In revenue generation part government used to fixed several types of taxes and tariffs to collect from the citizen and business entities. This par is mainly divided into three parts like income tax (personal and enterprise level), VAT and several tariffs duties on import. A very normal trend of our country is to fix a higher rate of income tax in both personal and corporate level. As a result a very common trend of avoiding or hiding incomes grows up among the citizen and corporations level. It facilitates income tax officers to negotiate rent seeking with the tax payers. Tax payers are taking advantage of corrupt bureaucracy to save their income by paying bribe to the income tax people. Probably Bangladesh is one of the highest rate taxes imposing country around the world. As a result rate of collection is poor. But think it other way if the rate comes to corporate income tax 15% and personal income tax 5 % then more people will be willing to pay taxes and rent seeking or avoiding tendency will go down. If the different between actual payable income tax and citizen’s willingness to pay tax come narrower then the possibilities of income tax officers to negotiate will come down. Automation of income tax payment system and easing the procedures can encourage people to pay taxes. Then the rate of tax payers will increase and collected amount will go up. Our inflation rate is higher then many developed country so minimum tax payers slaves shall be increased up to a reasonable limit as present one is poor enough.

VAT stands for value added tax. But in our country VAT collecting on the price of the products not on the value added by the producers. NBR people may argue that there is a system of VAT adjustment if VAT receipts of raw materials be submitted by the producers. But reality is different that is 90% of Bangladeshi production factories are SMEs. They used to purchase raw materials from the local wholesaler not even from the importers. As a result wholesalers are not capable to give VAT payment receipt as a result SME producers are unable to show that VAT receipt while payment of VAT of the final products. NBR people are taking advantage of their inability and charging VAT of total price of the final goods. In which VAT paid two times earlier at raw materials stage by the importer, at intermediary stage by the wholesaler and at the final stage by the producer. That means triple VAT charging on a same product. It increases cost of production and local products are losing competitiveness with imported finished products. This is a very much dangerous problem for Bangladeshi electrical and light engineering sector especially for the micro, small and medium enterprises (MSMEs) of these sectors. NBR should be attentive to solve this problem during current budget otherwise these sector will loss local market and export potentials will die at initiation. Rate of added value in these sectors may be calculated for example these sectors are adding 20 – 30% value during producing a product. Then 15% VAT can be collected on this 20-30% added value. Then these sectors will be competitive.

Different types of tariffs are imposing in import stage. Generally import tariffs like CD, SD, RD and other duties on finished products are higher than raw materials. But it is a very complex task to differentiate raw materials and finished products. Because of a single product is raw material for one sector and finished products for the other Bangladeshi sector. But there are some basic products which are not available or produce in Bangladesh like base metals of HS chapter 74, 75 and 76 some chemicals, dying staffs, capital machineries, sophisticated hospitals machineries etc can be zero duty in import stage. Logic may be raised that if all these items allowed to import duty free then government will loss revenue generated by import duties of these items. I am strongly disagreeing with that foolish statement because these materials will not be eaten by the importers or their family members. These will be used in either factory to produce useful product or provide services. Then massive industrialization will took place and employment generation will get momentum. Massive production means higher amount of VAT payment which will be deposited in the same government account not in a form of import duty but in a form of VAT. Government’s target is to get revenue which head shall not be the headache of government.

Now come to the expenditure part, government allocates money in different development projects. Construction of roads, bridges, expenditure in defense, education, health care, environment protection, social safety nets, citizen services and so many segments. But one thing is very much neglected in our previous budgets that are allocation in private sector development. Loyal civil servant / bureaucrats may argue that private sector is doing business for their personal interest to maximize his / her personal wealth maximization what government can do for their development or promotion? And why government will nurture them? How government can do anything for private sector in this free market economy?

The answer is this government is constitutionally bound to ensure livelihood of all citizen of the state. Their good safety, education, healthcare, employment and social security shall be ensuring by the state. It is impossible to provide food for each citizen of the state from government reserve thrice a day, to provide all education materials, supply medicine while they are ill or employ all citizens in government job. But government is constitutionally obliged to do so. In such case government can only ensure a single thing that is ensure a minimum income source for the citizen and they will have all other needs by their own by spending that income.

To ensure income source of citizen government has to work on creating, maintaining and sharpening market mechanisms for a congenial business environment. In which entrepreneurship development will get highest preference. Because of an entrepreneurial initiative provides employment to the entrepreneurs as well as to a group of citizen. But it is very much unfortunate that there is not a single entrepreneurship development institute in Bangladesh. Our universities are teaching hundreds of subject to produce teachers, administrator, executives, doctors, engineers and many more but none of these are producing entrepreneurs. Entrepreneurship incubation centre is far beyond from our existing mechanism. Arguments may be raised that, Ministry of Industries, Ministry of Commerce, Bangladesh Standard and Testing Institute (BSTI), Bangladesh Small and Cottage Industry Corporation (BSCIC), The Small and Medium Enterprise Foundation (SME Foundation), Bangladesh Industrial and Technical Corporation (BITAC) and Bangladesh Center for Scientific and Industrial Research (BCSIR) are working to help the entrepreneurs and private sector. All these enterprises has been established by or run by the government. So government has done a lot for the entrepreneurs.

