Md Joynal Abdin
The Financial Express on December 16, 2009
The US economy was rising fast during the 1980s economic depression in the east. Despite having the world’s largest consumer market, sophisticated technology, unmatched investor group and efficient managers, why the US economy has fallen now into the unprecedented financial crisis. Economists attribute the failure to lack of regulatory checks.
For Bangladesh, economic growth based on the single sector of readymade garments (RMG) industry cannot be a good sign because no country can forever retain its grip on a particular sector. One day, a third country would enter the RMG market to beat Bangladesh. A disaster would await Bangladesh unless it anticipates it and plans to diversify its export basket. Otherwise, it could be difficult to sustain the growth at some point of time. The world’s economic history speaks of rise and fall of economies. Some of the economies could manage comebacks, others did not.
Why is not a second sector rising in Bangladesh? Is it because of lack of government support? Or, is it due to a failure to plan the development of a second sector? Many RMG entrepreneurs say that, they grew up without prior government support. One cannot agree with them. The history of RMG industry has a different story to say. Back-to-back letters of credit (LC) system and bonded warehouses, the results of government policy, helped the RMG sector to grow up fast.
Government should adopt a policy that encourages other industries to grow for the diversification of the economy. Leather, pharmaceuticals, light engineering, handicraft, and ship building are among the potential areas of industry for Bangladesh to develop. Government can assist, with priority, the growth of these and other potential industries in next five years.
For industrialisation, the government and its facilitator organisations like the Board of Investment, the central bank, the Joint Stock Office and the National Board of Revenue (NBR) have to be dynamic and efficient. There should be no corruption in these institutions. Rent seeking, in any form, needs to be eliminated.
Despite offering too many incentives, Bangladesh is failing to attract much foreign direct investment (FDI) because no investor likes to do business, in a place where delays in regulatory decision pushes up the cost of business. Entrepreneurs’ one-stop centres that save harassment.
The Awami League (AL)-led alliance government came to power, pledging reforms for the development of Bangladesh.
Bangladesh has to maximise land utilisation, systematise property right, ensure rule of law, eliminate corruption, establish accountability of the government and develop healthy political culture to achieve development and economic diversification.
With proper governance, Bangladesh can devote to diversification of its export basket for sustained economic growth. Extra attention must be paid to keep in place market regulation to avoid financial crisis that troubled the world not long ago.