approach of the green pages, it will be based on a result-oriented
resource allocation, which would be introduced through rigorous prior assessment to lowering
risks and uncertainties related to expected return from large public investment. Second, public
investment would not suffer from low quality due to expenditure spikes in the fourth quarter, as
well as in June.
Introducing a meaningful MYPIP will crucially depend on close and effective cooperation between
the Finance Division and the Planning Commission. There is a need for external support for greater
coordination and preparing Joint Budget Strategy Paper, and the roll out of the SSPs and MTSBPs.
It will help realise greater coordination and synchronisation in preparing the revenue budget and
development programmes.
The government should also initiate a structural reorganisation of the Planning Commission to
establish it as the 'core' planning institution. Its role should be redefined to provide strategic
guidance to the ministries and formulate indicative plans according to national and sectoral
priorities. The government should also strengthen the planning and financial management
capacity of its staff through comprehensive formal as well as on-the-job training and capacity
building. Also, the capacity of staff within planning wings of line ministries should be strengthened
to reduce flow of 'junk' projects from personal trail of the political leaders.
Finally, there is a need for introducing sectoral programmes instead of a plethora of projects in
various coloured pages that are quite difficult to implement and monitor. There are good
instances of such programmes with rigorous prior homework between the government and
donors, such as PEDP and HPNSDP containing interrelated components that bring tangible results.
Such a transition would then be instrumental for a meaningful introduction of the MYPIP to come
out of the gloomy ADP scenario.

61 Let tax policy deliver distributive justice


A tax policy usually aims at achieving a few objectives in the economy. These are enough tax
collection for the government, ensuring distributive justice for citizens and serving or influencing
public interests. It also aims at discouraging some consumption items like tobacco which are
deemed to be hazardous t o health.
The policy also encourages or sometimes coerces companies, specially the multinational ones, to
leave a portion of their equity ownership for members of the public. The tax authority
continuously sets tax rates and also decides as to which tax should be paid by whom.
There are two types of taxes: one is called direct tax and other is indirect tax. This division has
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been made on the basis of shifting of incidence. Normally, the burden of direct tax, such as income
tax, cannot be shifted to others, and the burden of indirect tax, such as value added tax (VAT) can
be transferred by the collectors to the consumer or to those who buy the commodity or service.
But the fact remains that the burden of every tax can be shifted to others. Can't income tax payers
shift the burden of tax levied on their incomes received from house rents to the tenants?
The income tax policy in Bangladesh is not bad, but revenue collection from this sector is poor.
This is because those who can pay tax do not pay and those who pay more income tax pay less.
Only in recent years, the National Board of Revenue (NBR) made a requirement of an income tax
certificate for those who buy costly items like automobiles, land and flats. But collecting a tax
identification number (TIN) and a certificate thereafter is very easy. Many of the buyers of these
costly items normally are first timers in income tax payment and they pay the minimum tax to
have a TIN. The NBR should follow these people, ask them to file their tax returns on a regular
basis. Again, some people should be denied this identification number unless they show their full
income in a transparent way.
The highest income tax rate in Bangladesh is 25 per cent, which is alright. But as the income tax
policy already offers some concessions on investments in the name of investment allowances, this
concession can be further widened to encourage savings in the economy. The proposed enhanced
tax concession can be tied to the tax rate, say those who pay at the rate of 25 per cent will enjoy
higher investment allowances.
Tax on dividend is too high. The dividend earners are paying tax twice from the same income once their companies are paying in the form of corporate income tax, and later the receivers of
the dividends are also paying in the form of personal income tax. This writer's suggestion is that
tax on dividend should be levied at a lower rate, especially for individual dividend earners. This
will encourage the income tax-paying people to invest in the stock market. Investing in stock
market means taking more risk. Incomes accruing from risky investment like that in equity and the
same from safe investment like that in the government savings certificates should not be taxed in
the same way and at the same rate. Income tax on dividends for individuals should be brought
down to 15 per cent, by keeping a scope for a further reduced rate for the very small stock
investors.
The corporate income tax rate is higher in Bangladesh compared to what it is in many other
countries, including some European countries. In fact, countries are in competition to lure
investment by offering lower corporate income tax. In Bangladesh, the same is between 27 per
cent and 45 per cent, the highest being for banking and finance companies and the lowest for
publicly traded listed companies. At some points, the financial companies were not discriminated
against other types of companies in this respect. But a few years ago, a discriminatory tax was
levied on the former.
Listed companies should pay less tax as they are sharing their incomes with their small owners. In
fact, a further 5.0 per cent tax reduction should be given to them so that their dividend-paying
capacity can go up and other companies which are still outside the bourse listing feel encouraged
to invest in stock markets.
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Many multinational companies are still outside the stock market. Why? Because, nobody told
them boldly to come to the stock market listing or tax concessions were not enough to bring them
to the stock market. In other countries, the same multinationals, like Unilever, City Bank NA and
Siemens are listed companies.
Getting listed in the stock exchange means parting with a portion of ownership in equity capital in
favour of stock market investors. How could the multinationals in many other countries have gone
away with without giving any kind of ownership to the local people? This question should be left
to our policymakers to answer. A huge amount of money goes out of the country every year in the
form of transfer pricing. Who stops this hidden transfer of money by the companies, specially by
the multinationals?
A better way of stopping capital flight is to reduce the tax rate. Where do they shift the incomes?
Certainly it is to the lower tax rate countries and to the off-shore centres. By doing so they benefit
the foreign shareholders, but they deprive the local ones.
It is time to make corporate income tax competitive. That the higher the tax rate the higher will be
tax collection is not true anymore. Now-a-days, the opposite is true.
In other countries, more taxes are being imposed on expenditure, specially on costly items like
cars, hard drinks, soft drinks and travellers who travel in first class and live in luxury hotels. In
Bangladesh, the tax authority also should follow the same way.
The tax policy should encourage investment, discourage high consumption, encourage the
companies to go public, and provide lower tax rate for small investors in stock market.

62 On the road to Digital Bangladesh


The global information and communication networks are called information super highway. These
cover internet and switching systems such as telephone, cable television, satellite communication
networks etc. and all types of digital information at high speed
Like many developed and developing countries, the internet in Bangladesh has witnessed a
phenomenal growth. The number of internet subscriptions in Bangladesh grew from 1, 86,000 in
2000 to 6,17,300 in 2009. By 2011, however, the number of internet users in Bangladesh grew over
900 per cent bringing the total number of users to 55,01,509 (3.5 per cent of the total population)
mainly due to wide availability of mobile internet access.
Benefits of information are many. It is now easy to find educational resources, up-to-date news,
copies of important documents and photos and research information on topics ranging from
weather conditions to population statistics. Online encyclopedia and other reference materials
and access to experts, increasing reading skills by providing access to interesting materials and
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suggestions for additional reading can be made available.


At this moment, information technology is the most dynamic sector. It is leading the way. We are
optimistic about Bangladesh getting to the frontline of information super highway.
The internet's speed in Bangladesh is among the slowest in the world. As of August 2012,
Bangladesh ranked 168th out of 184 countries on the household download index by net index.
Bangladesh is slowly moving up in the world-wide ICT ranking, rising from 130th in 2009 to 113th
in 2012 in the 'networked readiness index'.
Bangladesh has officially joined the second submarine cable South East Asia-Middle East-Western
Europe-5 (SEA-ME-WE-5) and hopes to get connected to it by the first quarter of 2016. It will be a
high-class connectivity of both data and voice between Southeast Asia and Western Europe. The
country will get an additional bandwidth of 1400 Gigabyte per second (Gbps) from the second
submarine cable and will always be online even if one connection goes down. The SEA-ME-WE-5
system will deliver an ultimate design capacity of 24 Terabyte per second (Tbps). The system will
Span 20,000 km connecting Singapore to France via Malaysia, Indonesia, Thailand, Myanmar,
Bangladesh, Sri Lanka, India, Pakistan, Oman, the United Arab Emirates, Yemen, Saudi Arabia,
Egypt and Italy. It will deliver ultra-broadband capacity and faster access to consumers and
business.
Installation of the second submarine cable was scheduled to be completed by December, 2014.
The installation work is progressing fast and it will connect Bangladesh through the landing station
situated in Patuakhali. Construction work of the landing station has been progressing so far at
expected level.
The Bangladesh Submarine Cable Limited (BSCCL) is the core telecommunication service provider
and international submarine cable operator of Bangladesh. The BSCCL will soon start operations as
IIG (International Internet Gateway) which would help the people get broadband internet with
cheaper rates and better quality of service. It is one of the growing companies in the telecom
sector of the country and is contributing to the revenue earning of the government of Bangladesh.
It is a leading company implementing national ICT policies to develop modern tele-network and
high speed broadband internet in Bangladesh. The submarine cable network is expected to be the
main telecommunication infrastructure for 'Digital Bangladesh', by the year 2021.

63Rural development: More talks, less innovation


Is it not a stern reality that in this 21st century the rural regions are facing major challenges which
arise mainly from globalisation, demographic change and the rural migration of young, welltrained people? Policies for rural areas desperately call for recognising and making use of
strengths and opportunities.
The reality may be seen in more details. More than half of the global population already resides in
cities. This number is projected to increase, with 60 per cent of the population living in urban
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areas by 2030. Very recently, the UN rightly warned that half of the world's increase in urban land
will occur in Asia over the next 20 years and two of the region's largest economies, China and
India, will see the most extensive changes. In India, the loss of agricultural land to urbanisation,
aided by insufficient planning for food supply lines, will place a severe constraint on the country's
future food security for its growing population, the United Nations Convention on Biological
Diversity (CBD) opined in its 'The Cities and Biodiversity Outlook' report.
With the total urban area in the world expected to triple between 2000 and 2030 and urban
population expected to double to around 4.9 billion in the same period, urban expansion, the
report observed in its assessment, will put stress on water and other natural resources, and
consume prime agricultural land. This report makes a strong argument for greater attention to be
paid by urban planners and managers to the nature-based assets within city boundaries.
Sustainable urban development that supports valuable ecosystems presents a major opportunity
for improving lives and livelihoods, and accelerating the transition to an inclusive green economy.
Is there any short-cut process to tackle the situation? The answer is of course a great 'no' in as
much as the development process itself has turned to be more complex even compared to a
decade's back. It is virtually the urban-rural-management of integration process that would rule as
the ultimate factor.
No doubt, the policy shift towards integrated rural development has been there though at a snail's
pace - reflecting a fundamental change so far as the objectives are concerned and a movement
towards a more holistic approach to rural development inviting new tools of analysis. But the
goings in the developing world cannot be given an excellent certificate in as much as a number of
inhibiting factors still roam at large.
It is not that planning has been a futile exercise, but it is to be agreed upon that either plans are
inadequate or implementation is poor. Supervision and control leaves much to be desired. It is
crystal clear that integration reflects the complex linkages and interactions within the system of
overall rural development. Putting too much emphasis on agriculture and ignoring its linkages to
the rest of the economy results in sub-optimal utilisation of resources.
An innovative approach has to be there in as much as tinkering around the existing practises could
not enable an economy to reach at higher level of equilibrium. Rural diversification, one way of
looking at this, in turn, refers to the process aimed at reducing the risks of farming and is a logical
consequence of the policy shift away from direct agricultural price support -- a synergy approach
to rural development, incorporating both traditional network and institutional analysis, focussing
on working mechanisms and processes. This, no doubt, paves the way for fostering co-operation
between public and private actors to achieve sustainable development. Planning is a continuous
and spontaneous process indeed.
Needless to reiterate, proper land use planning could bolster the farm output to a significant
extent. Fallow lands also bear potentialities. Farmers' training, though of late, being arranged by
institutions like N I R D, S I R D, among others, no doubt have been bearing fruits. Extension works
are highly expected.
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In particular, agricultural lands require top attention in as much as sectoral competition may lead
to diminution of farm land steadily in the absence of proper land use planning. It will be pertinent
to refer here some global happenings. This is particularly serious in Egypt, where only 3 per cent of
the total area is of any use for agriculture, the rest being largely desert. It appears that every year,
Egypt loses 0.5 per cent of what remains of its agricultural land-a trend that cannot go on forever.
The situation is similar in China. Indeed, since that country started industrialising it has lost some
10 per cent of its agricultural land. In China, urban areas are increasingly encroaching on protected
areas of the country. In the Latin American and Caribbean regions, where the number of cities has
grown six-fold in the last 50 years, housing for low-income people often occurs in important areas
for biodiversity and ecosystem services such as the wetlands or floodplains. These are mistakenly
considered to be of marginal value by planners.
At the same time, environmental concerns should have been considered and integrated during the
planning phase of programmes of measures to support rural areas. A large share of policies
targeted at land use in rural areas should have served to promote agro-bio-diversity and
environmental measures in agriculture.
Side by side, it also remains a question as to why the T C G [Technological Consolidation of
Holdings] Model is not attached due weightage! Under this system, the individual ownerships
remain undisturbed as such but the inputs/facilities that are extended are meant to all of the
owners who use the land for productive purposes. Accordingly, the rate for water use/machine
use remains the same and is calculated on total use vis--vis pro rata basis [i.e., keeping in account
the actual individual shares].
How long the productivity factor will remain at bay is difficult to ascertain. In fact, productivity has
been offered a back seat for decades, as ignorance, slow implementation of known knowledge,
unscientific faith and beliefs rule the game. The result is poor production, poor profitability and
loss of other resources, which, in turn, could have been utilised optimally.
Why don't we recognise local knowledge? It may be mentioned on this score that globally
speaking, the traditional combination of livestock and crop activities had helped farmers -- to use
the manure as fertiliser for crops, and the crop residues as feed for livestock. In place of this, in
many parts of the world these days the practise has becomes less optimal -- most of the manure
losing up to half its nitrogen content before it becomes nitrate to be used as fertiliser to plants.
Next, due to interplay of a number of factors, the incidence of regional disparity galore. Regional
peculiarities must be given importance. Species of fish, crops and livestock to be raised will have
to be selected on the basis of local conditions and requirements. Access to science and technology
is also not included adequately in rural development strategies in order to improve the nutritional
value of crops, reduce production fluctuation and increase productivity on small-scale farms in a
manner appropriate to the ecosystem in which they operate.
Empowering rural population [that includes a large number of vulnerable groups, including
women, indigenous peoples, fisher folk, member of low castes, and ethnic minorities], still
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remains a far cry. Women, as is well known [thanks to the African proverb: without women we
will go hungry] in particular are responsible for a vast majority of food production, household
work, and care work -- they are yet to be actively included in designing and implementing the
programmes that will enhance the security of their livelihoods. Poor educational facilities and
awareness on this score stand in the way of achieving gender equality and equity. These, in turn,
block speed of the ongoing efforts directed towards mitigation of regional imbalances. Manpower
wastage, marketing hindrances, inadequate availability of quality inputs and managerial
ineffectiveness, among others, just go on adding to sectoral and spatial imbalances.
Further innovations inclusive of drive for optimising productivity, subject to environment
constraint, is the crying need to push the integrated farming system to perfection.
Finally, what about access to services and infrastructure that should be available throughout the
economy (drinking water supply, sewage treatment, mail, telecommunications, transport, access
to broadband in the field of IT and telecommunications)? The quality of these services, however,
differs from region to region. One field which urgently needs improvement is sewage treatment
where, for economic reasons, the number of decentralised systems is growing. Furthermore,
employment opportunities are not at all sufficiently available in rural regions.
As rural innovation is increasingly viewed as a complex process that defies simple solutions, it has
become more and more difficult to identify the types of investment and policy interventions
needed to make developing economies' rural regions more responsive, dynamic, and competitive.
So, the requirement is there to identify where the most binding constraints to rural innovation are
existing and how better to target interventions to remove such constraints.