But my question is how many entrepreneurial entities are there in Bangladesh? What is the total number of SMEs in Dhaka or Chittagong? How many entrepreneurs are there in Bangladesh? These are very tough statistics. Let try to get some basic information for an investor. These are how many sectors / sub-sectors are there in Bangladesh in case of goods are services? Which are the sectors are in beginning stage? Which are in maturity and who are in declining stage? Annual turn over of which sector is how much? Which are the most promising sectors maintaining an annual growth of 20% during last five years? Which of the mentioned organization can answer these very essential questions of a foreign investor wants to invest in Bangladesh.

I am not getting answer of these questions during last few years. That means we are doing very good job in different levels but finally result is not satisfactory. This is because government establishes several public institutions in different time but not utilizing their capacity by taking proper projects and implementing by them. At least ten to twenty different projects can be taken under relevant ministries and execute through BSCIC, SME Foundation, BITAC, BCSIR, FBCCI and other sector specific associations. For example some projects may be – identification of industrial clusters of different sub-sector and their problems, – Identification of required technical skills of labor in different sub-sector, – testing requirements and establishment of laboratories for different sectors, – identification of labor market in different countries and training up labors according to their specification, – prior preparation to export executives and other white collar professionals, – Providing technical support to the existing industries in achieving international quality certification, – Technology transfer and absorbing latest technology in different sectors, – Promoting Bangladeshi products and branding Bangladesh in abroad etc.

Incase of sector selection SME booster sectors according “SME Policy Strategy – 2005” or thrust sectors according to National Industrial Policy – 2010 can get priority. Eleven (11) SME booster sectors are Electronics and electricals, Software-development, Light engineering and metal-working, Agro-processing/agri-business/plantation agriculture/ specialist farming/tissue-culture, Leather-making and leather goods, Knitwear and ready-made garments, Plastics and other synthetics, Healthcare & diagnostics, Educational services, Pharmaceuticals/cosmetics/toiletries, and Designer, aesthetically-challenging, personal wear and effects. Thirty two (32) industrial thrust sectors are Agro-based and agro-processing industry, Human Resource Export, Ship Building, Renewable Energy (Solar Power, Windmill), Tourism, Basic chemicals/dye and chemicals, ICT and ICT based service, Readymade Garments Industry, Active Pharmaceuticals Ingredient Industry and Radio Pharmaceuticals Industry, Herbal Medicinal Plant, Radio-active (diffusion) Application Industry (e.g. developing quality of decaying polymer/preservation of food/ disinfecting medicinal equipment), Development of Polymer Industry, Jute and Jute products, Leather and Leather products, Hospital and Clinic, Light Engineering Industry, Plastic Industry, Furniture, Handicrafts, Energy Efficient Appliances/Manufacturing of Electronic goods/Development of Electronic materials, Frozen Fish Industry, Tea Industry, Home Textiles, Ceramics, Tissue Grafting and Biotechnology, Jewellery, Toy, Container Service, Warehouse, Innovative and import substitute industry, Cosmetics and toiletries and Light engineering industry.

Current national budget going to be declared in June 2011 shall undertake few projects and implement by the relevant agencies for private sector development, employment generation, entrepreneurship development, increasing rapid GDP growth finally to get a middle income Bangladesh within a shortest period.

Although there had been a steady flow of remittances from Bangladeshis working abroad no effective government initiative has been made to expand the job market to sustain foreign exchange earnings from the source.

The foreign direct investment (FDI) in Bangladesh is one of the lowest in the world. This is because Bangladesh is yet put in place required infrastructure to attract the FDI. The industries in the country are struggling to maintain production because of the energy crisis. They are facing upto 12 hours of electricity load shedding everyday.

Traffic jam in Dhaka city is getting worse. One fourth of working hour is wasted on the street due to the traffic jam. In such a condition how Vision – 2021 can be achieved?

The price hike of essential prices during current regime has defeated all past record. General people are spending 80% of their income on food and their savings are falling. Currently, prices of commodities are rising illogically in the market when they are falling at farmers’ level. If farmers do not get fair prices for their products they will be discouraged to grow crops. So, the new budget should outline proper price management mechanism for the sake of the farmers as well as the economy.

The budget is the most important development document of a country. Currently, our policy makers are working hard to finalise the next budget, which is likely to be placed in parliament by the finance minister on June 10, 2010.

While preparing the budget the policy makers must take into consideration the water crisis, electricity and gas shortage. Special attention should be given to ensure water supply to every houses in the cities. Uninterrupted electricity supply is the prerequisite for industrial development. Without uninterrupted electricity supply the digital Bangladesh will remain a day dream. Under the circumstances the government can consider compensating the factories harmed by load shedding. Because, factories remain idle during the load shedding period, but labour wages, salaries and other utility bills have to be paid by the entrepreneurs. Specific budgetary measures have to be taken for increased FDI flow into Bangladesh.

Development projects to be taken up in next financial year should get highest priority for implementation. The government must also see its political agendas do not get preference over development agendas. Because, the people want to have better living and see the dream of digital Bangladesh come true.

