Wish list: A move detrimental to stakeholders and national interest

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AF Nesaruddin
A report published in the Financial Express on February 28, 2012 states that the Ministry of Commerce (MoC) of the government of Bangladesh (GoB) sent recently a wish list to India expressing its willingness to invest in Indian service industry. The list includes service sectors like a) accounting and auditing, b) financial services, c) management consulting services, d) computer services, e) telecom services, f) courier services, g) construction services, h) education services, i) audio-video services, and j) maritime services.
The report also says that "The Ministry of Commerce (MoC) after a long study and consultation with stakeholders has identified the areas, a senior official said". I am not sure about other sectors but know that no such discussion has been held with the auditors and accountants. In this regard, the Institute of Chartered Accountants of Bangladesh (ICAB) is the most important stakeholder and to my knowledge, it has not been consulted nor informed by the relevant ministry while preparing and presenting the "wish list" to the Indian government. It may be noted here that ICAB is the regulatory body under the MoC.
If we look at the individual items, it is seen that some of the services are not mere services, they have to operate under a regulatory regime like those of accounting and audit, financial services etc. Without much analysis, it is presumed that the persons or government behind this move have either no knowledge about the services nor do they think about safeguarding the interest of the Bangladeshi stakeholders. It is really a big question. I do not have much knowledge about other sectors, so my discussions will be again concentrated in the audit and accounting services. By the by, the relevant clauses of the World Trade Organisation (WTO) regulations suggests for opening the service sectors but all small and emerging economies are protecting for non-implementation of this clause for safeguarding their own interests under some pretext or otherwise. Since long, Indian accounting and auditing professionals are pushing for opening these services but Bangladeshi accountants are opposing this idea for many reasons. It may be noted here that accounting profession is not a mere service-providing one; accountants are to operate under a regulatory regime under ICAB. The question is: when Indian auditors will be practising in Bangladesh, will they abide by the rules and regulations of ICAB or Indian Institute. First of all, unless s/he is a member of ICAB, he/she has no obligations to ICAB. On the other hand, whether they are ethically compliant or not, whether Indian Institute can monitor it with respect to Bangladesh practices is one of the major issues for consideration. Further, how the GoB will monitor the activities of such services providers when they are not practising under any regulatory body in Bangladesh.
It is an admitted fact that India has acquired predominantly a high level of capacity in all these areas. It is not clear to us why India will take these services from Bangladeshi service providers. Further, in certain areas, Bangladesh is yet to build its capacity to cater to the needs of the country, not to speak of providing services to some other countries, specially a highly knowledgeable and capable country like that of India. For example, in the field of audit and accounting, there are about 150,000 chartered accountants in India. Apart from chartered accountants, there are more than 50,000 cost accountants and about 50,000 other professional accountants. On the other hand, the total number of professional qualified accountants in Bangladesh is just over 2,500. Out of this small number, some are retired, working outside the country, working in industry -- and are not in practice. Approximately, 400 chartered accountants are practising in the market. More interestingly, out of these qualified accountants, only practising chartered accountants are qualified (like all other countries worldwide) for audit or attest services by dint of relevant statutes. With this small number, we are catering to the needs of the country. We wonder how they will serve Indian industries, apart from complexities in cross border operations. Furthermore, in Bangladesh, excepting a few, the audit fee structure is alarmingly low for raising of which professional accountants have been pleading for long, for the sake of quality audit services.
Our big fear is that when such an approval is sought from any country, they will also ask for reciprocity. In such an event, Bangladeshi will hardly be able to get benefit out of it; rather, Indian investors or service providers will take full advantage of it and will oust Bangladeshi service providers from the market. Further, our experience shows that India has learned to take only, not to give anything or do not probably believe in reciprocity in reality, even they promise as we have seen in many areas of national issues. In such a scenario, offering such a big list without knowing and assessing the capacity of the service providers in the relevant fields is not only detrimental to the interest of the Bangladeshi stakeholders but also against the country's interests. In fact, this move has given an opportunity for the Indian service providers to enter into Bangladesh market freely and virtually we are inviting the problems for ourselves. Report further states that the present move will help reducing trade gap between India and Bangladesh. Unfortunately, considering the capacity of the service providers, specially in the field of accounting and auditing, the "wish list" will not help reduce the trade gap rather further aggravate the situation.
There is a strong rumour in the market that many Indians, specially people from the neighboring states (provinces) of India, are working in Bangladesh without any work permits and taking the money to their country through other than banking channels. Thorough investigations and studies are overdue in this regard for the sake of protecting Bangladesh's interest from the points of view about revenue earning and upholding the interests of our huge unemployed young fellows. It will not be out of turn to say that recently, it has been noticed that many Indian auditors are trying to provide services in the field of IT audit, enterprise risk services (ERS) audit and similar other high tech audits where Bangladesh has no capacity or is yet to acquire the capacity to compete with India. We had the opportunity to interact with the Indian delegations on a few occasions and proposed that such an effort may be taken under joint venture partnership with a view to increasing capacity building for Bangladeshi professionals. But unfortunately, no response was received.
Indian teams virtually want to use Bangladeshi resources just as a vehicle for expanding their market and do not at all believe in sharing the ideas for mutual interest. In such a scenario, it is not understandable how the "wish list" is going to help serve and protect the interest of Bangladesh. It will only lead to further drainage of our hard-earned foreign currencies.
The matter obviously warrants for review and reconsideration for immediate withdrawal of the so-called "wish list" for the sake of protecting greater national interests.
A F Nesaruddin is a practising chartered accountant and a partner of Hoda Vasi Chowdhury & Co,
an affiliated firm of Deloitte