65Concern about economics: Some questions


Global trade and market economy are not a new concept. Mankind has moved from one end to
the other part of the globe for marketing products. Arabian perfume did find market in Europe in
the 15th Century because of its superb quality. As far back as in 594 BC, Athens exported olive oil
in return for grain. Adam Smith in his famous book Wealth of Nations advised not to produce that
item which could be imported at a lower price from abroad. Adam Smith's book was published in
1776. Now it seems that the concept of globalisation and free market economy has been
reincarnated in the 20th century. Of course, these economic weapons have been forcefully used
against the fragile command economy of the socialist world. The western world was proud of its
economic performance, and it had reasons to be so.
But in the early eighties of the last century, Ronald Reagan, the late US President, and Margaret
Thatcher, the late Prime Minister of Great Britain, used the theory of market economy in their
own ways. According to their views, the government has nothing to do with the economic affairs
of a country. Its function is restricted to maintaining law and the size of the government should be
minimal because it is an impediment to the economic growth of a country. Market will take care
of everything. Reagan's adage was "surplus wealth of the rich will trickle down to the poor."
President Kennedy said that the high tides would lift all boats.
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The glorification of the market economy gained further momentum with the collapse of the Soviet
world. In the meantime, China moved away from Mao's path and took oath of allegiance to the
market economy, of course with much state control. Chinese leader Deng Xiaoping used to say:
"To get rich is glorious". Adam Smith said in The Theory of Moral Sentiments: "The rich man
glorifies in his riches because he feels that they naturally draw upon him the attention of the
world and that mankind is disposed to go along him in all those agreeable emotions, with which
the advantage of his situation so readily inspires him. The poor man on the contrary is ashamed of
his poverty. He feels that it either places him out of the sight of mankind or if they take any notice
of him if they have, however scarce, any fellow feeling with the misery and distress which he
suffers."
Invincibility of market economy got a shock and faced the worst economy disaster in 2007-2008
AD during the global economic recession. In the developed countries, so long very loud against
government intervention, no other option could be found safe and except the financial assistance
from the public exchequer. Some organisations had to be rescued under the plea 'too big to fail'.
The US President had to come forward with billions of dollars for rescuing the distressed
corporate. At one stage, the US government probably became the top share owner of the country.
While taking oath as President of the USA, Barack Obama acknowledged the role of the
government and said that the size did not matter, how efficiently it worked would be looked at.
After observing the roles of the government during this depression have there been any changes
in the views of the protagonists of the free market economy? During the crisis, either money
market or any share market did not or could not rescue a single distressed company. Of course,
long before this crisis, the number one currency dealer, George Soros, admitted that the market
system, like every other human arrangement, is inherently flawed.
For centuries the economists have been highlighting the market value, known as market
capitalisation, of both share market and currency market before the people. But what
contribution it may make to the economic development of a country? Mahathir Mohamad, the
former Prime Minister of Malaysia, wrote in his book A New Deal for Asia, "Currency trading is
said to be 20 times bigger in money terms. But what benefits do we derive from it? Apart from a
few people making huge sums of money, it has created no increase in employment, no growth in
business or in the wealth of nation and people."
The same words can be applied in case of share trading also. Market capitalisation does not have
intrinsic value. But unfortunately, the media always presents the issue in such a manner that
creates misunderstanding and panic. At the decline of a huge amount of market capitalisation, it
is sometimes reported that a huge amount of money has been smuggled out from the market.
Numbers of share remaining the same, the airy calculation of price differs without having any
financial impact on the economy. The stock exchange is a market, where financial instruments are
traded. It does not and cannot provide any financial assistance to any proposed or ongoing
corporate organisation. The reason is very simple. It is a place for trading and not investment. If
the economy of a country becomes buoyant, the share market will be bullish, not the other way
round. Hyper sensitivity is a very old disease of a stock exchange. This causes damage to the
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innocent shareholders/investors.
In 2004, when the Congress with the support of the Left won the election in India, the Mumbai
stock market collapsed. Again, when in 2009 the Congress won the election sans Left support, the
Mumbai stock exchange was overheated and trading had to be suspended. On both the occasions,
the Mumbai stock exchange behaved in silly and unreasonable manner --- because no financial
policy would change overnight, particularly in India, where the bureaucracy is notorious for
lethargy and delays. What happens, be it in India or anywhere around the globe, rumour-mongers
and persons with ulterior motive either create panic or over-joy and misguide the innocent
people. There are issues, like those revolving round the stock exchanges, which need to be studied
by PhDs dealing with the capital market. In all kinds of trades, certain methods are followed
purely for flourishing the business without paying any attention to ethics or the greater cause of
the people.
Again, a quotation from George Soros's book The Crisis of Global Capitalism may be suitable for
the purpose. He says, "Politicians gain recognition for getting elected not for the principles they
represent. Business people are esteemed for their wealth, not for their probity or the contribution
of their business to social and economic wellbeing. What is right has been subordinated to what is
effective and this has made it easier to succeed without paying any heed to what is right."
Needless to say, we see a grave danger here to the stability of our society.

66 Int'l focus on Bangladesh economic prospects


The New York Times reported on 23 April, 2012, that Bangladesh has a huge prospect of becoming
one of the emerging economies. The country is running on a strong promise of growth despite
various challenges the nation of 160 million people is facing.
Similarly, an economic and insurance institution of France has included the name of Bangladesh in
the list of ten emerging nations of the world. This French financial institution called 'French
Insurance Company for Foreign Trade' (COFACE) observes that the economic march of the five
countries belonging to the BRICS is slowing down. The BRICS is the acronym for an association of
five major emerging national economies: Brazil, Russia, India, China and South Africa. The
grouping was originally known as the 'BRIC' before the inclusion of South Africa in 2010. The BRICS
members are all developing or newly industrialised countries, but they are distinguished by their
large, fast-growing economies and significant influence on regional and global affairs; all five are
G-20 members. As of 2013, the five BRICS countries represented almost 3 billion i.e. nearly half of
the world population, with a combined nominal Gross Domestic Product (GDP) of 16.039 trillion
US dollars, and an estimated 4 trillion US dollars in combined foreign reserves. Presently, South
Africa holds the chair of the BRICS group, having hosted the group's fifth summit in 2013.
These BRICS countries are now suffering from various sorts of problems that hinder their
economic progress. They are gradually losing competing capacity with respect to commodity
exports. Apart from this, the domestic demands of the BRICS countries are not sufficient to
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facilitate the speed of increased productive capacity. As a result, these five economies will
experience growth rate on an average not above 3.2 per cent per annum. And the ten emerging
countries including Bangladesh will achieve economic growth rate that is set to be more than that.
The COFACE maintains that the ten emerging countries listed by it are thus going ahead to capture
the place of the economies belonging to the BRICS.
These ten countries have again been divided into two groups. The economies belonging to the first
group are PPICS, acronym for an association of five developing economies: Peru, Philippines,
Indonesia, Columbia, and Sri Lanka. The PPICS nations are now in the most favourable economic
condition for economic advancement. These economies are growing very well since their
commerce and trade environments are comparatively better than others. On the other hand, the
second group includes four least developed economics: Bangladesh, Kenya, Tanzania, and
Ethiopia. The COFACE opines about these economies that as trading and business is difficult in
these countries their pace of economic development may be hindered. Nevertheless, the COFACE
is hopeful and interested about these countries; since the BRICS countries experienced similar
problems in 2001, and they could overcome such problems ultimately.
In explaining the economic possibilities of the ten new emerging countries, the COFACE has
compared their economic conditions with those of the countries belonging to the BRICS in 2001;
and accordingly it passed opinion based on those observations. It has actually been noticed over
the past several years - say a decade or two - the numbers of optimistic people and quarters are
gradually on the increase so far as their vision, especially about the future of Bangladesh economy
is concerned. Some of them even go to the extent of terming Bangladesh as an economically
'emerging tiger' of Asia. They maintain that such possibility for the advancement of Bangladesh
economy has been further opened up and accelerated as the world economy has turned its face
towards Asia, and as huge economic activities are now specially centred in South and East Asia. As
Bangladesh is lying close to this geographical location, it is obvious that it will be logically and
sufficiently influenced by such economic health which is being witnessed by the region.
But it is a great challenge for a backward and the most densely populated economy like
Bangladesh with a population of 160 million on 142,776 square kilometres of land area. Its
population density (people per sq. km) was last measured at 1174.33 in 2011 according to the
World Bank, with the GDP standing at worth 115.61 billion US dollars in 2012. The country's
foreign reserves amount to 20 billion US dollars as of 2014. Under such circumstances, it is really a
great challenge for Bangladesh to materialise this economic prospect that has been opened up in
South and East Asia. The prime and predominant factor to keep the country's economic wheel
moving or revolving continually, which is urgent, is political stability and internal peace. But at the
present moment no one can guarantee such an economically congenial socio-political
environment or order for Bangladesh.
There is an important role of the external sector that comes up in the form of export-imports,
foreign remittances, foreign aids and investments in the Bangladesh economy. At the same time,
the private sector and small and medium initiatives are performing well in the country. Given
these favourable factors, it was possible for Bangladesh to maintain a growth rate of more than 6
per cent per annum for the past years. The Bangladesh economy was moving well forward even in
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the world recession after 2009; it encouraged the World Bank to identify Bangladesh economy as
an "unsettled surprise".
It is mentionable that US organisation J.P. Morgan, a leading financial services firm at global scale,
made a forecast in 2007 to the effect that Bangladesh will be one of the five advancing economies
in the world in the coming days. These five countries were at that time termed the "Frontier Five".
Another financial institution Goldman Sachs Group and other multinational investment banking
firms that engage in global investment banking, securities, investment management and financial
services primarily with institutional clients, prepared a list of eleven countries that will
economically advance after the BRICS countries. Bangladesh was included in that list of eleven
countries. It means the observations of COFACE about the economic possibilities of Bangladesh
are nothing new, but an addition to the earlier optimism surrounding the BRICS countries.
The ultimate truth is that Bangladesh is an agricultural country, with some 75 per cent of the
population engaged in farming. Jute and tea are principal sources of foreign exchange, apart from
RMG exports. Major impediments to growth include frequent cyclones and floods, inefficient
state-owned enterprises, inadequate port facilities, a rapidly growing labour force that cannot be
absorbed by agriculture, delays in exploiting energy resources like natural gas and other related
resources, insufficient power supplies, and slow implementation of economic reforms. Economic
reform is stalled in many instances by political infighting and corruption at all levels of
government. Apart from this, foreign direct investment in the country has been languishing at
about 1 billion US dollars a year - less than what Albania or Belarus each receives, and about onetenth of foreign investments going to Thailand or Malaysia.
It is often observed in the Third World countries that these countries make exaggerated and
inflated estimates about their own economic growth for political reasons. On the other hand, the
donor countries and agencies quite often also provide fictitious or ambitious estimates and are
eloquent in praise about the poor countries they help in advancing economically to sing about
their success stories to win the hearts of their own people at home.
Even after that the economic prospect of Bangladesh cannot be played down. Bangladesh can
materialise its immense economic possibilities through dynamic political leadership, enacting
necessary reforms in its economic policies, building necessary infrastructure, rejuvenating the
industrial sector, eradicating the limitations of electricity and energy supply, wiping out
corruption, strengthening the agricultural sector and the like in the shortest possible time. We
have to keep in mind that time is running out, and the world is moving ahead fast.

67Economic diplomacy and Bangladesh


Modern diplomacy refers to "the application of intelligence and tact to the conduct of official
relations between the governments of independent states." Diplomacy is the exclusive domain of
the Ministry of Foreign Affairs (MOFA). However, alternative actors in the field of diplomacy have
emerged within and outside the state and often act independent of the Ministry of Foreign Affairs.
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Economic diplomacy is another kind of it, which uses the full spectrum of economic tools of the state
to achieve its national interest. Economic diplomacy includes all the economic activities, but not
limited to only export, import, investment, lending, aid, free trade agreements etc. So the foreign
policy of Bangladesh may focus on development and maintenance of friendly economic and trade
relations with other countries and fostering cooperation in the field of trade, commerce and
manpower through different regional, sub-regional, political and economic groups. A country like
Bangladesh should pursue economic diplomacy more vigorously and we need professionals from
trade and business backgrounds and a business-friendly environment to meet that end.
Usually LDCs like Bangladesh employ the same set of negotiators on every platform. As a result, they
become masters of none. The country needs to produce different sets of negotiators, having
specialisation in different fields including bilateral trade, regional trade and multilateral trade,
conversant with different World Trade Organisation agreements and other such issues.
Economic diplomacy can be used to mobilise investment, promote tourism and focus better on the
national image building. We need to develop tourist spots and the tourism infrastructure to attract
foreign tourists. For projecting a positive national image abroad, the country's political leaders have
to be responsible about what they say regarding their own country. They should know that the
world media report what they say. Their unguarded statements can damage the image of the
country. To build a good image, Bangladesh may also need promotional activities in the world
media. The missions abroad have to assess the demand for Bangladeshi products in the host markets
and facilitate government-to-government interactions to promote exports to those countries.
Ensuring proper education and technical training of people on latest technical know-how is also
important for proper economic growth of the country. Many developed countries are providing
scholarships for higher education, short training and diploma courses to the LDC citizens. A
diplomatic mission can help more participants from Bangladesh seize these opportunities. Thus they
can play a vital role in technology transfer.
The economic diplomacy of a developing country like Bangladesh is shifting from foreign aid to
international trade, investment and credit supply. The foreign aid scenario of Bangladesh has
changed. Grants are being significantly replaced by loans. Dependence on foreign aid has also
declined, though it still meets a considerable part of fiscal deficit and the Annual Development
Programme (ADP) financing. Bangladesh also requires foreign aid to meet its Sustainable
Development Goals (SDGs). So the importance of foreign aid is immense. Foreign aid and economic
diplomacy of Bangladesh should focus on (i) enhancing the flow of aid available on favourable terms
and conditions, (ii) negotiations at the multilateral level to gain as much as possible, and (iii)
advocating aid as a source of investment. Accelerating South-South cooperation to gain technical
assistance and complementing foreign aid from Bangladesh's development partners are also
important while climate diplomacy should be made part of the economic diplomacy of Bangladesh.
Economic diplomacy of Bangladesh: Basically, economic diplomacy is a continuous course of action.
Its outcome may not be evident within a short time, rather it could take a decade or even longer.
Hence, economic diplomacy may not at times be successful with the global economic scenario
changing very fast and sometimes without any prior notice. Indeed, this is a dilemma. Economic
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diplomacy has to be pursued as part of a long-term policy approach of a developing country. It


would facilitate economic interest. Bangladesh's economic diplomacy should be guided by three
basics: increasing exports, Foreign Direct Investment (FDI) flow and managing the regular aid flow.
The country should not separate economic diplomacy from political diplomacy.
Commercial diplomacy, on the other hand, involves the diplomatic missions working in favour of the
home country's business and financial sectors in their pursuit of economic success and achieving the
country's general objective of national development. It includes the promotion of inward and
outward investment as well as trade. Important aspects of a commercial diplomats' work are the
information given about export and investment opportunities and their role in hosting trade
missions from home. In some cases, commercial diplomats could also promote economic ties by
advising and providing support to both domestic and foreign companies on investment decisions.
Bangladesh branding: To get a strategic platform for exploiting the multilateral regime, the country
has to prioritise Bangladesh branding. For attracting foreign investment, the country needs to
project a positive image abroad. Bangladesh branding is essential, because without a brand image it
would not be easy to get foreign investment. The government should promote the image of the
country abroad, which should be the primary part of economic diplomacy. The image of a country is
very important in the fields of trade, global politics and international relations.