After so many struggles and much blood shedding, democracy was restored in 1991, but we have seen unwillingness of democratic parties to ensure a free, fare and credible election. Whoever was in power wanted to stay forever in power and feared to face free democratic election. System of caretaker government was initiated and also made paralyzed through applying many elections engineering processes. Everything was done to create barriers in front of general people in electing their representatives in the parliament. Our political leaders have a fear to face the truth and to accept peoples’ judgment against them. As a result, every party tries to make us out of the boundary and stay in power forever.

None of our political parties is happy to sit in the opposition, but why? How will democracy be established without an active opposition in the parliament?

After an unusual ruling of the last caretaker government, countrymen were waiting to see their preferred party in power. During last caretaker government, our political leaders suffered more than people from any other profession. So, people were expecting that they would find some qualitative changes in the character of our leaders. But what are we observing today? We see the same scenario-the opposition is avoiding the parliament, the government is showing non-tolerance to the opposition, and the people in power are emphasizing political agenda rather than development agenda of the election manifesto. Day by day, older picture of our politics is becoming clearer. The two chief political parties are not following their vows mentioned in their respective election manifesto.

As a student of business, I used to write on business and development issues, but after some recent activities undertaken by the student wings of different parties, I am very shocked and wish to remind them what they are doing now. What are they thinking about people’s judgment?

Current government has many good achievements, but one major failure may engulf all their achievements. If the political parties fail to control their student and youth wings from doing campus violence, tender massacre, smuggling, mugging, robbery, etc., their other achievements will be of no use. This is extremely unfortunate that Honorable Prime Minister failed to control the activities of her student wing even after taking several initiatives. But why? This is for sure that some mid level leaders/ministers are giving them inspirations. Otherwise, how did the party president’s initiatives fail to control them? Their recent performance on the occasion of admission test at several public universities was excellent! Several innocent lives have been lost but our ministers’ performance during two similar types of occurrence raised questions.

When ruling party student wing killed one student in Dhaka and an opposition party student wing killed another (according to newspaper reports) student in Rajshahi, what was our home minister’s reaction? Again, what did our most powerful police force do? These pictures are sending important messages to the general peoples’ mind and also creating questions. Our political leaders including ruling ministers should not think that people are foolish without any jurisdiction power. Especially I would like to draw attention of our ministers to their actions during these two similar events. You are elected ministers of the republic. You should be impartial to all people at least while using republic’s wealth-the police force. The performance of the police force is already controversial; please do not muddle it anymore. Please do not abuse power. You should remember that silent observers are watching everything you are doing and they may not have power to do anything but time will come up when you have to go to their door to seek their assistance for further continuing of your dominance. But if you do anything you like now, you will find them cruel when you will seek their support.

Without proper investigation, how can minister term someone as ‘killer’ and some other as ‘innocent’?  So I hope our minister will be more accountable during providing statement for the sake of impartial justice. We, general people, want to see impartial judicial investigation of both the event and appropriate judgment of the responsible people without harassing mass arrest of opposition political workers. Tolerance to opposition, impartial implementation of law and proper use of police force are important for sustainable democracy.

Today several newspapers reported that our honorable home minister saying that current law and order situation is better than that of previous time. I would like to request her not to judge self-performance but to let the voters judge your performance. Otherwise, your statements may hurt the voters who voted you to be home minister. We do not expect false statement from our leaders, rather we want accountable statements from them. Please do not look into the past. Your responsibility is to shape our future.

But due to protectionist mentality of the new emerging countries this intra regional trade has since declined to the lowest 2 percent in 1967. With the emergence of SAARC in 1985 South Asian people got a platform to get closer and renew their past shared trade. Measures have been taken to facilitate intraregional trade among the SAARC nations. The “SAARC Preferential Trading Arrangement (SAPTA, 1995)” got its maturity through implementation of “South Asian Free Trade Agreement (SAFTA, 2006).

But, despite efforts the intraregional trade remained only above 6 percent though intraregional trade among the East Asian nations i.e. ASEAN+3 is 51%, EU 58%, Latin America 17% and even the poorest Sub Saharan countries it is 11%.

In South Asia intraregional telephone calls is only 7% which is 71% in case of East Asian countries. It means we have lack of communications among ourselves in South Asia. Only for this reason intraregional trade is not increasing in South Asia after offering so many duty free facilities under or beyond SAFTA.

A united South Asia can be more powerful than the EU, because we have a larger market than EU, massive workforce and fertile lands to produce anything we want. We have diversified products and favourable weather for cultivation. We have easy access to the markets of economic powerhouse China and integrated ASEAN. So, deeper integrated South Asia can be more powerful than that of integrated EU.

But first step towards economic integration of South Asia will be to improve connectivity among the nations. It is mandatory to reduce the cost of doing business in this region, Bangladesh can offer transits to its neighbours by accepting such facilities from them. We will have to remove any misconception in this issue for better economic benefit and regional harmony.

