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Webinar on “Bi-annual economic state and future stance of Bangladesh economy: private sector perspective"
Attracting FDI, expansion of trade, reforms of tax, vat, duty and tariff structure, policy reforms, skill development, improving backward linkage industry, facilitating ADR system, financial inclusion, utilizing capital market for long term financing, access to finance for small and cottage industry, strong negotiation skill and product diversification are key to economic recovery, speakers said in a Webinar on “Bi-annual economic state and future stance of Bangladesh economy: private sector perspective” organized by Dhaka Chamber of Commerce & Industry (DCCI) on August 7, 2021. Planning Minister M A Mannan, MP joined the webinar as the chief guest while Professor Dr. Mohammed Farashuddin, Former Governor of Bangladesh Bank joined as guest of honour.
The keynote paper was presented by the DCCI President Rizwan Rahman. He said in terms of macroeconomic perspective over the last 6 months, the economy is being conducted more or less in the right direction despite manifold COVID-led challenges. Both public and private sectors have to work hand in hand towards the road to recovery to achieve the game-changing economic transformation of Bangladesh targeted in 2026 and 2041.
The overall economy overall fell into a crisis due to rapid spread of Covid cases across the world. GDP value reduced to USD364 billion against the target of USD 374 billion. Poverty rate rose by 9% to 29.5% and 30%. 2.26mn jobs have been lost already. The country’s economy, trade and investment are going through a very challenging time. Economic recovery is now the only target to be achieved. Moreover, Bangladesh is going to be graduated from LDC status in 2026, just 5 years in hand to take preparations. It is estimated that country may lose USD 4-6 billion export earning following LDC graduation.
In order to boost internal revenue generation, Rizwan Rahman suggested for full automation of tax, vat, customs assessment, return and credit. Regarding Monetary Policy he said relaxed terms and conditions of repayment and collateral will help increase credit demand from private sector. Private Investment to GDP ratio targeted to 25% in FY2021-22. To accelerate private investment, the DCCI President recommended for improvement in country competitiveness, cluster development of backward linkage industry, expanding ADR system and capital market-led long term financing. Despite export saw an increase of 15.1% in FY2021 than the previous year, which is however short of target. He said best use of export development fund, credit guarantee scheme, product diversification, signing of FTA and PTA with trading partners, simplification of customs clearance and development of post system will help foster international trade. CMSMEs are going through a very tough time during this volatile situation. For the survival of CMSMEs, he suggested for collateral free cash flow based loan, comprehensive policy framework, reducing bureaucratic complexities and at least 3 years of moratorium period. He also urged the importance of faster approval of loan process for CMSMEs, most likely of 7 days from the time of application. Health sector is now the most-talked sector in the country. With a view to balancing life and livelihood, the budget for this sector has been increased. But special focus should be given on investment in the governance of the health system and allocation in research and development of public health, Bio-technology, epidemic disease control. Government needs to create flexible regulations for bringing informal sector into the mainstream so that they can be traced easily, he added. He also calls for relaxation of rules to attract SMEs into the Capital Market. Terming skill development as a key factor in future, he urged upon industry-academia collaboration to blend emerging industry skills and redesign the education curricula based on market demand.
Chief Guest of the webinar Planning Minister M. A. Mannan, MP said that the private sector is in the driving seat of stimulating the economy. Government has a good collaboration with the private sector which will take Bangladesh to a new destination. For policy reforms, tax reforms or tariff structure reforms, government will continue its attachment with the private sector for framing out a better policy regime. Government is giving focus on better living, better values of life, more freedom, more democracy and independence of people. The present government is the most business friendly ggovernment in the country, he said. Regarding prevailing Covid crisis, he said mass vaccination has been start, hopefully we will overcome the situation shortly.
Guest of Honour Professor Dr. Mohammed Farashuddin, Former Governor of Bangladesh Bank said Bangabandhu Sheikh Mujibur Rahman was always been a pragmatic and private sector friendly leader. Private sector is doing better now as we have seen its dominance from the parliament to cabinet to financial sector as well. According to BBS, GDP growth in FY2019-20 was 3.51% due to Covid. But in FY2021 it was 5.47%. But he stressed on increasing the existing Tax-GDP ratio which is only 10% whereas he said it is 18% in Nepal. Recently Vietnam has surpassed the second position of Bangladesh in terms of RMG export, he added. For export performance he suggested to follow the success model of Vietnam, Nepal and Sri Lanka. He urged upon policy reforms and an efficient credit flow mechanism so that cottage, micro and small entrepreneurs can be benefitted largely. He also urged for buy back system for better FDI attraction and transformation of agriculture sector in producing goods and services for the domestic market.
Dr. Zaidi Sattar, Chairman, Policy Research Institute (PRI) of Bangladesh said we need a tripartite partnership among the public, private and non-public sectors. Consumers are the integral part of private sector. So there should be a balance between the producers and consumers. Depending on strong macroeconomic strength, Bangladesh’s economy is performing quite better than the other countries in the world despite we are going through a tough time due to Covid. He also mentioned that the growth is dependent on three pillars namely macroeconomic development, export performance and trade development. He said because of our prudent and sustainable macroeconomic management our economy did not shrink. Growth has been continuing. We have seen a stable growth in the export sector in the last 25 years, he added. In 2021 we have experienced a 15% export growth. Citing Vietnam’s example, he said Vietnam’s export is dependent on foreign manufacturers and their export basket is diversified. He thus advocated for a sustainable trade policy having equal treatment especially for non-garment sector. He also reiterated for rationalizing current tariff structure and incentive policy.
Dr. Binayak Sen, Director General, Bangladesh Institute of Development Studies (BIDS) said we do not have an up-to-date poverty, employment or human development data. Lack of data actually affects the quality of policy formulation. We need a systematic and coordinated data base. He was hopeful that after the Lockdown poverty rate would come down. While designing a stimulus package, priority should be given to cottage and small sector, he said. Social protection system for the urban community is also same important. He also underscored importance of removing inequality of education. For accelerating private investment, domestic tax structure is an issue. He further said to rationalize the domestic structure of tax, tariffs and hidden subsidies. Moreover, he suggested for a decentralized budget, institutional reforms to reaching out to all the sectors.
Prof. Mohammad Abdul Momen, Director, IBA, University of Dhaka said to face the challenges of LDC graduation in terms of export; we need to go for product diversification and entrepreneurial diversification. Also he urged to strengthen G2G diplomacy to avail GSP+ facilities even after the graduation. He is hopeful that mass vaccination will turn the economy back in full force. He also underscored the importance of creating our own brand like “Made in Bangladesh” and for that we can utilize the online platform. He also stressed on collaborating with different universities and research organization both of home and abroad to create a knowledge-based skilled society.
Dr. Nazneen Ahmed, Country Economist, UNDP Bangladesh talked about the recovery from Covid and facing challenges of LDC graduation. She said we cannot go for unlimited lockdown for the sake of economy so we have to go for mass vaccination and abiding by the health advisories. During this volatile situation, access to finance including financial inclusion for the CMSMEs is more important. In the liquidity management system, we have to accommodate small investors for access to finance. To facilitate women entrepreneurs including their financial inclusion, e-commerce can be a potential platform, she added. She also urged for a public private collaboration, nexus of government planning, improving trade negotiation skills, climate negotiating skills and green financing mechanism of Banks.
DCCI Senior Vice President NKA Mobin, FCS, FCA gave vote of thanks. DCCI Vice President Monowar Hossain, Members of the Board of Directors of DCCI and former President Rashed Maksud Khan also joined the event.
Published on: 2021-08-07