The Ministry of Foreign Affairs, the embassies and diplomats of Bangladesh are responsible for
projection of a 'correct' image of the country abroad. But their capacity to project a positive image
or change the undue negative perception may be limited. The diplomats abroad have to be
proactive, rather than reactive. The foreign ministry has to give importance to promotion of trade
and development by organising trade fairs, participating in foreign exhibitions, organising investors'
conferences and holding business-to-business dialogues etc. The missions abroad have to be
facilitators of joint business councils, joint chambers, joint trade facilitator taskforces etc.
Bangladesh today is the 48th largest economy in the world with a GDP size of US$ 225 billion based
on the purchasing power parity. Bangladesh has already started moving from low-income status to
an upper middle-income economy, and we want to continue advancing to become a middle-income
nation by 2021. And this commitment of the people will be our key strength, when we think of
branding Bangladesh. Recognising the importance of our international image and reputation, we
need to mobilise all our resources to develop and implement a positive national brand. While a welldesigned branding campaign can prove highly favourable for Bangladesh, an effective campaign
requires a high amount of cooperation among a wide range of government and private actors. There
is a great opportunity for cooperative interaction among the government agencies, corporations,
non-governmental organisations, development partners and other actors, when it comes to
brightening the national image. However, actors in diversified areas can also prove
counterproductive. So we have to underscore the common interests of all sectors involved so that
multiple branding campaigns can work. As Bangladesh is the 2nd largest garment manufacturer of
the world after China, we can underscore our garment sector's success story and internationally
promote the 'MADE IN BANGLADESH' brand by rightly using the tagline 'WE CLOTH THE WORLD', so
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that the string 'MADE IN BANGLADESH' will itself be a master brand alongside the ready-made
garment (RMG) sector. It has been well-proposed that in every 'made in Bangladesh' product there
may be a tag like: 'Made by the happy people from Bangladesh' which will create brand equity for
the Bangladesh country brand. With regards to that, we should make adequate efforts to keep the
workers really happy by ensuring their basic rights so that our buyers will feel by their hearts that
their buying means our happiness and eventually buyers will stay attached with us psychologically.
This may also be a good response to the recent tragedy in the garment sector.
Bangladesh's position in global economic diplomacy: If we look at the global economic diplomacy,
we find that most of the jobs of the World Bank, UN, WTO, WHO and such other international
organisations are secured by Indian people. A few Bangladeshi people are engaged in less important
positions in the WB and in other UN organisations. The people, who are entrusted with the
economic diplomacy in different missions of Bangladesh abroad, are mostly posted in political
consideration. They neither have training nor have the required qualification and skills.
Representatives of the ministries like finance, commerce, expatriates' welfare and overseas
employment, religious affairs working in different missions abroad can take those responsibilities.
But there are no set rules or any system of exams other than the benchmark ACRs (annual
confidential reports), based on which they are selected. Most of the officers have no training nor any
experience in these fields. When it comes to economic diplomacy, exploration of every economic
opportunity needs skill and professionalism. One must know the disadvantages of their own country
and exploit the economic facilities in the host countries. Only touring the whole world should not be
the main purpose.

68Can Ticfa deliver favourably for Bangladesh?


The first meeting of Trade and Investment Cooperation Forum Agreement (Ticfa) between
Bangladesh and the United States is scheduled to be held in Dhaka on April 28. This will take place
against the backdrop of the long-drawn controversies prior to the signing of the agreement and
the developments that took place during the last one and a half years including the suspension of
preferential trade benefits enjoyed by Bangladesh under the US GSP (generalised system of
preferences) in June 2013. As such, this meeting is being viewed by concerned quarters as not just
a routine affair but one that is critically linked to the future of bilateral trade relations between
Dhaka and Washington.
The reality that the meeting will signify, if not determine, how things would look like in the days
ahead must not be ruled out. Supporters of Ticfa, before it got inked in November 2013 despite
protests at home, were keen to see it as a forum that would provide Bangladesh with a structured
platform for discussing trade, investment and related areas of cooperation with the US. And now
ahead of the maiden meeting, they look to it a bit more precisely in that it is expected that it
would help address some of the burning issues such as restoration of GSP and facilitation of
market access. It is here that the stake weighs heavy for Bangladesh.
Issues likely to figure in the meeting will reportedly include review of bilateral trade and
investment matters, market access for Bangladesh products (in line with the Bali Ministerial of the
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World Trade Organisation or WTO), review of the GSP Action Plan and developments in labour
affairs, establishing a labour affairs committee, and establishing working group on women
empowerment. Bangladesh delegates will try to assure their US counterparts as regards
improvements in labour rights and workplace safety, among others, on the basis of the actions
taken following GSP suspension. As for the unfinished actions or those just initiated, the
Bangladesh side, understandably, will demonstrate the sincerity of the government in remaining
engaged to fulfill all the required actions for improving workers' rights and workplace safety. The
government, in the meantime, has sent its submission to the USTR (United States Trade
Representative) incorporating the status of works in line with the action plan. The tripartite action
plan adopted by the government encapsulates the US action plan as well as those suggested by
the North American and European retailers. It may be recalled that the USTR had outlined 16
conditions in the Bangladesh Action Plan. Much of the deliberations in the meeting will centre on
evaluating progress towards implementation of the action plan.
The GSP issue, given its importance and the hype it has received from the media, is for Bangladesh
the key focus of the Ticfa meeting. Although reconsidering the issue is the prerogative of the
USTR, discussing the matter across the table would surely facilitate higher level of understanding,
hopefully to the benefit of Bangladesh.

69Traffic management - if we could do then, why not


now?
The capital city dazzled with sparkling lights, cleaner roads and colourful hoardings during the T20
World Cup Cricket. The roads, road islands and important intersections were magnificently
decorated. It is learnt that the government spent Tk 1.15 billion to give the capital a facelift ahead
of the cricket extravaganza. Police were seen in action not for security reasons only. They were
seen busy inspecting transports, checking their fitness and related papers.
The dented and worn-out transports not only look ugly themselves, they harm the beauty of the
city. Similarly, transports releasing black smokes are injurious to public health and environment.
Moreover, public transports with dilapidated and decrepit condition are vulnerable to accidents.
Such types of vehicles are not supposed to get fitness certificate as per criteria of the BRTA
(Bangladesh Road Transport Authority).
Prior to the T20 World Cup Cricket, authorities seemed to be tough on these faulty vehicles. BRTA
issued public notification to owners of buses and mini-buses plying in the city and suburban areas,
advising them to undertake proper repair and maintenance of such vehicles. They also raised
warnings that tougher actions would be taken against those who fail to comply with the
directives. Accordingly, police checked vehicles and took immediate actions. Things thus looked
much well managed during the T20 Cricket. Alongside an illuminated and clean environment, the
city dwellers watched a better traffic management.
Now that T20 is over, the city traffic is back to where it was. The defective, old and ugly vehicles
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are back on the streets. As usual, they are haphazardly making their movements before the eyes
of the law enforcing agencies. Doesn't this indicate that the authorities are more attentive to the
foreigners and have no obligation to the tax-paying city-dwellers?
The city of Dhaka has the ill reputation of becoming the worst liveable city in the world. One of the
reasons is the poor and messy traffic situation. Successful holding of the T20 World Cup Cricket
has made us believe that by addressing mismanagement we can bring a good deal of improvement
on the traffic situation. If it was possible then, why not now? Is it because some sections of the
law enforcing agencies prefer chaos to discipline, as commonly alleged, so that they can reap
benefit from it,?

70Serving the cause of sustainable development


Planners in Bangladesh appear to have forgotten the necessity of 'sustainable development'. It
refers to a situation where development will bring benefits for the people on one hand and
protect environment, on the other. Environment converges to a situation which is healthy,
peaceful, congenial and beneficial for all forms of life on earth.
Environment is not a subject of the present only. It is said to be a subject of next century. It is
more for future generations. This is why the concept of 'sustainable development' has emerged.
The World Summit on Sustainable Development was held at Johannesburg in August-September,
2002. We need sustainable habitat for mankind. We need it for bio-diversity. We need clean air
and fresh water. We should preserve rivers, ponds, canals, wet lands and jheel-beels. We require
water conservation and its prudent management. Climate is continuously changing. Due to this,
seasons in Bangladesh are fading away. The effects are manifold. Apart from natural calamities,
this is affecting both human and animal habitats.
It is observed that rivers and canals are being continuously silted and encroached. Public ponds
and beel-jheels are being grabbed and filled up. So is the case with many rivers and canals. The
human greed has aggravated the situation. Some rivers are biologically dead. Some rivers will die
very soon. Bio-diversity of rivers and water bodies are vanishing. Dozens of small rivers have
already lost their existence. There are frequent reports of grabbing and illegal occupation.
Withdrawal of water from common international rivers by upper riparian countries, construction
of bridges, culverts and irrigation structures and the use of underground water have all
contributed to increased salinity and arsenic problem in many parts of Bangladesh, particularly in
north and south-west areas of the country. Unplanned expansion of shrimp culture has also been
contributing to increasing salinity and destroying composition of soil. There has been
deforestation. Some greedy people have captured and are continuously trying to grab the forest
land.
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Industrial pollution has increased. Waste management has been found poor. Soil, water and air
pollution have increased. Chemical wastes are indiscriminately dumped. Many industries do not
have effluent treatment plants.
Human lives and livelihood in Bangladesh are interlinked with nature. Consequently no process of
development and eradication of poverty can be conceived of without effectively caring for
environment and placing sustainable development at the centre-stage. A careful balancing
development approach must be orchestrated where economic growth is maximised without
compromising environmental protection and safety.
Successive governments have been found taking some serious initiatives over more than two
decades. Some of them were implemented and some of them are being executed. These include
the National Environmental Management Action Plan (NEMAP), the Sustainable Environment
Management Programme (SEMP), the Bangladesh National Adaptation Programmes of Action
(NAPA), the Bangladesh National Capacity Self-Assessment (NCSA) for Global Environmental
Management, the Dhaka Environment Programme and the Creation of Climate Change Fund.
Success stories also point to banning of two-stroke three wheelers, polythene bags, introduction
of CNG vehicles as well as legal requirement of effluent treatment plants for industries.
There are 16 protected areas of which seven are national parks, eight wildlife sanctuaries and one
game reserve. These were notified under the Bangladesh Wildlife Order, 1973. These protected
areas including the Sundarbans cover the total area of 244,182 hectares which is about 9.7 per
cent of the country's total forest area. Six areas, namely the Sundarbans, Teknaf sea beach, St.
Martin Island, Sonadia Island, Hakluki Haor, Tanguar Haor, Marjat Baor and Gulshan-BananiBaridhara Lake have been declared by the government as Ecologically Critical Areas (ECA) under
the Environmental Conservation Act, 1995.
Bangladesh is a signatory to various international conventions, treaties and protocols (ICTPs).
These include the United Nations Convention of Climate Change (UNFCCC) and the Kyoto Protocol,
the United Nations Convention of Biological Diversity (CBD), the Cartagena Protocol on Bio Safety,
the Montreal Protocol on Substances that Deplete the Ozone Layer, the Basel Convention on the
Control of Transboundary Movement of Hazardous Wastes and their Disposal, the Stockholm
Convention on POPs (persistent organic pollutants), the United Nations Convention to Combat
Desertification (UNCCD), etc. Various acts, rules, plans and policies have been adopted by the
government supporting environmental activities. These include the Environment Policy, 1992 and
Implementation Programme, the National Environment Management Action Plan (NEMAP), 1995,
the Environment Conservation Act, 1995 and its subsequent amendments, the Environment
Conservation Rules, 1997 and its subsequent amendments, the Environment Court Act, 2000 and
its subsequent amendments.
Every year a large number of projects are undertaken in Annual Development Programme (ADP)
under environment and forest sub-sectors. The fund allocation is around Tk. 7,000 million in the
fiscal year 2013-14. Added to this, the Climate Change Fund involves more than Tk. 20,000 million.
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The board of trustees for this fund under the Ministry of Environment and Forests accepts projects
and distributes funds mostly to NGOs.
In spite of all these initiatives, laws and rules and funds, rivers in Bangladesh and other water
bodies continue to be captured by grabbers and waters have become more polluted. One can see
cars plying under the Bangabandhu Bridge over the Jamuna and construction of houses at the
middle of the rivers near two Meghna Bridges at Sonargaon and Daudkandi. People are found to
have constructed or are constructing permanent structures. Grabbing of rivers, ponds and canals
in all the cities and town are going on unabated. Waste (all kinds) management has been
suffering. Shrimp culture has been getting high.
Sustainable development encompasses maximisation of economic growth with emphasis on
poverty reduction and social progress. It is also related to preservation and management of
natural resources that will make development fruitful for the present and future generations. It
requires co-ordination between national and planning policies and programmes. It requires strict
enforcement of laws side by side with mass awareness.
Land laws should be amended and the deputy commissioners be made accountable for protecting
rivers and water bodies from the grabbers. Funds should be made available for increased
navigability of rivers. Projects for ensuring appropriate sanitation and safe water should be taken.
Visible government actions are needed for waste management and for stopping industrial
pollution. Local government bodies should be engaged and made accountable for preservation of
water bodies. Indiscriminate use of pesticides and insecticides in agriculture should be stopped.
Concerted efforts on the part of the government in collaboration with local government bodies,
NGOs and civil society are needed for sustainable land management, population planning,
conservation of agriculture and bio-diversity, management of rivers, lakes and wet land, forest
conservation, desertification and drought management. Urban and house planning, education,
health, sanitation, and strengthening the Directorate of Environment and other concerned
agencies will contribute to sustainable development. The plan documents including the budget
should highlight these. A strong political will is urgently required. We like to hear something from
the Finance Minister in the next budget speech.