Intraregional trades among the SAARC nations have to be increased for self sufficiency of the region as well as reducing dependency on the US or EU countries. Regional policy reform committee can be formed to identify major policy barriers of this region to increase intra regional trade. Because of deeper integration is the only prerequisite for enhancing cross border investment in the region. Today Indian giant companies are investing in Singapore, Vietnam even in the EU countries but why they are not investing in Bangladesh, Pakistan or Sri Lanka? This is due to mistrust, lack of infrastructure and absence of investment friendly environment in South Asia. Bangladesh must have to execute required policy reform to get FDI in thrust sector.

Cross border investment has to be increased to a substantial level. India and Pakistan have to take the lead. Recently, India has opened up is door for regional investors similarly, India has to take effective measures to increase its investment in neighboring countries for the sake of an integrated South Asia.

An integrated South Asian market can provide economies of scale, diversified product, higher value addition to provide special strength in bargaining with other regions or in multilateral trade negotiation under the WTO regime.

Recently, it has been forecast that India is replacing Japan as the third largest economy of the World by 2014. So, smaller neighboring economies may get some special benefit through integration with India. So, smaller countries like Bangladesh, Nepal and Bhutan can get the benefit from relocated investment of India.

So, this is the time for south Asian smaller economies to make required policy reform and open their doors to welcome global investment. With these two upcoming key players of global economy South Asia has a greater prospect to grow if congenial investment climate can be created.

Integrated South Asia has much more product in their basket of comparative advantage.

For a deeper integration in South Asia initiatives can be taken to avoid political conflicts, ensure better connectivity, overcome power crisis and control terrorism.

There is a misconception that governments have nothing to do in the free market economy. Governments have nothing to do for private sector capacity building and regulating market instrument. It has been proved once gain that without effective government intervention, market loses its efficiency, instruments lose their activity and economic downturn follows.

In Bangladesh, high bank interest rate is decreasing market efficiency and creating an adverse investment climate. Our government is thinking that they have nothing to do in this regard, investors are continuously blaming bankers, and bankers are trying to defending themselves by the name of depositors. The government is playing a role of soundless observer, and as a result investment scenario is going to be tougher continuously. In such a condition, we may learn many things from the great economist Keynes and his lesson. Our government may play a pivotal role to reduce bank interest rate without harming the bankers.

Let’s try to find out the way the government can turn bank interest rate down and save investors without decreasing bankers’ profit margin and saving depositors interest? Think, the government may issue revocable, transferable and cashable bond against profitable ventures like power plant establishment, bridge construction, etc. Then one investor will buy these bonds through IPO and there is an assurance of 12 per cent rate of interest at the end of the year. One investor may cash on it with the face value or sale it in the open share market. Ensuring 12 per cent dividend by investing promising sector is not an impossible practice. The government may promote ICB pension scheme and other instrument with adequate rate of return to collect money from the general depositors.

The government will supply the money to the scheduled commercial banks at the interest rate of two per cent and scheduled banks will be instructed to lend the money to the investors and banks loan at an interest rate of six per cent. Thus bankers can get four per cent margin. Currently they are collecting deposit at nine per cent and lending at thirteen per cent with a profit margin of four per cent. Thus depositors may get their expected rate of return by investing in bond market or ICB pension and other scheme. Bankers may get enough money from the central bank and lending at four per cent profit margin and investor may get industrial loan at a rate of six per cent. This may increase their competitiveness in international market and the country may get an industrial Bangladesh with full employed people.

Lower bank interest rate not only facilitate investment but will help to control rate of inflation, lower fluctuation of essential prices, promote employment.

Let’s think for such an environment, the government declares ceiling of bank interest rate at 6 per cent, than what will happen? Banker will cut savings interest rate at 3-4 per cent, as a result depositors will not deposit money to the banks. But what will be the scenario? What will be the ultimate destination of the money currently deposited in different banks?

With fifty thousand or five lakh taka people never think for large investment. Either they will go for different government saving certificates or invest into share market. So ultimately money will go into the banks. So liquidity crisis would be there. Now question arises how the government will handle such huge liquid money? Interesting thing is: according to a newspaper report the government is under pressure with current increasing trend of government savings papers income and ensuring its interest is a major challenge for the government. In such a condition my proposal may be totally unacceptable to the government. They may think that we are in trouble to handle current savings papers money but how it will be handled when all private deposit goes to the government high rated savings paper or ICB schemes.

I do not think so because it depends upon what the government does with the money. If this money used in non-productive expenditure than it is a challenge but why government is not investing this money in a promising sector. For example we are in trouble due to shortage of power and energy. Why the government is not investing the money to establish a new power plant?

If private companies like Summit Power and other can do profit after investing money collected at 13 per cent interest rate and provide dividend to the shareholders after meeting up all liability, then why the government would have to think for ensuring 12 per cent interest to the savers by investing into power plant? Similar example may be drawn from shipbuilding and other sector as well.

So the government can actively interfere in reducing bank interest rate to 6 per cent without harming the bankers and others. Yes it may create a short-term problem but will open up the door of industrialisation, full employment, and export growth, control inflation and prices of essential commodities.

