Economy of Bangladesh

Policy Advocacy for Private Sector Development

Policy Advocacy for Private Sector Development

Md. Joynal Abdin

The Daily Sun on January 12, 2020

Bangladesh is going to be graduated from the LDC category in 2024. It is transforming from agriculture dependent into industrialized economy. Per capita GDP of Bangladesh rose to USD 1909 in last fiscal year. Bangladesh achieved the Millennium Development Goals (MDGs) remarkably. Now, Bangladesh prepared itself and started hard working to achieve the Sustainable Development Goals (SDGs). All of the previous achievements were results of both the private sector’s hard work and government’s policy supports. Similar joint effort (private & public) is required to achieve SDGs by 2030 and Vision 2041 as projected. The existing level of private-public integration may not be enough to achieve future projected targets, because till now importance of private sector development is not highlighted by the bureaucrats at different level of policy making. A large segment of bureaucrats don’t have proper knowledge about the importance of private sector in economic development of Bangladesh. Contribution of private sector is not duly recognized by the government bodies. As a result, private sector institutions are completely absent in the warrant of precedence till now.

Let’s try to recall the contribution of private sector in economic development of Bangladesh. According to an UNDP study, private sector is responsible for 78% of economic development of Bangladesh. In one sentence 78% role of private sector may seems to be a bigger number. But if we can see the contribution from different segments, then the figure could be believable to us. It is found that, 87% of civilian employment is generating by the private sector of the country. Not only employment, if we evaluate private sector contribution sector-wise then we will see that private sector is the leader of USD 18.32 billion remittance earning (last year) of the country. If we look at the banking / financial sector of Bangladesh then we can see that 90% of the banking, insurance & NBFI sector is controlled by the private sector. Export earning of the country i.e. USD 40.53 billion is also achieved by the private sector. Bangladesh’s total investment is 31.56% of it GDP where Private sector’s contribution is 23.40%; almost 74.15%. There were 75,000 land phone users in Bangladesh before private sector’s entrance in the telecommunication sector of Bangladesh. But currently more than 80 million users are getting telecommunication services dominated by the private mobile phone operators. Bangladeshi private companies are meeting more than 95% of local demands and exporting to more than 100 countries. Private sector is partnering with public initiatives of large infrastructure development as co-financer / partner.

Not only are the above mentioned sectors, most of other sectors are also led by the private sector in Bangladesh. Employment generation, remittance earning, investment, fostering GDP growth etc. everywhere private sector is leading. Hope now it is believable that, the private sector is contributing 78% of economic development of Bangladesh. Now, necessity of private sector development in Bangladesh is justified.

Whatever be the private sector’s contribution in the economic development of Bangladesh, we should not undermine the role of the government too. Because the government will not do the business but it has a great role as facilitator of private sector development. It is government which can flourish any particular sector through policy formulation. For example back to back LC, bonded warehouse, cash incentive etc. policy support placed readymade garment sector at the top of export earnings. Whereas many other potential sectors like leather goods, jute, pharmaceuticals, agro-processing etc. are fighting to move ahead but could not due to absence of government policy support as like as the garment. Let’s try to analyze what government can do for private sector development. Role of government for private sector development could be but not limited to the followings:

  1. Infrastructure Development: Conducting business operations like export, import, distribution, transportation etc. operations are expensive in absence of proper / adequate / better infrastructure. Countrywide infrastructure development is the role of government. But government of least developed countries are unable to develop required infrastructure due to resource limitation. Private-Public Partnership (PPP) model could be helpful to develop infrastructure within shortest possible time. Foreign investment could be invited for large infrastructure development on Build-Operate-Transfer (BoT) model. Whatever is the source of fund, government is the key player in infrastructure development of a country. Therefore one of the top ranking role of the government  to develop proper, adequate and better infrastructure for promoting private sector development.

  1. Skills Development / Capacity Building: Skilling up the nation with concurrent demanded skillset is another major task of the government. Unskilled people are liability whereas skilled manpower is the assets of a country. Private sector development without proper skilled manpower is the nightmare. Business sectors can grow faster if adequate skilled manpower is available. Technology adoption, productivity improvement, standardization etc. is possible if adequate manpower is available with proper skillset. Therefore skills development / capacity building of mass people of the country is another important task of the government to promote private sector development.

  1. Access to Finance: Private or public sources of funds both are regulated by the government of a country. Government policies are the guiding principles for both public and private institutions. Therefore it is government who has to take the lead to make access to finance easy for the entrepreneurs. Not only access to finance but low cost, in time and adequate amount of fund is important for private sector development of a country. All of the above mentioned parameters of the access to finance are to set by the government.

  1. Business Development Services: Private sector development requires some public services to be flourished. In absence of required business development services private sector growth will be hampered. It is government who has to provide appropriate location, electricity, gas, water etc. supplies, controlled law and order situation, security of investment and investors, proper partnership agreement with major import and export destinations, taxation policy etc. are the major business development services can be provided by the government for proper development of private sector.

  1. Regulatory Reforms: Colonial countries have inherited legal system from the colonial rulers. As a result most of the colonial law have more focus towards controlling the private sector and prided excessive authority to the civil servants. Motive of these law and acts were to control the private sector instead of promoting the private sector. As a result doing business is comparatively complex in the colonial countries. For example Bangladesh has 215 registration / licenses / NoCs / clearance etc. laws / policies to control the private sector. Most of these systems are not relevant today. Therefore regulatory reform is essential to change focus of the government laws from controlling / ruling motive into promoting / facilitating motive. A large number of these licenses / registrations / NoCs / clearances could be removed today. Thus government can make doing business easy through regulatory reforms and promote private sector development in the country.

  1. Competitiveness: It is the government who can contribute largely to make private sector of a country competitive through proper policy support. At the very beginning of this task government can identify competitors of the country in terms of export and import. Then analyze existing business policies of the competing countries. Adopt best practices of the competing countries could be one of the easiest way of increasing competitiveness of native private sector. Signing free trade and investment agreement with potential export destination, economic partnering countries could increase competitiveness of a country in export market as well as in sourcing countries too.

  1. Good governance: Good governance is the mother of all other government supports for private sector development. Because it is good governance who can ensure transparency and accountability of the bureaucracy as well as private sector from respective position.

Private sector development is not a one-sided game; there are some roles of private sectors too. It is the private sector that has to make it competitive by its own quality. Major roles of private sector could be stated as investor, as employer, as innovator, as mentor, as guide and as informer. All of the roles of private sector could be played through in-time policy advocacy with the proper government body with actual fact and figure explanation. To conduct that effective policy advocacy private sector institutions have to develop negotiation skills as per need of the day.

Finally we can say that, the economic development of a country is a joint effort of the government and private sector. Therefore private sector development concept should be in the training modules of bureaucracy in all levels. At the same time, private sector bodies should be qualified enough to conduct effective policy advocacy to bring the expected change in the legal system under the government’s regulatory reform program.

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