71 The challenges RMG faces


There is no denying that one year after Rana Plaza Tragedy, a wide gap still exists between the
commitments made and the delivery of those promises. Families of the injured and dead in the
building collapse are leading a life of uncertainty as the government, garment factory owners and
international brands have failed to honour their commitments.
Despite various initiatives taken up at national and international levels, the victims and their
families are still in a vulnerable state. With the passing of the first year, the need to fulfil those
commitments has become urgent, according to a recent Centre for Development Studies (CPD)
study. The country needs to formulate a long-term strategy for the welfare of the victims, so that
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the injured and families of the dead do not feel that their sacrifices were worthless, the study said.
The Rana Plaza Trust Fund, an initiative of the government, buyers and industrial trade unions, has
failed to collect the targeted funds. Only a total of $15 million has been collected against a target
of $40 million. The British retail giant Primark has been the main contributor until to date, with a
total contribution of $12 million. In fact, both the government and Bangladesh Garments
Manufacturers' and Exporters Association (BGMEA) have failed to fulfil their commitments.
Side by side, work on safety condition and worker rights in the apparel sector is yet to make any
visible. Almost all the initiatives that the government is implementing under the national tripartite
plan of action have remained half done.
However, there was significant improvement in some areas but any such change to be visible
would take time as a number of initiatives were still being implemented. Poor safety condition in
apparel factories came to light at national and international levels after the collapse of the Rana
Plaza building, which housed five clothing factories.
The government, along with Accord, a platform of European Union (EU) retailers, and Alliance, a
consortium of North American retailers, came forward with some measures to ensure structural
integrity of and fire and electrical safety in apparel factory buildings. As part of the initiatives, the
government with financial support from the International Labour Organisation (ILO) and some
other donors launched a factory inspection programme.
In line with the GSP action plan and the EU sustainability compact that the EU countries reached
with Bangladesh, the government in association with the ILO adopted a 25-point national action
plan. Yet only seven conditions have been implemented half-way and there has been no progress
on three of the conditions. Beginning the initiatives, the government and the manufacturers
started work on all of the points but the work is yet to gather pace. Now it is evident that most of
the commitments that the government made in the National Action Plan have remained
unaddressed.
On its part, the government claimed that significant progress was made in terms of improving
workplace safety in the apparel sector. The labour law has been amended and the registration
process for labour unions has been simplified. The labour directorate has been changed to a
department to recruit required number of factory inspectors to ensure an effective apparel factory
inspection. The government claimed that remediation work in some factories had started where
Accord, Alliance and the government had found faults during inspection. It said some big
manufacturers have made significant changes in their factories but medium and small
manufacturers need time to do so.
Readymade garments (RMG) analysts say the sector had made some improvement in terms of
safety condition but more improvement was required. Progress in big factories is satisfactory but
small units will take time as they need support from the government and retailers. Any visible
improvement in the sector, however, seems to be too little as manufacturers failed to relocate any
units from rented buildings, they say.
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Meanwhile, the country's apparel manufacturers criticised the global retailers for not increasing
prices of the products to help them improve workplace safety after the Rana Plaza tragedy.
Relocation and remediation are the two main challenges for the manufacturers to make the RMG
industry safer and henceforth, they need support from the government and retailers to do this.
Some 13 factories housed in four shared buildings in Dhaka and Chittagong have so far been
closed due to structural faults which resulted dislocation of about 11 thousand workers. Although
the manufacturers have taken initiative to ensure workplace safety, the buyers are pulling out
their business from the factories housed in shared building, which is very much inhuman. It would
not be logical for the buyers to stop orders to the factories housed in shared building as about 1.5
million workers are now working there.
The moot point is that although the national action plan had taken some initiatives at
administrative level, some at the legislation and the policy level and some at the factory level, a
few of the pledges have been met but most of the activities have lost momentum.
Certainly, the Rana Plaza disaster is a wake-up call for the garment sector as the forward march
towards compliant RMG industry began on the sacrifices of 1,135 workers who lost their lives in
the tragedy.
The manufacturers need to address the challenges of relocation and remediation in order to
ensure full safety of their units. The government and the retailers must support them in this
respect.

72Economic growth, commitment and innovation


In the recent past we have seen some comments in the media that have not reflected positive
sentiments. I am referring here to views expressed regarding the fulfillment of conditions
associated with the regaining of GSP (Generalised System of Preferences) facility with the USA and
those generally agreed upon pertaining to the requirements to be met in the RMG (ready-made
garment) industry.
It has been pointed out that though the private sector and the government have tried to meet the
conditions required for regaining GSP facility, three important issues have still not been resolved.
The three conditions include appointment of 200 more inspectors to check the safety situation in
RMG factories, allowing trade unions in export processing zones (EPZs) and creating a database on
registration of trade unions and inspection of factories. One understands the insistence on the
fulfillment of these conditions is being insisted upon by the American Federation of Labour and
Congress of Industrial Organisations (AFL-CIO). In this context, it has also been stated by the
Bangladesh authorities that while trying to meet these demands, efforts are also being made to
obtain duty- and quota-free access for its entire products-range entering the USA. In that case, the
opportunity will be similar to that existing with Bangladeshi products entering the European Union
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(EU) under the Everything but Arms (EBA) principle.


The European Delegation in Dhaka has expressed its disappointment that all the suggested
conditions that were mentioned last year with regard to safety of workers and their working
conditions have not been met. One needs to understand that the consumer lobby and the activists
in Europe have been pursuing with great care the labour rights of workers in the RMG sector in
Bangladesh. Over the past year the factory owners in the RMG industry seem to have taken a few
steps, but it does not appear to have been enough.
This reaction has been reflected in the media following inspection by engineers hired by European
brands and retailers within the paradigm created by the 'Accord on Fire and Building Safety in
Bangladesh'. The safety checks were started from February 20 this year. 68 factories have been
inspected so far. It is anticipated that 250 factories will be inspected each month and such efforts
will continue until the end of September this year. Their inspections have started with the highrisk buildings that have more than five floors. These inspectors will be working with
representatives from brands who are purchasing from Bangladesh, labour union and factory
owners' representatives and officials of the Ministry of Labour. It may be recalled that the legally
binding agreement which is the basis for such inspection was signed in May 2013 in response to a
building collapse in April that killed 1,135 people. The deal under the Accord requires brands and
retailers to pay up to US$ 500,000 per year to administer the inspection programme. The
International Labour Organisation (ILO) is also associated with this inspection process.
These inspectors have identified major electrical and structural flaws. Electrical safety problems
have been specially highlighted. Cables were found laid out directly on the concrete floor without
proper safety. The inspection teams also found overloading of goods on different floors in factory
buildings, insufficient exit capacity through the exit doors and absence of sufficient sprinklers.
It is good that the existing problems are being identified. Such inspection by engineers should also
include trained technical personnel available within Bangladesh. It should not totally rely on
foreign experts. Such an arrangement would then assist in future inspection and maintenance. Our
engineers could then also learn and gain requisite experience that would be most useful in the
future.
In the meantime, the factory owners should take immediate steps to correct the structural and
other defects that have come to light. The government should, with the cooperation of the
BGMEA (Bangladesh Garment Manufacturers and Exporters Association) and the BKMEA
(Bangladesh Knitwear Manufacturers and Exporters Association), ensure such corrective measures
and compliance.
It has come to light that all the factory owners in the RMG industry have not, as yet, raised the
wages of all their workers in conformity with government order. Human Rights Watch has
remarked that workers who are trying to form unions are being intimidated and threatened.
These things are unacceptable. Necessary steps need to be taken to be in conformity with the
agreed matrix. Our RMG owners could probably learn from the manner in which the Korean
company, Youngone, is handling the rights of its thousands of workers in different factories
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located in the EPZs in the KEPZ in Chittagong and in the EPZ near Dhaka.
We have to remember that the success of our RMG industry is under scrutiny from our
competitors. They will try their best to find faults so that buyers move away from Bangladesh to
other destinations. That is why we have to be careful and take care that the human rights
situation in this industry is beyond reproach.
It would accordingly be correct at this juncture to note that recently more than 40 participants
from Bangladeshi businesses, government agencies, trade unions and civil society came together
in Dhaka to identify concrete actions that could be undertaken to improve human rights situation
in the RMG sector. The multi-stakeholder forum was organised as part of the "Pillars in Practice"
programme, a joint initiative of the CSR Centre (Bangladesh), Social Accountability International
(USA) and the Danish Institute for Human Rights. Participants in the multi-stakeholder forum
recommended actions for companies, civil society and government agencies in different areas environmental sustainability, working conditions, occupational health and safety requirements
and scope for trade union activities. All concerned need to take account of the suggestions made
in the meeting. A concerted effort in this regard will definitely enhance accountability.
I am an optimist who believes in moving forward. I inspire myself by looking at our past and how
we have gradually climbed the ladder - from being supposedly 'an international basket case'
(Kissinger) to a country which today is at the doorstep of becoming a middle-income country.
Compared to 1972 when our export was in the region of US$ 300 million, by end 2012-13 fiscal
year it climbed to around US$ 27 billion. It would also be worthwhile to note that Bangladesh
received US$ 2.78 billion in aid last fiscal, but the net aid was US$ 1.89 billion, and US$ 899.5
million was spent in repaying earlier loans and accrued interest. Our foreign exchange reserve has
crossed US$ 20 billion despite LC settlements for the period July to January of the current financial
year (2013-14) reaching US$ 21.21 billion.
The fact that our economy is rising and development is taking place has become evident with
another statistics. Capital machinery import, a significant indicator of this dynamics, has been
reflected through such import rising by 18.25 per cent during the current July-January period as
compared to 21.59 per cent negative growth during the same period of fiscal year 2012-13 and
15.85 per cent negative growth in 2011-12 (according to the Bangladesh Bank). Despite this
increase in imports, according to Bangladesh Bank, our trade deficit in the first half of the current
fiscal year, 2013-14, has fallen by about 58.29 per cent to about US$ 1.53 billion, year on year. It
has also been recently revealed that our overseas merchandise shipments stood at US$ 22.242
billion during the July-March period of this financial year. This is welcome news.
Yes, there are also worries. It would be misleading to think that we have no problems ahead of
us. It is clear from the half-yearly report released by the Finance Division that indicators
associated with the service, construction and the manufacturing sectors reflect that there has
been adverse impact and that these areas are still recovering from the restive political situation
that marked our socio-economic horizon during 2013. It is now believed that due to relatively
lower receipt of remittances from expatriate Bangladeshis, higher inflation and slower growth of
revenue, our GDP (gross domestic product) growth will be less than what was estimated earlier.
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Nevertheless, we need not be overcome with anxiety or concern about a possible recession. Our
economic scene, thanks to our innovative private sector and public-private partnership, will
continue to evolve its own denominators.
In this regard, it is heartening to note that entrepreneurs are already examining, seriously, the
prospect of diversification and greater investment in enhancing the skill of our workforce. They
realise that continued diversification of the range of Bangladesh's export-suitable products and
discovery of new markets are vital for the economy and also important for garnering new
investment. The RMG and the pharmaceutical sectors have already taken the lead and their
efforts are paying dividend. Their efforts can be replicated by identifying new markets and
marketable products with the help of our diplomatic Missions.
One exciting area that needs to be seriously pursed in this context is Bangladesh is becoming an
important player in the group involved in providing software and IT services. The Bangladesh
Association of Software and Information Services (BASIS) has indicated that local software and IT
vendors exported services and products worth US$ 100 million in 2012-13, a 50 per cent rise from
the previous year.
They feel that this can increase to US$ 1.0 billion in five years if more investment-friendly ICT
policy can be put in place. We still have a weak infrastructure in this sector but with political will
and more pro-active engagement in skill enhancement this can be remedied.
With commitment and innovation we will continue to rise.

73Meeting RMG challenges through merger and acquisition


The garment industry has emerged as the engine of the Bangladesh economy. Around 3.6 million
people are working in this sector while 80 per cent of them are women. About 20 million people
are either directly or indirectly depending on the sector for their immediate livelihoods. Therefore,
considering all these factors it can easily be assumed that Bangladesh has enabling conditions for
faster growth of the industry. These factors include low manufacturing cost, export-friendly policy,
geographical location, availability of workers, and long experiences in manufacturing and export.
Ironically for the last few years, Bangladesh hit the headlines of international print and electronic
media quite frequently due to some incidents like Tazreen fire, Rana Plaza collapse,
demonstrations of workers for wage hike and others. After those incidents, brands came up with
several initiatives to improve working conditions, building and fire safety. But the harsh reality is
that a significant number of factories might not comply with the demand of brands in terms of
relocation and restructuring of the factory buildings.
On the other hand, with the passage of time, wages of workers and officials will move upward
naturally. Significant investment is required to make the factories compliant in terms of building
and fire safety. So, investment cost will increase. This eventually will reduce the capacity of
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factories to expand their businesses by constructing new production units. Consequently, shutting
down of small factories and low expansion rate of big factories would put some adverse impact on
the economy of Bangladesh in terms of less employment generation, low growth in exports, and
low growth of supporting industry like accessories, fabric and yarn manufacturing.
Now it is time to think differently as to how we can cope with the current situation given the
challenges like high investment cost for restructuring of the factory buildings, pressure for wage
increments of workers and officials, and demand from buyers/brands to reduce the selling prices
and competition coming out from countries like India, Vietnam, Myanmar, China and Cambodia.
From the point view of business, coping up with these challenges becomes simple for any business
as long as certain profit margins are ensured. But maintaining the profit margin after going
through all these challenges is very difficult unless one puts in series of strategic efforts.
To maintain the profit margin, multinational companies in the electronics sector, for an example,
Samsung, Sony and Panasonic, are inventing new products with new features each year. Fierce
competition and high investment cost have made them more innovative. Companies in the
aviation sector go for merger and acquisition often, for example, the British Airways and the
Iberia, the United Airlines and the Continental Airlines.
In a similar way, merger and acquisition (M & A) could be one of the options for garments
factories in Bangladesh to maintain the stable profit margin even after overcoming the
aforementioned challenges and to ensure their future growth.
A merger is a combination of two companies to form a new company, while an acquisition is the
purchase of one company by another in which no new company is formed. Sections 12-14 of the
Companies Act, 1994 deal with reconstruction and amalgamation (acquisition and merger) of the
companies. This section requires companies to make application to the court under Section 12,
which empowers the court to sanction compromise or arrangement as proposed by the
companies.
Strategically M & A can be beneficial in the following way in the context of current situation of
garments industry:
Brands/buyers usually prefer to place order to big factories as this kind of factories tends to be
more compliant, efficient and trustworthy. As a result, big factories' production facilities are
always occupied with orders from different buyers. These big factories could even grasp more
orders if they have further capacity.
On the other hand, small factories, which tend to be less compliant and efficient compared to big
factories, are having less order. On the top of it, small factories are struggling to cope up with
standards especially in the area of fire and building safety. They are not also capable to hire skilled
workers and officials. Through M & A, big factories can take more orders as they will have more
capacity while they merge with small factories and on the other hand, small factories will also
survive as their standards will be improved with sufficient work for becoming the part of big
factories. So M & A will help both big and small factories to sustain through a win-win situation by
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taking the maximum orders from the buyers.