The government can think about the issue immediately, because currently investment scenario is not good enough. Now we have ever-highest reserve, reducing trade gape but it is not for export increasing but due to import decreasing. Currently import of capital machinery decreased to 19.92 per cent and import of raw materials decreases to 21.85 per cent. It proves that flow of investment hampered.

Huge foreign exchange reserve may not give us any positive result if it does not go for long-term investment. If total money invested into trading purpose then it may give us short-term profit but in long run country have to suffer with huge unemployment, which is major cause of social unrest.

Today or tomorrow better competitors may come and capture the market. In the past, Bangladesh lost its golden fiber market in a similar manner. It is likely that today or tomorrow some third country will enter  our RMG market and drive us out of circulation. Are we preparing for that disaster? No, of course not; because during the last thirty years or so, Bangladesh could not develop a second export sector in order to counter such a disaster. If we fail to develop a substitute export earning sector of RMG then economic development of Bangladesh will face unsurpassable obstacles in the days to come. This is why we must develop two to three sectors with Public-Private Partnership (PPP) as early as possible.

Bangladesh’s remittance inflow was increasing even during the massive destructive period of the global financial crisis (GFC), 2008. But currently our workers are losing jobs and returning home due to post-GFC recession of the global corporate houses. If current government fails to manage alternative job location for these people, remittance inflow is bound to be lower in near future. We are losing our labour market in Middle East. So quick actions should be taken from the highest level to regain our labour market in this region and to discover new markets to relocate returning workforce and increase labour export. Foreign ministry and related agencies, bureau, commercial counselors and our diplomatic missions have a great task to do for the same. Newspapers reported that our foreign missions  are showing zero interest to solve these problems. Specific direction should be given to our missions so that any labour inconvenience abroad has to be dealt with the concerned mission officials and reports of their action has to be submitted on all issues regarding  our workforce abroad. There is a rumour that Foreign Service is the royal cadre in our civil service and they are not interested in dealing with the third class labour issues. It is also found that our mission officials are busy to give birth to a child in a developed country and make them citizen of those states. Some of them are too busy with their personal business, though they are the paid servants of the republic. Effective measures should be taken to root out these feelings of our mission officials.

There is no alternative of foreign investment for economic development of the poor countries like Bangladesh. Since foreign investment increases GDP growth, creates employment opportunity and boost government revenue earnings,  it is a very important tool of economic development. With this view in mind Bangladesh has taken a good number of initiatives to attract foreign investment. Some of these initiatives are as follows:

a. Tax holidays for up to 12 years;

b. 100% foreign ownership;

c. Permanent residentship for the investors who have invested more than US$75,000;

d. Remitting full investment and profit/dividend in their own country;

e. Multiple visa facilities for the foreign investors;

f. Reinvestment of profit/divined.

Moreover, Bangladesh is gifted with world’s most competitive labour wages, duty free market access into the EU and US market and two active sea ports to attract foreign investment in Bangladesh.

Despite all these facilities, Bangladesh is not getting foreign investment as expected. Causes of this bad performance in attracting foreign investment are many, including bureaucratic complexity, inefficient performance of the board of investment, lack of infrastructure facility, lack of continuity of government policy, corruption, longer period for government decision-making, poor mentality of the chief executives of the investment related government agencies, political unrest, terrorism and high bank interest rate, etc. These problems are not supposed to be solved overnight, but government has to declare a reasonable timeframe to solve all such problems to facilitate rapid economic growth. A roadmap should also be declared to make the relevant agencies efficient and effective.

Major election manifesto of current government was to build a digital Bangladesh. Vision 2021 has been declared, but reasonable timeframe and roadmap are yet to be announced for attaining the goal of a digital Bangladesh. The present government is busy with implementation of their political agenda rather than development agendas promised in their election manifesto. Without spontaneous cooperation of the government offices relevant to trade and investment, such as the Board of Investment, Bangladesh Bank, Office of the Registrar of Joint Stock Companies, National Board of Revenue, Bangladesh Tariff Commission, Bangladesh Foreign Trade Institute, Export Promotion Bureau, and other relevant offices under the ministry of commerce, industry and finance, there is no hope to achieve the target of ‘Vision 2021′. A high power task force can be formed with the honourable Prime Minister in chair consisting of Ministers and Secretaries of the Ministry of Finance, Industry, and Commerce, Governor, Bangladesh Bank, Presidents of FBCCI, DCCI, MCCI, AMCHAM, FICCI, BGMEA and BKMEA. They may sit together at least once every month to evaluate investment situation and take necessary measures to make a business-friendly environment at home and to expand our market access abroad. According to World Investment Report, 2009 (WIR) Bangladesh got $ 1.09 billion US foreign investment in the last financial year. This is 63% more than that of the previous financial year, but a nominal amount compared to the foreign investment India got in last financial year i.e. $ 41.56 Billion. Even a country like Pakistan passing through constant unrest got foreign investment of US $ 5.4 billion,  which is five times higher than ours. This statistics proves that our performance in attracting foreign investment is, indeed, very frustrating.

Global investors are relocating their industries into poor countries due to the changed scenario of the global financial crisis. Labour intensive industries are looking for  cheapest labour markets to survive. With the rise of labour cost in China, India, Brazil, Korea and Singapore, this relocation is expected to ncrease in the days to come. Bangladesh must be preparing itself to receive these relocated foreign investments to gear up its economic development.

In the last financial year our tele-communication, textiles, weavings, banks, food industries, agriculture and fisheries attracted foreign investment. But we have some more sectors like agro-processing, electricity generation, ship building, and infrastructure development to invite foreign investment. It is, indeed, an urgent necessity to revise our policies and strategies facilitating an investment friendly environment, so that we may widen our foreign employment aiming at earning more and more foreign currencies.

For example, the US economy was rising during last four and above decades without any downturn, even it was rising fast during the economic depression in the east during 1980s. They have the largest consumer market of the world, having sophisticated technologies, world’s biggest investors groups, efficient managers of the world. But why US economy fell into the greatest financial crisis in recent years? Because market mechanisms were not performing well, and there was a lack of regulatory check and balance activities.

Today economists are rethinking that market should not be over freer, there should have a check and balance mechanism to ensure planned growth and this mechanism would be operated by the government. The state needs to intervene to sustain growth and development. In particular market failures would prevent the acquisition of advanced technologies.

In case of Bangladesh, our growth is running based on a single sector i.e. RMG. It is not a good sign that our economy is depending upon one sector to grow. Today or tomorrow a third power would enter into the RMG market and defeat us. Are we ready to tackle that disaster? No, off course not. After three decades of RMG’s rise, no other sector is coming forward. Without diversification of export basket, it would be tougher to sustain our current growth. There are many examples in the world economic history that, economies that rose for three or four decades with a significant rate but after saturation of that particular industry, those economies fell, never to comeback again.

Why a second sector is not rising in Bangladesh? It is simply because lack of government support and proper planning to grow a second one.

The government should take urgent necessary action to push forward a second sector for sustainable growth in Bangladesh. We have many other potential sectors like, leather and leather goods, pharmaceuticals, light engineering, handicraft, and recent ship-building industry. One or two sectors can be selected to earn foreign currency equal of the RMG within next five years, and it is possible.

To do so the government has to ensure efficient role of some trade related organisations along with Board of Investment, Bangladesh Bank, Joint Stock Office, NBR and others. The government has to ensure zero tolerance to corruption in these institutions. To root out corruption, Bangladesh must ensure that the income source of the political parties is legal. Currently political parties are running upon the funding of its members and some allied businessmen. As a result, the donors get special non-budget income facility whenever they are in power. So managing a legal source of income for the political parties would be the first step towards rooting out corruption.

Bangladesh is offering too many special facilities to attract FDI but the rate of foreign investment is not increasing. An one-stop business support centre is the demand of time to avoid harassment of investors to increase flow of FDI in Bangladesh.

The current government came into power with a manifesto of reform, so for the betterment of Bangladesh economy some business reforms are mandatory like -
a. Stable property rights (specially in case of ownership of land): Because, to establish an integrated industrial state we are in lack of land. Today or tomorrow power, gas and infrastructure problem would be overcome, but we have a limited amount of land which is not expandable. So maximum utilisation of land is required. At the same time we have the most complicated cases regarding land ownership. So ensuring a stable property right and enforcement of IPR is important to ensure foreign investment in Bangladesh.
b. Rule of law: Without ensuring full security of entrepreneurs and their wealth it is not possible to expect higher rate in investment. Once it was said that civil servants are corrupted due to their low salary, but now salaries have increased through the announcement of recent pay scale up to a considerable level. In absence of an accountability mechanism to monitor their activities, the rule of law cannot be ensured.
c. Anti-corruption drive: You can hardly find anybody who likes corruption, but why corruption is not going down? Post 1/11 anti-corruption drives helped to reduce corruption in Bangladesh only for a limited period. Thanks to the efforts, we are now not in the list of top 10 corrupted nations. But with the political government taking over power, corruption scenario is changing. The post 1/11 anti-corruption drive was criticised due to their one-sided mission towards politicians and businessmen rather than bureaucrats. So
anti-corruption drives need
to be operated impartially irrespective of politicians, bureaucrats, etc.
d. Government accountability: Political parties come to power with so many good promises but after being elected they begin fulfilling their party agendas. As a result development is hampered. Development agendas should get priority rather than political gain and rivalry. An unaccountable government leads the nation towards corruption, which results in a stagnated economy.
e. Stable political situation: There is a measurable absence of tolerance and compromising attitude among our ruling elite. Without tolerance to opposition, political stability can never be achieved. This is very important for economic development.

In fine we would like to be optimistic that our government and political parties would try to build up two more new exportable sectors for earning foreign currency for sustainable development of Bangladesh. Good governance is a prerequisite for sustainable development and government planning and assistance is required to build up new sectors. Our ship building industry, along with leather and leather goods may be given priority and assistance so that these sectors can be flourished like RMG and save our economy from the danger of RMG saturation and ensure suitable growth of our economy.