From the point of economies of scale, factories going through the M & A would help to achieve the
economies of scale. Economies of scale are the cost advantages that enterprises obtain due to size,
output, or scale of operation, with cost per unit of output generally decreasing with increasing
scale as fixed costs are spread out over more units of output. It would help those factories to
reduce the long-run average costs of production. Factories can afford to invest in expensive and
specialised capital machinery. Businesses can split complex production processes into separate
tasks to enhance efficiency. Factories can expand its advertising and marketing budget over a large
output and it can purchase its inputs in bulk at negotiated discounted prices and lastly, large
factories have access to credit facilities, with favourable rates of borrowing.
From the ground of synergy, two companies that are merged to form one company can achieve
operational excellence through transfer of best practices. A merged company will achieve superior
competitiveness in terms of lead time, unit price, quality, and production volume. Eliminating
overhead and better utilisation coming out of mass production will help to reduce the unit price of
the product. A merged company will get opportunity to expand its business through the crossselling opportunities in overlapping buyers. On the top of it, a merged company can also look for
new buyers based on the expanded capacity.
In the context of standard upgradation in the area of fire and building safety, M & A will help
efficiently. Let's assume that small factories need to relocate their plants for meeting the
standards like size and number of staircase, strength and structural flaws in the building etc. For
small factories, it is going to be very hard task to relocate everything as their financial capacity is
not at this level even after having the partial support from others. In that case, if small factories
could merge with or are acquired by big factories, it is possible to relocate the factories while no
one in the factories will lose his/her job. Moreover, new factories formed either through merger
or acquisition will be in a position to comply with any standards. Two factories formed one
company either by merger or acquisition can provide more wages and salaries to their workers
and officials due to the increased profit coming out from the synergy and economies of scale and
for the same reasons; profit margin for the owners will also be higher.
From the bargaining point of view with buyers regarding price of garments product, M & A will
give any factory owner great privilege. Just assume that due to M & A, number of factories in
Bangladesh decreases to 1200 but with higher capacity: equivalent to 6000 factories. So the
sourcing options for buyers will be limited. Limited options for sourcing for buyers will put the
factory owners in a favourable position while negotiating prices of garment products.
If the total number of factories decreases due to M & A, it would be greatly convenient for
garment associations and the government in a sense that they can effectively and efficiently take
care of the factories. The government can easily monitor and assist the apparel factories in
implementing the standards; associations can devise a better plan to implement measures among
the factories to improve the working conditions.
Factories formed through M & A will have the ability to take care of their workers and officials due
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to availability of adequate skilled human resources in the management position, higher profit
margin and supervision and guidance getting from the government and associations. As a result,
workers will be satisfied and eventually there will be no demonstration or disputes.
The rapid growth of textile industries creates environmental pollution, mainly pollution in water
bodies. The reason of water pollution is lack of appropriate environmental management in textiles
in Bangladesh. There are several environmental management options in textiles. Among various
options most popular and effective option is establishment of perfect waste water treatment
plant which is conventionally known as Effluent Treatment Plant (ETP). It is very expensive and
needs certain skills to run it smoothly. Higher standards and profit margin stemming from the
large factory facilities due to M & A will enable to have functional ETP, which eventually will keep
our water bodies pollution free.
In case of M & A, we have to take into account some factors. Very few institutions, which can
assist in M & A, are available in Bangladesh. According to the website of the Investment
Corporation of Bangladesh (ICB), it provides assistance to companies in this regard. There is also
no evidence or example of M & A especially for garments and textiles in Bangladesh about how
much successful it could be. There are some certain costs of M & A. Mergers and acquisitions can
be costly due to high legal expenses and the cost of acquiring a new company that may not be
profitable immediately. Moreover, if problems unknowingly emerge after a sudden acquisition of
another company's shares, this could convert the acquisition approach very expensive and/or
redundant.
But to become number one or the best, the garment sector needs to take the challenges. To stay
in the business with sufficient profit margin while maintaining high standards of working
conditions, fire and building safety, M & A could be one of possible strategic decisions.

74Borrowing more from external sources


External assistance is a pressing need for a low-income country like Bangladesh to carry out its
development activities. The surplus it generates after meeting its annual recurring expenditures is
not enough to support development budgets, which, according to many, are deliberately kept low
because of the resource constraints. Since the day one from its emergence as an independent
country in 1971, Bangladesh has been receiving foreign assistance. Initially, the volume of aid,
both bilateral and multilateral, was low. But later it started increasing, more in the nature of
concessional loans than that of grants, with a built-in trend about fluctuations in its flow.
However, with the rise in the volume of domestic resources and the reluctance of the donors to
commit more aid because of their own fiscal constraints, the share of external aid in financing
development projects has shrunk over the last two and a half decades. The foreign loans and
grants that the government receives to support its development budgets has been around 2.0 per
cent of the gross domestic product (GDP) in recent years. The domestic revenue surplus and the
average volume of external aid flow together are not enough to finance the country's
development needs and poverty alleviation.
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Under the circumstances, the government, according to a report published in this paper last
Saturday (April 26), is exploring options to beef up the flow of external assistance, up to at least
3.0 per cent of the GDP, to help build the necessary infrastructural facilities and reduce poverty.
However, the officials concerned have, quite justifiably, decided to analyse the possible impact of
higher borrowing on the overall debt management of the government. The intention relating to
higher external borrowing would surely trigger a few questions that the policymakers need to
respond to, before taking any decision on the issue.
The first and foremost question that would agitate the minds of the development practitioners
both at home and abroad is about the capacity of the government agencies to use the loans and
grants made available to the country. The accumulation of more than $13 billion in the aid
pipeline does illustrate the incapacity of the public sector agencies to use aid money. The
government can easily blame the donors for asking too many questions or for making the
disbursement of aid too lengthy a process. But with this kind of allegation it can hardly cover up its
own weaknesses as far as implementation of development projects is concerned. The state of
implementation of the annual development programme (ADP) for the current fiscal is a glaring
example; government agencies could spend only 43 per cent of the development budget in the
first nine months of the fiscal.
Both bilateral and multilateral donors are unlikely to feel encouraged to lend out more soft loans
to Bangladesh under the prevailing circumstances. The government might feel like going for hardterm loans or suppliers' credit for the sake of 'development' in such a situation. But such a move
might prove risky in the long run. The government may not be in a comfortable state in the coming
months as far as the external debt-management is concerned. The balance of payments (BoP)
situation indicates such a possibility.

75Higher education and the role of private universities


It is no doubt a positive aspect in our country that the government has been putting increasing
emphasis on the education sector in general and higher education in particular. In addition,
development of the IT sector is a plus point to improve our education system by way of
strengthening support services. As an academician having gained some experience in working in
overseas universities, I have a feeling that the way the private universities in Bangladesh are going
ahead does not reflect an ideal setting in terms of quality of learning, curriculum and learning
environment. We understand that ministry of education (MoE) and the university grants
commission (UGC) are working together to bring private universities in a disciplined shape as seats
of higher learning. Based on my personal experiences, I would like to point out some key issues
which must be addressed or implemented in order to provide and ensure quality education in the
private universities. The issues involved include teaching and learning environment, curriculum,
blended learning environment, scholarship of teaching and learning, hiring of quality teachers,
defining of workload, compliance and auditing of degrees awarded.
Creation of teaching and learning environment is the most important factor in as much as it has a
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direct bearing on the academic setting. A study of Pascarella and Terenzini's (1998) meta-analysis
of research on the effects of university education concluded that learning and cognitive
development occur when students are closely engaged and involved with the subjects they are
studying. Therefore, in order to achieve this, the university must provide resources and activities
to allow students to develop their interests beyond the experiences provided within their courses.
It includes classroom environment, course design, blended learning, and teaching quality including
enthusiasm for the subjects taught.
Most of the private universities in Bangladesh have business degree(s), such as BBA and MBA.
There is much inconsistency with regard to the course designs and setting of syllabi among the
universities. We need to build up the concept of course design in general. My personal view is that
we need some core courses in the 1st year or freshness year. The MoE and UGC can work together
with private universities to determine some criteria for a common curriculum design.
If every stakeholder comes forward to maintain quality education in order to help our students in
the competitive environment, de-emphasising maximisation of profits from education business, I
think it is the right time to build a philosophy for Bangladeshi university education system, and
here curricula should be the key concern.
One of the models that can substantially enhance the academic base in the universities is blended
learning system. It is model that brings together e-learning in on-campus learning and teaching
activities. The government has given high emphasis to use IT at all levels by introducing 3G, online
banking, e-applications, e-tickets, e-results, e-tender and so on. Therefore, we can introduce a
combination of face-to-face and online blended learning. Actually, blended learning is an approach
to learning and teaching which combines and aligns learning undertaken in face-to-face sessions
with learning opportunities created online. If universities implement blended learning, there will
be the following types of blend with a complete learning environment for our students. These are
(not limited to):
* Course profile/module in the electronic format;
* Course lecture slides and related documents in electronic format;
* Online assessment (quizzes, assignment) and submission;
* Opportunities to learn from each other collaboratively;
* Checking students from cheating and plagiarism;
* Opportunity to record lecture (audio and video) and uploading facilities;
* On line grade and marks, plus feedback.
In the western world, a popular blended learning software called Blackboard is used in almost all
the universities. Private universities in Bangladesh should use Blackboard or similar types of
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software to facilitate and enhance the level of learning and teaching in the classroom. It is a
communication platform and an academic resource centre for the students. Since IT in our country
is now at an advanced stage, MoE and UGC can work together to plan a strategy for implementing
blended learning approach without any delay.
The scholarship of teaching and learning is also equally important here. It is a board concept
implying systematic inquiry, critique, research and development in teaching, which provides
educational benefit to students. This can be adopted as an innovative teaching approach for
seeking and obtaining peer recognition among the students for their ideas and practices.
Sometimes, quality and output of research into teaching & learning or publications on teaching &
learning practice could be an evidence of scholarship. This approach is totally absent in our
country and concerned authorities should arrange workshops/seminars on scholarship of teaching
and learning issues with foreign educational bodies such as the British council.
The qualifications of the faculty of the universities are closely related with the output of the
quality of education. Here faculty means all personnel who carry academic rank in the university
(such as professor, associate professor, assistant professor, and lecturer/instructor). In the
western concept, university faculty at the ranking of assistant professor must hold a PhD. There
may be exceptions in case of those having research experience or important publications. MoE
and UGC should have a clearly defined principle in this regard to be strictly followed by the private
universities.
There is the need for introduction of workload model in the universities. Workload modeling is the
process of identifying one or more composite application usage in respect of performance testing.
For example, in the universities, usually we have a balanced workload model, i.e., teaching 40 per
cent, research 40 per cent and service 20 per cent. Within this criterion, the university will set a
required minimum target for each faculty (based on rank) for performance evaluation at year-end.
The criteria may change depending on the rank of the academic. We have to keep in mind that the
policy for work load model should be designed to encourage principles of equity, transparency and
flexibility for the academics to manage their workload in a way that is most effective for them and
beneficial to the students and the University as a whole. Also, special consideration should be
given to new and early career faculty in the university.
Finally, the MoE and UGC should audit the compliance of requirements for degree(s) awarded,
course design, teaching and learning environment including blended learning and quality of
education programmes.
As public universities in our country are not in a position to accept all aspiring students, private
universities are playing a vital role in the education sector. The government is also encouraging
the growth of private universities. However, we have to ensure the quality of education in private
universities as the students are paying higher tuition and other fees than public universities.
Moreover, we have to build up quality human resources so that they can contribute efficiently to
our economy in the long run.

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76Sluggish investment an unwelcome development


for emerging economy
We are one of the ten newly emerging countries as identified by the Coface, a French credit
insurer firm. Bangladesh is also listed among top twenty-five countries in terms of per capita
income by the year 2050. Many economists are hopeful about Bangladesh's ability to reach the
World Bank threshold of per capital income of USD 1,130 in 2016 and to attain the status of a
middle-income country (MIC), maintaining a growth rate of 5.4 per cent. Our Prime Minister,
however, wishes for the high income country (HIC) status, for which she will soon turn her Vision
2021 into Vision 2041. But, it depends on the least gap of potential and actual economic
progresses.
The base of our economic potential includes demographic opportunity, non-interventionist
orthodoxy and macroeconomic stability. We have USD 20 billion foreign exchange reserves
equivalent to 12.8 per cent of the gross domestic product (GDP). Moreover, the economic freedom
index shows that our trade-openness also increased from 20 to 50 per cent of the GDP during the
last two decades.
Moreover, a 14 per cent export growth over a few years and a negative import growth in the last
year have kept the government far from any external debt burden, which is now only 20 per cent
of the GDP. Fiscal management is also getting stronger with a gradual increase of revenue
collection from 8.3 to 13.4 per cent of the GDP during 1991-2013. In addition, the economy has
experienced over 6 per cent growth and stepped up in poverty and some social indices.
Still, we are far below the targeted growth. Investment-GDP ratio is also quite below the target of
Vision 2021. Now, the question is whether it would be possible to lift investment, the private part
of which declined from 19.7 to 19 per cent of the GDP during 2009-2013. The Finance Minister is
anxious because of such downtrend as it is the lifeline of our economy accounting for more than
three-quarter of total investment. However, the government has lifted its portion to 7.9 per cent
of the GDP in 2012-13, beyond its projected figure for the next year.
It is true that private investments began to pour in after a long confusion with capitalistic
transformation from a socialistic policy taken to break peripheral capitalism just after
independence. It was not easy to transfer our state-owned-enterprises to the private sector even
with incentive-oriented denationalisation policy. However, some politician-cum-investors became
opportunist industrialists to gain from incentives in the late 1970s. Subsequent to rigorous openmarket policies, private sector started to invest in a few industries, businesses and services in the
early 1990s. Foreign direct investment (FDI) was virtually zero in the 1980s that increased to over
USD 300 million in the late 1990s and recorded its highest at USD 1.47 billion in 2012-13. Much of
the investments went to a few high-return services like telecommunication, banking, education
and health-care in the 2000s. Lately, FDI inflow has also been shifted to our mono-centric
readymade garments (RMG) industry but the industrial sector as a whole lagged behind. The RMG,
the major employer of our indigent labour force, has lifted its export to USD 20 billion.

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Our goods market is more efficient with its higher global competitiveness index (GCI) of 4.1
compared to 3.8 for labour market efficiency. Notwithstanding our bad governance and political
instability, the low wage reflects deficient skills but we are proud of using it as a trump card for
expansion of our RMG industry. Shouldn't we make our large labour market equipped with proper
skills? Despite being a large RMG and knitwear producer in the world, we are yet to brand
ourselves.
The government is happy with the macroeconomic benefits from double-digit export and
remittance growths but is far from taking into account the pains of the RMG workers and
expatriate work force. Isn't it necessary to invest on skill development of our youths to enable
them to contribute in a commendable manner to domestic economic activities and also compete
in global labour market?
Our economy demands huge investment to raise production capacities for value-added diversified
products. Our investment policies are supportive with incentive packages and the government
tried to set a single-digit interest rate. Meanwhile, our private investment crossed our domestic
saving in 2008-09 but reversed last year, perhaps due to political turmoil. There is a roundabout
fall in investment due to a fall in credit growth and a large fall in import of capital machinery from
USD 2.32 to 1.1 billion during 2010-2013. The government may put a weak rationale on the tradeoff between low imports and high reserves.
Given where things stand now, it is difficult to term our emerging market as an emerging
economy. The government needs to take real care of curbing corruptions, conflicts, bureaucratic
inefficiencies, infrastructure deficiencies and illegal trades in order to uplift investment.

77FDI and economic growth


Foreign direct investment (FDI) is actually transfer of capital from a source country to a host
country. It is done in order to earn more revenue by grabbing the facilities offered by the host
country. The surplus capital of any source country, mostly from the developed blocs of the world
such as Europe, the North American nations and the eastern Asian countries, can generate more
revenue from the country where labour is cheap and a tax haven is prevailing. There is no denying
the fact that no country has developed without investment of foreign capital. It is quite impossible
on the part of a nation to develop a vibrant economy only with local investment. Bangladesh, a
least developed country (LDC), is no exception to this rule.
There are two types of fund-local and foreign-for investment for the sake of economic growth,
which comprises many indicators like poverty alleviation, job creation and per capita income.
Local investments stem from surplus savings of a nation. But it is very meagre in Bangladesh. The
rate of savings is only 4 per cent and it is not that much that can spur economic growth. The
remittances from Bangladeshi wage earners abroad are mostly used in non-productive areas and
for consumption of luxury items. Investing borrowed funds from banks cannot take the economy
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to the level of sustainable economic growth in Bangladesh. So Bangladesh, being an emerging


economic nation (as stated by the Goldman Sachs) must attract foreign direct investments for
sustainable economic growth.
Foreign investors consider many issues including economic management, structural policies,
policies for social inclusion and public sector management and institutions before investing in an
economy. They do it to make sure they earn more profit by keeping their investments safe and
risk-free. Bangladesh, very important in view of its geo-political location, can attract more FDI by
stabilising the political situation which is being viewed as the biggest hurdle to it. Bangladesh
having two world class seaports, an active workforce that is 60 per cent of its population, cheap
labour, a flexible foreign exchange policy, investment-friendly trade policies, double taxation
avoidance agreements signed so far with 28 countries and free trade agreements with 29
countries cannot attract FDI only for the unstable political situation. Foreign investors do not feel
safe in Bangladesh along with their investments. This scribe firmly believes everything will be
alright, if politics is stable and participatory.
Bangladesh's economy had been struggling for the period from the Independence to 1980. During
the period no mentionable amount of foreign investment was inbound. In 1980 Bangladesh's
economy started opening up to foreign investors with enactment of the Foreign Private
Investment (Protection and Promotion) Act-1980 and Bangladesh Export Processing Zones
Authority Act-1980. Those made foreign investors confident about Bangladesh. But the inflow of
foreign investments minus the capital invested in export processing zones was very nominal
compared to that required for sustainable economic growth. The FDI first crossed the billion dollar
mark in 2008 to stand at US $ 1.10 billion (according to the Board of Investment-BOI statistics).
The figure was increasing every year. In 2013 China grabbed US $ 16.00 billion in FDI while
Bangladesh could attract only US $ 1.70 billion because of the destructive politics in the country.
Bangladesh has drawn up a two-phase development plan-long-term and short-term-under the
Millennium Development Goal (MDG) set by the UNDP. Under its long-term plan Bangladesh
intends to be a middle income nation by 2021. But the goal will be elusive, if no decision is taken
on reduction of poverty. It can be done by bringing in more FDI. The investment-GDP ratio should
be minimum 32 per cent and the economic growth rate has to be raised to 8 per cent for achieving
the middle-income-country status by 2021. At present the figures are below 25 per cent and below
6 per cent respectively.
A few propositions drawn from the desk work experience of this scribe are placed below with a
view to aiding a robust growth in FDI in the country for achieving sustainable economic growth by
2021:
n Political stability
n Concerted investment policies.
n Aggressive incentives to profit and capital reinvestment.

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n Easy and hassle-free land acquisition process.


n One-stop services to the investors.
n Patriotic attitude of officials working in the Bangladeshi missions abroad.
n Real-time offshore banking facility to the investors.
n Initiative to undertake more double-taxation avoidance treaties.
n Cap on unbridled corruption.
n Easing the cumbersome paper work.
n Free Trade agreements with other big consumer nations.
n Reactivation of the GSP (Generalised System of Preferences) with the USA.
A policy should be framed on the ground that Bangladesh cannot be just a profit-making platform
for foreign investors. Capital reinvestment and technology transfer should also be ensured to aid
sustainable economic growth in the country. This scribe gratefully remembers Mr Kihak Chung,
chairman of Youngone Group, South Korea who has set an example for us as to how to handle FDI
and how to reinvest capital and facilitate economic growth for Bangladesh alongside the growth of
his company.

78Investing on manpower training


The decision taken by the government to train manpower with technical education under the first
phase of 'Skills for Employment Investment Programme' (SEIP), though belated, is a significant
move in adding value to the bulk of the country's workforce. The government has approved a Tk
10.50 billion project to offer technical education to around 260,000 people to meet the growing
demand for skilled manpower at home and abroad. Reports say that skill development under the
aforesaid project would be an ongoing one, and the first phase is scheduled to be completed by
2017. The successive phases are expected to be completed in seven years' time, concluding in
2021, with a total of US$ 1.07 billion fund. Asian Development Bank (ADB) is expected to offer the
largest share of $ 350 million for the billion-dollar programme while the government will provide $
200 million, and the rest would come from some development partners.
The idea is lofty no doubt, given the utter neglect the manpower sector of the country suffered
from lack of skill in various areas of employment at home and overseas. The project appears to be
part of a mid-term policy in that it intends to create a workforce of 1.25 million, equipped with
technical education to cater to the growing demand in the local industries and the overseas job
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markets. It has been reported that the skill development drive will mainly be industry-centric.
This, observers believe, makes practical sense, as being sector-specific the training is expected to
be focused on specific areas. Industrial sectors intended to be covered by the project activities
include, among others, garment, textiles, leather, light engineering, information technology (IT),
ceramics, software and construction sectors. Major industry associations will receive funds from
the ministry of finance to train up manpower in respective fields. Besides, state-run training
institutes will also be provided with funds. Skill development training to groom job seekers abroad
is reportedly a key feature of the project.
Bangladesh is widely known as a country of cheap labour mainly because of the dearth of
technical knowledge and skills. This, while restricting workers' access to technical jobs, causes
them to suffer low wage. The only way workers can be expected to be empowered is through skills
and expertise. More importantly, a skilled worker tends to increasingly improve his/her capability
because of the competitive nature of works and jobs demanded at the workplace. This brings in
the opportunity for specialisation that is critically lacking in the vast majority of the manpower
employed at home and abroad.
It must be admitted that the huge sums of overseas remittance received by the country's
exchequer do not reflect a well thought-out plan, particularly regarding the types of works in
which majority of the workers are employed. Had there been a plan to facilitate job-seekers with
required skills in various fields, the workers would have been highly benefited by increased wage,
and the country, in turn, would have experienced a far more inflated remittance.

79Steps underway to make Bangladesh's RMG compliant


Accidents in the country's apparel sector have come as a severe blow when it is struggling hard to
comply with global outcry for workplace safety. The fire at the Aswad Composite Mills in Gazipur
may add to the concerns of global retailers. They may weigh the option of keeping outsourcing
their products from Bangladesh apart from putting pressure on the sector to put a safety system in
place. The fire caused deaths to nine workers and left as many injured. Reportedly the factory is
one of the top safety compliant units. However, the factory authority will pay Tk 500,000 in
compensation and another Tk 200,000 in insurance benefits to the family of each worker who
died. The company will also bear all the costs of treatment of the injured workers. The buyers
have expressed condolences but did not make any negative gesture.
True, the country's garment sector, which is the second biggest supplier to the global market next
only to China, has equally become vulnerable to fire and such other accidents because of its very
size. The inspection system of factories needs to be immediately upgraded. It is heartening to
know that the global coalitions of the US and EU retailers have already developed their factory
inspection and verification regimes to allow a factory to make clothes for them only if they fulfil
their compliance requirements. Their presence on factory floors may help overcome many
shortcomings.
Media reports say RMG export orders were being diverted to India and Vietnam in the recent past
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due to labour unrest and accidents in garment factories in Bangladesh and growing political
tensions that worried buyers about timely shipment. The prospect of diversion of orders to India
brightened in the wake of the fall in the value of Indian rupee in terms of dollar. This means India
may be able now to supply more apparel items to US buyers at a lower cost.
The garment sector is the highest foreign exchange earner, but its export growth is coming down
significantly from August due to impacts of multiple negative factors. In order to keep
Bangladesh's lead in the global market, the industry leaders should immediately settle the wage
issue and restore the order. The president of the Bangladesh Garment Manufacturers and
Exporters Association (BGMEA) was quoted as saying that a negative image, arising from the
devastating fire in the Tazreen Fashions and the Rana Plaza collapse were increasingly driving
buyers away from Bangladesh. As a result, he fears that the export target this year may not be
achieved. He says the buyers are concerned about only business and profit and it is very natural
that they will switch over to other destinations that offer the facility of quick shipments and also
profit.
The apparel industry is the backbone of our national economy. It has potentials to establish
Bangladesh as an economic power house in the world. Earlier, Bangladesh ranked ahead of
Vietnam, Cambodia and Myamnar. But with suspension of the generalised system of preferences
(GSP) by the US government, the country's image abroad has been tarnished. The US government
suspended the GSP facilities following the loss of at least 112 lives in the Tazreen Fashions fire in
November 2012 and more than 1,117 others in the Rana Plaza collapse a year ago. The European
Union and other major buyers are now vigorously creating pressure on Bangladesh to improve
health and occupational safety standards in the factories.
The ILO has signed an agreement with the garment units aiming to help nearly four million
garment workers in Bangladesh. The ILO cooperation is aimed at extending essential support to
improve working conditions, strengthening labour inspection and upgrading building and fire
safety at workplaces. This will focus on supporting Bangladesh's National Action Plan for Fire and
Building Safety developed in the wake of the Rana Plaza collapse.
Belying speculations about adverse response following the Tazreen Fashions fire and the Rana
Plaza collapse, Bangladesh continues to be one of the top choices for garment buyers from
developed countries' markets. In an article, the Wall Street Journal claimed that apparel exports
from Bangladesh increased by 24 per cent in the first quarter of the current fiscal year. The journal
quoting the findings of a survey said Bangladesh is likely to remain one of the top destinations for
sourcing apparel items over the next five years. The WJS report highlighted some factors that
could raise both hopes and concerns. There is hope that the buyers would continue to buy
apparels from Bangladesh, at least, for the next five years. But there is a reason to be worried
about other developments. Emerging markets like those in Ethiopia and Myanmar could come up
as serious competitors of Bangladeshi garments since they would be offering apparels at low
costs. This is the most important factor taken into cognisance by the international buyers, who do
not have any special love for Bangladesh. Buyers value two factors-low cost and the capacity to
deliver export orders on time.

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But if some other countries could meet their requirements including those concerning workers'
safety and trade union rights, the buyers in all probability would abandon Bangladesh and rush to
those destinations. China is a glaring example. Though China still holds the position of top apparel
exporter, its business is declining at a fast pace. The buyers no more find China an attractive
source of procuring low-cost apparels because of the rising cost of labour. Bangladesh, thus, has to
work out a safe mechanism to keep her production cost low while offering 'respectable' wages to
millions of workers engaged in the apparel sector. The gap between the wages given to
Bangladeshi RMG workers and that given to workers in other exporting countries is quite wide and
it leaves some room for a 'decent' hike.
Besides, neither the administration nor the apparel factory owners, despite all the global concerns
about factory safety and workers' rights, seem to be serious enough to mend the lapses. Both
have failed to make any major headway in addressing compliance issues, notwithstanding all the
seriousness they show in public in this regard. The UN has also said Bangladesh has not done
enough on the issue of factory safety. The government, the RMG unit owners and the workers
would have to understand one fact that buyers would soon find alternatives to Bangladesh if it
fails to meet their requirements.
However, a number of initiatives have been taken for retention of GSP facilities in the European
Union and to reinstate the same in the US which remains suspended since June 27, 2013. These
are:
(1) A delegation headed by the Foreign Minister visited Brussels and Paris. During the meetings
organised by OECD, the Bangladesh delegation briefed the Trade Commissioner of European Union
about the initiatives taken by Bangladesh on improving working environment in the RMG sector.
(2) Bangladesh, the EU and the ILO have adopted 'Sustainability Compact' with a view to taking
joint initiatives to improve labour welfare and safety. The US endorsed the 'Sustainability
Compact' in July last year.
(3) Regarding Bangladesh Action Plan 2013 proposed by the US to improve building and fire safety
and working environment, the ILO, development partners and foreign buyers have jointly taken
different initiatives. They include: (i) Accord on Fire and Building Safety in Bangladesh signed by
European buyers; (ii) Bangladesh Safety Alliance signed by North American buyers; (iii) an ILOproposed project involving $24.5 million undertaken for improving working conditions; (iv) Tk 1.0
billion JICA-assisted project for factory building inspection and relocation; (v) a $2.5 million project
undertaken with US assistance to ensure workers' rights and improve fire safety; (vi) Germanyassisted project to rehabilitate workers rendered disabled by the Rana Plaza collapse.
(4) The parliament passed the Bangladesh Labour (Amendment) Act, 2013 which came into effect
on July 22, 2013.
(5) The government has appointed 42 inspectors to fill the existing vacant posts while
appointment of another 12 inspectors is in the process under the Public Service Commission. The
government also approved upgradation of the Department of Inspection for Factories and
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Establishments with 679 new posts in the first phase. Of them, 392 posts are exclusively for
inspectors. The appointment of 200 new inspectors is in the final stage. An additional secretary
level officer has been appointed as Inspector General of the department.
(6) A proposal on increasing the number of inspectors from 50 to 310 at the Directorate of Fire
Service and Civil Defence has been sent to the Ministry of Home Affairs.
(7) A proposal to increase the number of inspectors in the RAJUK has been approved while a
similar proposal for the Chittagong Development Authority is awaiting approval.
(8) An inter-ministerial committee, headed by the senior secretary of the office of the Prime
Minister, has been formed to monitor implementation of the labour law in export processing
zones. The committee is preparing a report.
(9) The Department of Fire Service and Civil Defence has initiated a hotline. The Bangladesh
Telecommunication Regulatory Commission has earmarked two 4-digit dedicated numbers for the
hotlines for the Department of Labour and the Department of Inspection for Factories and
Establishments. The installation process is in the final stage.
(10) As far as formation of trade unions, labour rights and building and fire safety inspection in the
garment factories are concerned, the ILO has been requested to incorporate in their project
development of a database open to all.
(11) The government has withdrawn the cases against Kalpona Akhter and Babul Akhter.
(12) Police have submitted a charge-sheet against accused Mustafiz in the Aminul murder case.
The case is now under trial.
(13) The government has withdrawn the suspension orders against the Bangladesh Centre for
Women's Solidarity and the Social Activities for the Environment. The two organisations are now
continuing their activities.
(14) Trade union registration is being continued and 127 trade unions have been registered in the
RMG sector since January 2013.
(15) Legal steps have been taken against the factory authorities who are involved in unfair labour
practices.