Assistant Secretary (WTO, RTA & FTA)

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI)

Rapid advancement of Information & Communication Technology (ICT) provides a newer shape of business. Pattern of doing business has changed into a completely different format. Concept of free market economy got its existence from the conceptual base through the advancement of online marketing facility. Countries are working to come closer through different regional blockings as well as under the multilateral trading system through the World Trade Organization (WTO)s active intervention to make international trade easier than ever. World Customs Organization (WCO) introduced HS Code system to harmonize world trade facilitate quick customs clearance. After all globalization get a momentum in last decade and many non-tariff, Para-tariff barriers are addressed and in a considerable position of solution of the problems. Countries are negotiating and committed to co-operate each others to ensure free movement of trade around the globe. As a result new issues are coming into emergence with challenge or opportunity in its two sites.

An issue is challenge for one party at the same time opens opportunity for others. So to gain from the emerging issues of international trade stakeholders must be ready to address the issues in time and with an efficient hand. Currently the Global Financial Crisis (GFC) is a mature issue but time has comes up to overcome it through duly implementing the initiatives already has been taken. In case of Bangladesh our major exportable items is very limited. We have to increase the basket of our exportable items to overcome GFC’s impact through trade.

Post GFC protectionism may take place in the international business arena, this protectionist measures are not supposed to be implemented uniformly for all. So our government has to be serious about the upcoming measures by our major trading partners to consult any possible measures that may hamper our interest. Because it is easier to change any measures before it coming into force otherwise it must have some negative impacts and consume time to overcome.

Compliance issues from the developed countries are becoming as a major challenge for the Small & Medium Exporters of Bangladesh. Child labor, Sanitation, Day Care Center, Health Care Center, Corporate Social Responsibility, and Environmental issues are becoming part of developed countries buyers’ compliance. But strict implementation of the issues is sometime beyond our SME exporter’s capacity. In such case government can make state level negotiation with the issues or establish special zone with such facilities to assist our SME exporters.

Technology gape is a very much frequent problem for the LDC entrepreneurs at the same time when TRIPS agreement will comes into force uniformly then LDCs businessmen may face a very unfortunate pressure to comply with IPR laws and regulations. As a net technology importer country Bangladesh has to think with the IPR issue seriously either we can encourage more native technology innovation by providing government fund for research and development or create a framework by which we will be used to the possible change.

Powerful trade blockings and more bilateral free trade agreements (BFTA) may be cause of a very strong threat for the isolated countries like Bangladesh. Till now we don’t have any active BFTA with our major trading partners. It may be cause of our isolation in future. Intra trade block trade is rising for example currently western European countries are doing 68% trade intra regionally. Where north American countries are doing 41% intra regional trade and this trend is increasing. In such case we can involve our self with more trade blockings or sign BFTA with our major trading partners or potential major trading partners to keep the doors open for our international market access.

Emergence of new economies like India, China and Brazil may cause of losing market by the smaller countries like Bangladesh. Because SEZ, EPZ facilities and giant groups of companies involvement in the manufacturing in large volume trough automated technology may be threat for our SME exporters. Involvement with such giant companies as suppliers or distributor may open up a possibility for the small economies.

Globalization of retailing may be cause of head pain of our growing initiatives. So government has to be strict in case of opening retail market and has to try to defend the retail market as long as possible.

Opening service sector may open up opportunity at the same time a major threat, so in case of opening service sector Bangladesh may follow positive list approach. Our telecommunication & Tourism sector has opened up, telecommunication sector in Bangladesh get some FDI or JB but what about tourism? Till now it being neglected though we have the longest sea beach, largest mangrove forest but without developing infrastructure facility and networking it is impossible to develop the sector as expected. Who would like to visit Kuakata after twelve more hours’ vigorous journey with a way of four to five hours?

Contact manufacturing is becoming popular with the motion of globalization. We are manufacturing world’s renowned branded apparels but why we are not producing global cosmetics, baby food and other brand’s products through contract manufacturing. Thus we can increase employment and technology transfer may be facilitated.

These are some very little issues of international business but may be emerged as a very strong and active factor of international trade after one decade. If we continuously neglect such issues we may face huge problem in near future.

]]> http://joynal.wordpress.com/2009/10/05/emerging-issues-of-international-business/feed/ 0 JOYNAL http://joynal.wordpress.com/2009/08/19/need-for-trade-negotiation-framework-for-a-promising-future/ http://joynal.wordpress.com/2009/08/19/need-for-trade-negotiation-framework-for-a-promising-future/#comments Wed, 19 Aug 2009 02:56:18 +0000 MD. JOYNAL ABDIN http://joynal.wordpress.com/?p=30 ]]> Md. Joynal Abdin

Assistant Secretary

The Federation of Bangladesh Chambers of

Commerce and Industry (FBCCI)

Federation Bhaban, 60 Motijheel C/A

Dhaka – 1000, Bangladesh

Cell: 01813-318620

E-mail: joynal@fbcci.org.bd

At present, the world is going through a transitional period. Global financial crisis, possibilities of shifting balance in power and new emerging eco-politics have made the transition visible. Countries are coming closer and negotiating at different levels to share comparative advantages for a better future. The multilateral trade negotiation gets a new momentum to conclude the Doha round under the World Trade Organisation (WTO). A new flow of regionalism has emerged in Asia, Africa and others parts of the world.

The success stories of the European Union (EU) led people to think of regional integration and economic cooperation. Bilateral trade agreements are increasing in number and are proving themselves effective and are performing well. As a result, cross border BFTAs (bilateral free trade agreements) get cross regional, even cross continental, form. In such a situation, countries are making preparations for negotiating agreements and achieving a win-win situation or reaping strategic advantages through negotiations.

Bangladesh is transforming itself into a developing economy from being a least developed one. It may become, in the process, an important player in the multilateral trading system with its strong potential in many areas. But prior preparation is required to gain from the same. But do we have that preparation, infrastructural support, skilled negotiators and the required research work to gain from negotiation table? Do we know our prospects and problems? Do we have sectoral potential charts? Or has the priority sector been opened up? The answer, in most cases, would be no. So we should make the preparation that Bangladesh needs to take now in order to deal with the trade negotiations professionally. These are:

01.    Establishing a Trade Negotiation Commission: Bangladesh should establish an independent “WTO, RTA and FTA Commission” to deal with its trade negotiations at the multilateral, regional or bilateral level. This commission would be an independent constitutional body like election commission, anti-corruption commission or tariff commission etc. This commission may have several departments to deal with different WTO agreements and different regional trade agreements. The status of the head of this commission may be equivalent to that of a full Secretary to the government. This commission would be responsible to conduct sectoral research, coordinating its work with private sector to identify our potentials and apply those while formulating policies. The commission, based on merit and professionalism on specific subjects, should recruit its officials. The status of the officers can be equivalent to those of first class cadre officers of the government with all other facilities that are being enjoyed by them. This commission will coordinate the activities with Ministry of Commerce, Export Promotion Bureau, Bangladesh Tariff Commission and relevant private sector bodies. It also will need to place skilled negotiators in Geneva mission with the Economic Minister as well. Initially, this commission may start work with the experts from WTO Cell of Ministry of Commerce, Bangladesh Tariff Commission, BFTI, FBCCI, EPB and other relevant organizations.

02.    Trade Promotion Offices in all our missions abroad: Bangladesh should immediately open up a trade promotion office in all its missions abroad for promoting its products in the host countries and identify potential sectors that can be our export destination to help boost export earnings. Human resources in these offices should be recruited from private sector specialists, think tanks and renowned international marketing experts. Officials should fill all posts of existing commercial councillors with recognized expertise in relevant areas of national, regional and international trade.

03.    One private sector professional representative in Geneva: The government should ensure the development of at least one private sector professional representative in its Geneva mission in order to assist the economic minister there in negotiations in line with the interests of the private sectors. At the same time, our existing trade negotiators’ team should team up with at least one private sector representative.

04.    One national trade database: A national trade database is essential. This can connect the activities of Ministry of Commerce, Bangladesh Tariff Commission, Bangladesh Bank, Ports, EPB, FBCCI, and the NBR. The database will hold a comprehensive trade statistics and national production, potential & priority sectors of production.

05.    Selecting Appropriate Person for International Training Programme: Every year a large number of government officers and private sector personnel participate in various international training programmes, assisted by multilateral organizations like the UN, WTO, WB, ADB and under various national projects. But presently the maximum number of nominations goes to the people having good relations with the top officials. Sometimes, the topics of the training may not be relevant to the future activities to those attending such programmes, at all. Foreign training programmes are largely taken as a picnic or foreign tours. An irrelevant person may not be an effective presenter in such an international gathering; through poor participation, our country’s image is impaired. This makes it all the more difficult to tap our potential. So nominations for such kinds of international meetings, conferences and training programmes should be made, basing on a person’s background, present knowledge, intellectual ability as well as future prospects for involvement of that person with the relevant task. In case of WTO International Training Programmes, nominations should be impartial and persons from relevant fields in both public and private sectors should be nominated. The government should ensure private sector involvement in such international training programmes for the latter’s capacity building. This can contribute to the nation’s development.

06.    Organising Capacity Building Training Programme: Government should take an active initiative to organize training programmes by engaging international organisations like the UN, WTO, WB, ADB etc. Funding can be arranged from them as well as resource persons can be hired from the relevant organizations. Private sector involvement in such training programmes should be ensured for capacity building.

07.    Regular Dialogue Between Government & Business Leaders: To solve so many problems and to make public private projects (PPPs) effective and worthwhile, the Prime Minister can sit with the business leaders on a regular basis, along with the relevant ministers like those of commerce, finance, industry and home affairs, along with the concerned secretaries. In this dialogue, the FBCCI can lead the private sector along with representatives from different sectors and the Prime Minister can lead the government side. Topics of discussions in such dialogues may include matters like, among things, cost of doing business, access to finance, current problems that businessmen are facing, initiatives that should be taken to ensure a business friendly environment and attract foreign investment in Bangladesh. The dialogue should be a continuous process with actual businessmen and ministers concerned participating in it.

In fine, this should be noted that public-private gap needs to be minimized. For what matter, active actions should be taken to ensure development of the country and achieve a prosperous tomorrow for Bangladesh.