80National budget: The issue of political stability


Every year a national budget is prepared. From an accounting point of view, it is a statement of
income and expenditure to be incurred in a financial year. From the point of view of an economist
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or a planner, the budget should have some socio-economic targets and strategies and modalities
for achieving those targets. These targets are set as per demands or requirements for socioeconomic development of the country. Moreover, planners on the government side are supposed
to give attention to mid-term plan (usually five years) and the perspective (long-term) plan in the
exercise of budget preparation. Some assumptions are also required in such an exercise.
Today, Bangladesh has a rising economy. It is no more a basket case. The expectation is that the
country will be graduated to a middle-income country by 2020. The budget, therefore, should be
prepared and administered keeping this vision in view. In conformity with the Five-Year Plan and
Vision 2021, the budget for fiscal year (FY) 2014-15 should have the following objectives: Higher
GDP (gross domestic product) growth, higher rate of social progress, poverty reduction and
sustainable development.
In order to achieve these objectives, the following assumptions will have to be made by the
planners: (a) There is political stability in the country, (b) there is congenial law and order
situation, (c) projected investment will come to a reality, (d) all-pervasive perception of corruption
will disappear, (e) the government has the institutional capacity to implement budget and (f)
necessary infrastructure facilities are made available for industrialisation and free passages of
goods and services and (g) trade , investment , tariff and monetary policy are cohesive and
supportive to achieving the objectives.
The growth of real GDP is an important parameter for economic progress or development. The
government set estimated real GDP growth at 7.0 per cent for 2009-10, showing escalation to 8.0
per cent in the FY 2014-15. The estimated GDP growth rate was 7.6 per cent for the FY 2013-14.
During the budget speech, it was projected at 7.2 per cent. All circumstances show that it would
not exceed 6 per cent.
The Finance Minister disclosed in some pre-budget meetings that the size of the budget for FY
2014-15 would be Tk. 2.50 trillion. The current fiscal year's budget is of the size of Tk. 2.22 trillion.
The Finance Minister, we guess, will repeat the GDP growth rate to be 7.2 per cent again for FY
2014-15, although the projected growth rate in the Mid-Term Budgetary Framework was set at 8.0
per cent. Ceteris paribus, with the proposed outlay of Tk. 2.5 trillion, arithmetic suggests that
national revenue should grow at 18 per cent of GDP of which tax revenue should account for 16
per cent. The share of investment should be 31 per cent.
On the other hand, given the economic activities in Bangladesh, in order to achieve 7.0 per cent
growth rate and above the three broad sectors of the economy, namely agriculture, industry and
service sector must grow at least at 4.0 per cent, 12 per cent and more than 12 per cent
respectively. Of these three sectors, only service sector may render good performance.
In agriculture sector, setting aside natural calamities, attention should be given to research and
development, most efficient utilisation of the country's limited land and soil resources, multiple
cropping, prevention of land from salinity as well as desertification, conservation of water,
navigability of rivers and canals and protection of them from pollution. This demands necessary
and fruitful allocation of funds in the budget. Then one can expect the required growth in
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agriculture sector.
The industrial sector deserves serious attention in the budget and the plan. Transformation into
an industrial society is important for generation of employment and for export. The existing
industries and factories, first of all, should get congenial environment for their efficient operation.
There are regular complaints of non-availability of gas and electricity.
For a long time, for example, the industries of Chittagong are not getting gas connections. In other
areas of country including Dhaka, factories are not getting regular gas supply causing production
disruption including exportables. Supply of gas should be an important agenda in the budget. The
authority claims that there is proven unspent reserve of more than 16 trillion cft of gas in
Bangladesh. The present demand for gas for whole year is said to be about 1,000 billion cft. The
supply is about 750 billion cft. This suggests inclusion of a project or projects in the annual
development plan for extraction and supply of gas.
There is a gap between installed capacity of power generation and its actual production and
supply. According to government statistics, about 1,000 megawatt installed capacity remains idle
mainly for saving fuel costs. The supply lines are also inefficient. Here is a good avenue for
undertaking projects to utilise the installed capacity and ensuring efficient supply of electricity. In
the medium and long-terms, separate options are available. Coal-generated power plants and gasrun power plants should be installed. Bangladesh has enough reserves of coal. Co-operation and
joint ventures with neighbouring countries like Bhutan, India, Myanmar and Nepal will usher in a
new era in meeting progressive demand of electricity. Many experts opine that atomic power
plants are not suitable for Bangladesh for environment reasons. Furthermore, boosting up
renewable energy programme (solar, wind power and biofuel) can add to power generation.
The budget should also make provision for the SMEs (small and medium enterprises) which are
the life-line of the Bangladesh economy. The relative share of SMEs in manufacturing value added
to GDP is almost 30 per cent. It employs about 55 per cent of working labour force in the
manufacturing sector. This sector, however, continues to suffer from a multiple of constraints and
challenges. An enabling policy environment and institutional infrastructure is indispensable for
accelerated and dynamic SME growth. A policy statement is expected to take place in the next
budget speech.
The industrialisation of Bangladesh also demands creation of a large number of economic zones
with all facilities. The upcoming budget should allocate funds for creating at least 7 economic
zones (as already disclosed by the Finance Minister) during FY 2014-15. This has become a
necessity for the relocation of garment factories already threatened after the inspection of
Accord, an association of European garment buyers.
Industrialisation is also imperative for creation of employment. Around 2.2 million people enter
the job market annually. Only one million get jobs. Export sectors and overseas migration can ease
unemployment problem. The government has a duty to explore and help creation of labour
markets providing facilities for skills development.

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Though the national head count rate of poverty has been decreasing in Bangladesh, still onefourth of the population is under the poverty line and out of them 26 million people are hardcore
poor. In terms of family size, the hardcore poor constitute about 5.2 million families. The target in
the annual budget should be to get one million families out of hardcore poverty. Projects and
programmes should be undertaken under social protection policy for which a strong national
monitoring body should be formed. Though Bangladesh has achieved a lot in socio-economic
front, one should not boast of it. Social progress has many ingredients like citizens' access to
education, health services, water and sanitation power and energy, housing availability of
employment, safety of life, liberty and wealth. Education and health services are costly for the
common people. A chaotic situation exists in hospitals and clinics. More than 40 per cent of
population lacks sanitation facilities and do not have access to electricity. Safe drinking water is
scarce. Rivers are being polluted and encroached. Abductions and killings have become the order
of the day. Against this backdrop, the Finance Minister must bring some concrete proposals in the
budget for real social progress.
Local government institutions deserve due attention in the budget. Allocation of funds should be
enhanced for these institutions with an effective mechanism of accountability. There are some
other issues like corruption, governance and institutional capacity which should be focussed in the
budget speech. Whitening of black money should not be allowed.
Last but not least, political stability is an issue which the Finance Minister cannot ignore. Without
political stability, economic development is not possible and the budget cannot be implemented.
The January 05, 2014 parliamentary election did not bring political stability. Rather overall
politico-socio-economic conditions of the country reveal bankruptcy of governance.
That is why all stake-holders are now in a wait-and-see mood. A government becomes popular
and strong only when it comes to power through an inclusive and popular mandate. Otherwise,
stability will always be at stake. The budget then will remain just a paper work with its effects
failing to trickle down to the grassroots.

81Taking on climate change urgently


Climate change is the most-talked-about issue of the present time. The impacts of climate change
have already affected agriculture, human health, ecosystem, water supplies and livelihood of a
large number of people. The striking feature of observed impacts is that these are occurring
everywhere from the tropics to the poles, from small islands to large continents and from the
wealthiest countries to the poorest. People, societies and ecosystems on the planet are vulnerable
and the effects vary depending on places and countries. "The planet is poised for a disaster.
Forests will get burned, cities will see floods and infrastructure will collapse under the impact of a
warming climate. The climate change will also lead to increased food security and even wars over
resources," says a report of the Intergovernmental Panel on Climate Change (IPCC), which was set
up by the United Nations Environment Programme (UNEP).
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National and international seminars on climate change are held in different countries on different
occasions. But we do not come across any action-oriented swift programme that can tackle and
counter the adverse effects of climate change. As a result, developed and richest countries of
North America were affected by the abnormally freezing weather during the last winter. China and
the USA are the two great greenhouse gas emitters. A comprehensive approach to addressing the
problem of climate change remains mired despite emergency calls from eco-scientists, ecologists
and the concerned communities around the globe.
Climate change will hit hard underdeveloped and developing countries in the coming century.
Less-rainfall will prevail, drought-prone areas will become drier, wet tropical areas will be more
wetter and abnormal weather like high temperature will continue unabated and all these will
contribute to cyclones, storms, tornados, tidal bores and tsunami in low-lying areas of the poorest
countries. Combating climate change should be the number one challenge for the world leaders to
save the planet from an imminent human-made ecological catastrophe.
Different research organisations and climate scientists unanimously forecast and projected that by
2020 about 500 to 750 million people would be faced with water-related problems. Low-lying
coastal regions including Bangladesh are vulnerable to a sea-level rise under the impact of climate
change.
The overwhelming majority of scientists who study climate change agree that human activity is
responsible for the changing climate. The United Nations Intergovernmental Panel on Climate
Change (IPCC) is one of the largest bodies of international scientists ever assembled to study a
scientific issue, involving more than 2,500 scientists from more than 130 countries. The IPCC has
concluded that most of the warming observed during the past 50 years is attributable to human
activities. Its findings have been publicly endorsed by the national academies of science of all G-8
nations, as well as those of China, India and Brazil.
The climate change, a global problem, needs to be tackled by swift action plans jointly by
developed, developing and underdeveloped countries alike. The causes of climate change have
been identified by climate scientists and eco-geologists as human activities, burning of fossil fuels,
use of chemical fertilisers, industrial advancement, deforestation, melting of glaciers, volcanic
eruptions, depletion of ozone layer, air and water pollution and green house gas effect. The planet
is showing the signs of record heat, drought, storms, tornados, tsunamis, fire and other types of
extreme weather.
According to a science magazine, with the climate change happening, the wild fire situation is
getting worse in the west. Across the western United States, wildfires grew bigger and more
frequent in the past 30 years, according to a new study that blames climate change and drought
for the worsening situation. "It's not just something that is localised to forest or grasslands or
deserts," said lead study author Phil Dennison, a geographer at the University of Utah. "Every
region in the West is experiencing an increase in fire. These fire trends are very consistent with
everything we know about how climate change should impact fire in the West," Dennison told the
Live Science.
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It is now the appropriate time to take action. Climate scientists, ecologists and climate researchers
after spending a lot of time on studies and researches, have come up with specific options to
mitigate the impacts of climate change. These are: forgoing fossil fuels and coal-powered energy,
upgrading infrastructure, moving closer to work to reduce use of transport fuels, replacing fossil
fuels by clean and environment-friendly energy, stopping deforestation and planting more and
more trees around the whole planet. World leaders, climate scientists and people at large can do
a plenty of things to that end.
The basic science of greenhouse gases (GHGs) and global warming makes the approach to climate
change mitigation fairly straightforward. Science dictates that emissions of carbon dioxide must
stop. In fact, all anthropogenic sources of GHGs must be progressively cut. Although the majority
of citizens in the developed nations of the world acknowledge the reality of global warming and
the serious consequences of climate change, a very large proportion of them remains poorly
informed and confused about the science. Therefore, leadership on climate change solutions is
urgently required - and this opportunity is macroscopic for all dealing with climate change, global
warming and clean energy in both developed and developing countries.
Bangladesh, a developing country in South Asia, is highly vulnerable to climate change due to
many reasons, not limited to its geological and geographical position on the world map. Climate
change is an extremely crucial issue and according to the National Geographic, Bangladesh is the
number one nation in terms of exposure to the adverse impacts of climate change in the coming
decades. According to the German Watch's Global Risk Index-2011, Bangladesh is most vulnerable
to the global climate change. Deforestation has taken place in this small country without
reforestation while population boom, unplanned industrialisation, unplanned urbanisation and
green house gas emitted by industrially-developed nations have severely affected the country.
Deforestation is a double blow for Bangladesh. Trees help regulate the climate by absorbing CO2
from the atmosphere and an immense amount of carbon is stored in the world's forests. When
forests are lost, the carbon stored in the trees is released into the atmosphere as CO2, adding to
the greenhouse gas effect. On top of that, when a forest is destroyed, it can no longer absorb CO2
from the atmosphere. Bangladesh should take steps to stop deforestation and plant trees
throughout the whole country, stop soil erosion by dredging rivers and canals and make water
reservoirs like lakes, ponds and bore-holes for the dry season. The recent highest temperature of
Bangladesh (highest in 53 years) is a clear sign of the adverse effect of climate change and an
awakening signal to the state policy-makers of the country.

82Green financing need of the hour


Reckless deforestation activities across the continents and overdependence on non-renewable
energy resources create added challenges for human beings on earth. Hence, we need right focus
on sustainable development which has become an imperative. It has also become a global need as
we live in an interconnected world. A united action is required to solve these major ecological
problems before solutions become impossible.

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Climate disasters in recent times that have impacted significantly on human life are Super Storm
Sandy in the USA, Typhoon Haiyana in the Philippines, severe flood in Jakarta in Indonesia and
Cyclone Nargis in Myanmar. Even the storm with heavy rainfall in Southern England, the UK
starting on February 12, 2014 has been recognised as unparalleled in records stretching back to
1766. In case of Bangladesh, the most recent natural disasters are Sidr and Aila which happened
on November 15, 2007 and May 27, 2009 respectively destroying the southern coastal areas of
Bangladesh.
Financial institutions have a scope to directly provide finance in various fields of environment in
Bangladesh. These areas may include non-conventional and alternative energy, any type of
effluent treatment plant (ETP), bio-fertiliser, any sort of reprocessing and recycling plant,
production, improved and environment friendly kiln (Hybrid Hoffman Kiln: HHK), nursery, forestry,
improved cooking stove (Bandhu Chula), natural fibre (jute/ cotton products) and others areas.
On the other hand, indirect green financing as per the Bangladesh Bank include projects either in
the way of project finance or working capital or in any other form, which possesses any sort of ETP
(chemical, textile, liquid and garments) or environment-friendly other systems installed.
Financial institutions can finance these particular areas easily. Even banks can come forward to
provide money in natural disaster-prone areas mitigate climate change. The Bangladesh Bank
considers these outflows as CSR expenditures. Banks in Bangladesh can avoid deposit
concentration which are mobilised from millions of common people. They can use the funds
through a proper decentralised process for pertinent greenness. In this case, banks can join the
deprived, impoverished and helpless people of society in the form of partners in production.
Banks in Bangladesh have a commitment to pursue automation, nearly paperless, sustainable and
green banking operations by making best use of the information technology and related
professional skills. Banks' various ICT-based initiatives on green banking activities are online
banking, e-banking, mobile financial services, ATM, SMS banking, call centres, phone banking, erecruitment, etc. Thus, they are facilitating financial solution to billions of customers as well as
helping keep ecological balance. Banks have given significant attention to energy efficiency. Some
banks have inculcated this practice since their inception. Banks have started this enthusiastically
following both financial inclusion and environmentally sustainable green financing approaches. In
financing, banking sector in Bangladesh routinely takes up environmental impact assessment of
investment proposals, considering environmental risks in financing decisions. For instance, some
ethical banks do not finance even one taka (12 cent!) in tobacco production or tobacco-related
businesses and industries. Hence, the banks' management always emphasises on the welfare
aspect of the society and environment rather than making money.
Banks have extended financing activities to almost all priority sectors of green financing. They give
top priority to these sectors due to moral obligations and consideration of social responsibility and
welfare as well. They select financing sectors finding out the basic needs of common people. They
prioritise sectors which are prone to high employment, import-substitute, export-oriented and
which must ensure universal welfare.

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Most of the banks have formulated comprehensive framework for financing in green or renewable
energy particularly in solar energy, ETP, bio-gas, agro, SME etc. The banking industry needs to
adopt comprehensive policy guidelines for green banking launched in 2011 for banks in
Bangladesh. This policy guideline helps to adopt environmentally responsible financing while
assessing borrowers' proposals. This guideline also helps greening of internal processes and
practices within banks.
The banking sector needs to properly implement green banking policy to avail the central bank's
preferential treatment which is reflected in CAMELS position in top ten banks promoted in the
Bangladesh Bank's website and priority for opening new branch.
Financial institutions can explore new avenues for green financing ensuring better living
environment. They can allocate resources for this segment to carve a niche in the market, set an
example for stakeholders and create global business competitiveness.

83Search for ways to bail RMG sector out of crisis


The garments industries of Bangladesh appear to be on its way to becoming a political pawn of the
European Union (EU) and the US. In the aftermath of the Rana Plaza and the Tazreen Fashions
disasters, a number of big overseas ready-made garment (RMG) buyers, on the plea of these
unfortunate tragedies, have been raising absurd claims imposing bizarre conditions which are, in
fact, very difficult for a Third World country, like Bangladesh, to implement. And in view of this
fact, they are perhaps exerting enormous pressure in a bid to compel the government to
materialise their goals, apparently laced with political aspirations.
The US has suspended its preferential trade facilities i.e. GSP (Generalised System of Preferences),
for Bangladesh, while the European Union (EU) has been putting many conditions. On the
contrary, Pakistan has been brought under the purview of GSP facilities by the EU, and India is also
under active consideration as per media reports.
Meanwhile, India has taken a number of aggressive measures to grab the RMG export market
from Bangladesh. In order to make their apparels more competitive, the Indian government has
declared a number of lucrative cash incentives and other facilities for their exporters. They have
also adroitly depreciated their currency to a great extent to make their apparel products more
competitive to the buyers. Apart from these facilities, Indian banks and financing institutions have
decided to provide the sector with low-interest finance.
On the other hand, the government of Bangladesh has declared a trivial amount of cash stimulus
for its exporters at the rate of 0.25 per cent on FOB effective from January 01, 2014. But the wages
for the RMG workers have been increased substantially under the pressure of the government for
petty political gains immediately before the national election on January 05, 2014,
notwithstanding the fact that the buyers are reluctant to raise their rates at all. At the same time,
the prices of gas, electricity and fuel, as well as transport costs, have been enhanced abnormally
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and exorbitantly in Bangladesh.


IMPEDIMENT TO UNINTERRUPTED PRODUCTION: Compared to the incremental cost of
production, the cash incentive of mere 0.25 per cent is simply ludicrous and trifling for the sector.
Dearth as well as fluctuation of supply of gas and electricity in the country has also become a
serious impediment to uninterrupted production in the sector. Moreover, the voltage fluctuation
has also long been jeopardising the life-cycle of capital machinery. As a result, production in the
sector is tremendously dwindling causing the entrepreneurs to incur huge losses.
If all these issues are taken into due cognisance, the cost of production in the apparel sector of
Bangladesh is surging at a geometric rate. The situation is also pushing the industry to the edge of
virtual extinction. Cashing in on this circumstance, Indian apparel exporters have already been
able to capture a large chunk of our apparel market share taking the advantage of incentives
declared by their government. The supposition is amply corroborated by the fact that about 30-40
per cent apparel orders of Bangladesh have already been redirected to India and other places.
If we allow this situation to continue any more, the RMG sector of the country is likely to end up
with the fate of jute. All stakeholders of the apparel sector, including workers, labour leaders and
the civil society of the country should ponder the issue with paramount importance.
THE ACCORD AND THE ALLIANCE: Of late, the EU and the (North) American garment product
buyers have formed 'syndicates' by the names of the Accord and the Alliance to press home their
demands in Bangladesh. In the name of compliance related to structural repairs and remedies,
they have already de-listed many factories and are recommending work suspension in some other
units of the country as vendors. It is very much alarming. Due to their irrational classification of
factories as being non-compliant, many workers have become jobless and many more are also in
the queue to accept the same fate. If we allow this matter to go on unchallenged, then the apparel
sector must brace for a disastrous situation to be plagued by unemployment. The spillover impact
will also be felt in other sectors as well, as the RMG sector is the engine of many other sectors in
the country.
In a much-hyped humanitarian world, thousands of toiling workers are being compelled to live in
unwholesome and insecure shanties and suffer from malnutrition. They are also facing premature
deaths. The garment buyers of the developed countries are too much busy with the 'fire safety'
issue. But they seem to have no concern for the premature deaths of these poor workers caused
by frequent fires in those insecure slum dwellings, where they are compelled to live after losing
their jobs. The main responsibility for this unwarranted and unfortunate situation of these poor
workers and their untold sufferings should be shouldered by those so-called humanitarian
countries and their big RMG buyers. We do presume that perhaps the general citizens of their
countries have been kept in the dark very slyly about such inhuman activities being perpetrated by
these buyers in the name of humanity.
FOREIGN POLICY: If anybody looks into the foreign policy of our country, it might appear to him
that Bangladesh is much more interested to develop its bonhomie with China, Russia and India to
an extent which is higher than what is necessary and pragmatic. It is also fact that we do not have
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many exports to these countries. The aim and objective of foreign policy of Bangladesh is not quite
understandable. The lion's share of our country's foreign exchange earnings comes from export of
manpower and RMG products. These earnings come mainly from the Middle East, Malaysia, the
EU and the USA. Without doubt, the dominant export destinations of our products are the EU, the
US, Canada and Japan, and obviously not Russia, China and India. Circumstantial evidence reveals
that our relations with Middle East, the EU and the US are not that much tepid.
Perhaps, the Grameen Bank issue and the 'voter-less one-party election' held in January, 2014,
have appeared as a big question-mark to the peoples and the governments of those countries.
Here it is worth mentioning that the EU, the British Parliament and the US Congress also expressed
their strong resentment over the issues.
The government should form a high-powered committee on the basis of consensus incorporating
members of the civil society as well as some acceptable personalities from the Bangladesh
Nationalist Party (BNP). The committee should interact with the representatives of different
countries to come to a meaningful understanding on the country's RMG problem.
At the same time, it has become imperative to undertake immediate and pragmatic steps to take
at least 5/6 years' time from the buyers to comply with the standards of Accord and Alliance. The
BGMEA and the BKMEA should start meaningful dialogue with the government to set up a number
of economic zones at different places of the country.
WELFARE MEASURES: Meantime, the government should initiate the process of establishing a
Garment Worker Welfare Board and Fund for the benefit of the RMG workers. The Board shall fix
direct or indirect levies on the beneficiaries who are involved with the sector to create the Fund
for the welfare of the workers. At the same time, financial assistance from the reputed buyers and
donor countries can also be sought for the fund. If required, interest-free loans or those at a
minimum interest rate, can be taken from the World Bank, JICA, IDB and other bilateral or
multilateral financial organisations.
The government should introduce a rationing system involving essential food items for those poor
toiling workers of garment factories who are contributing to the nation's earnings of foreign
currency. If these sorts of facilities are introduced in a transparent way, it is believed to be more
beneficial and welfare-oriented for the workers than anything else.
This will enhance the workers' capabilities and productivity. Besides, it will also encourage them
more than that prompted by mere wage increase. If the policy is implemented, the 'smiling face'
of our apparel workers will induce the foreign consumers to buy more Bangladeshi products than
ever before.
At this moment, everybody, irrespective of workers, owners, labour leaders and political parties,
should work hand in hand, to take the sector out of this calamitous situation. In fact, everybody
should make a holistic attempt to facilitate the means of livelihood of 160 million people of the
country, and thus contribute to infusing due momentum into our foreign currency-earning efforts.

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84Budget and sustainable garment industry


The readymade garment (RMG) industry is crucial to the economy of Bangladesh as a source of
employment generation and export earnings. The industry accounts for 80 per cent of the total
export earnings of the country and is a source of livelihood for around 4.4 million workers, mostly
poor rural women.
Over the last three decades, our apparel industry has achieved a phenomenal growth due to policy
support from the government, dynamism of the private sector entrepreneurs and extremely
hardworking workers. The export earnings reached US$ 23.5 billion in the last calendar year and
people of around 130 countries of the world are the consumers of 'made-in-Bangladesh' knit
garments and woven products.
Moreover, a more glittering future is waiting for the ready-made garment industry of Bangladesh.
At least facts and figures have made us believe so. A McKinsey report forecast export-value
growth of 7 to 9 per cent annually within the next ten years, so the market will be double by 2015
and nearly triple by 2020.
But at present, the mightiest pillar of our economy is under threat and facing unprecedented
challenges posed by some unfortunate incidents in the sector. With challenges on one side and
huge opportunities for further growth on the other, we are now at a crossroads. One of the
biggest challenges for the sector is to make our factories safer and ensure better working
conditions for millions of garment workers. However, following the unfortunate incidents a
number of initiatives have been taken to improve building and fire safety of Bangladesh's garment
industry.
Platforms such as Alliance, Accord and National Plan of Action have been formed to ensure RMG
factories safer and compliant. They have already started inspecting the garment factories and shut
down a number of them due to safety concerns. However, have we ever thought of how these
workers would lead their life after losing their livelihood? The country does not have the capacity
to provide jobs to this huge number of workers in any other sector. This will surely halt our march
of development.
Now only one option is left for us to save our RMG industry: improving building and fire safety at
the garment factories to prevent further catastrophic collapse or fire. Of the 3,600 garment
factories now in operation in Bangladesh, 40 per cent are housed in shared and converted
buildings employing around 1.5 million people; the rest operate in purpose-made buildings. We
need to retrofit and, if not possible, relocate all the factories that are housed in shared and faulty
buildings with poor safety standards.
Given the fact that we have to address the workplace safety issue within a stipulated time frame,
using prefabricated materials is the best alternative to ensure building safety as they are easy to
build within the shortest possible time and ensure quality at the same time. It requires a year to
build a 90,000-100,000 square feet concrete-built building, while a steel building can be raised
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only in two months. Apparel makers want to use the steel buildings to set up their factories on
their own or leased lands with prefabricated materials to relocate their factories. But the
government currently imposes up to 61 per cent duty on imports of prefabricated building
materials. In this regard, we need special support from the government to protect the country's
leading foreign exchange-earning industry. We demand that the government in the upcoming
budget will withdraw all the duties on prefabricated building materials to help the garment
factories that are now housed in shared buildings relocate themselves to steel-made structures.
Apart from building safety, we also need to ensure fire safety in all garment factories. There is no
alternative but to install fire safety equipment at the garment factories to reduce the risk of fire
accidents. But acquiring and installing fire equipment require a huge amount of money as they are
very costly due to high duty on their import. It is difficult for the RMG factory owners to bear such
a high cost of installing safety materials, including fire hydrant, extinguishers, fire doors, sprinklers
and smoke detectors. Considering all these, the government should allow duty-free imports of fire
and building safety materials.
Both factory remediation/relocation and installing fire safety equipment would require a huge
amount of money. In this regard, we think 'term loan' could be a good option to help the factories
become safer and compliant. But it is difficult for RMG entrepreneurs to take term loans due to
the existing high interest rate on it. As the RMG industry earns money in foreign currency, the
Bangladesh Bank can advance foreign currency to the commercial banks so that they can provide
term loans to the RMG entrepreneurs at a low rate and on easy terms. It would be a great support
to the RMG industry if the Bangladesh Bank and the commercial banks give term loans to it at a
lower rate and on easy terms. The government can also bring about some changes to the Export
Development Fund (EDF), including permission for import of capital machinery under the EDF and
increase in the ceiling of the EDF and its time. We urge the government to set up a special Equity &
Entrepreneur Fund (EEF) for the RMG industry. As locally borrowed fund is far more expensive
than that sourced from abroad, foreign currency (FCY) loan would be a good support for us. But
less than one-year term FCY borrowing in the form of U-Pass is not helping us much. So we urge
the government to increase the time of foreign currency (FCY) loan from one year to five years.
Considering the need for ensuring a safer garment industry, the government should keep an
integrated solution in the budget to protect the sector.
The inspection of RMG factories by Alliance, Accord and National Plan of Action will be complete
at the end of this year. We apprehend that a number of garment factories may be closed down
following their inspection due to safety concerns while many will not be able to run their factories
paying off bank loans, house rents etc. Moreover, they are facing problems like back-to-back
liability, project loan, stock lot, term loan, customs liability etc. Under these circumstances, we
demand a provision of moratorium on the Company Act for at least a period of two years (like
Chapter 11 of America or UK's Company Law) so that these RMG entrepreneurs can make exit
from their business safely and with honour.
To ensure better living of the apparel workers, we have increased the minimum wage of garment
workers by 77 per cent. The consolidated increase in minimum wages for RMG workers in the last
five years is around 219 per cent. But our workers have not been able to enjoy the real benefit of
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the wage increase due to price spiral of daily essentials and exorbitant house rent. So we urge the
government to take special projects in the upcoming budget under its Social Safety Net to improve
the life of backward communities by ensuring their education, health and accommodation.
We cannot afford to let down the industry that has kept turning the wheels of our economy,
brought glory for the country through its 'Made-in-Bangladesh' tags, created employment for
millions of people, lifted them from the abyss of poverty, and ensured a safer and brighter future
for their children. We cannot afford to let the glory of our RMG industry, which we have built
gradually with our dedication and years of hard work, fade away in a day. We firmly believe that
with the support of all stakeholders, especially the government, we would be able rise to all the
challenges and ensure a safer and sustainable RMG industry in Bangladesh.

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