When Bangladesh returned to democracy in 1991 after nearly a decade of authoritarian rule, the moment carried both relief and expectation.
At the centre of that transition stood Begum Khaleda Zia, who not only became the country's first female prime minister and the second woman head of government in the Muslim world after Pakistan's Benazir Bhutto, but also emerged as a defining figure in rebuilding democratic governance at a critical juncture in the nation's history.
Her first term in office coincided with a period when Bangladesh urgently needed political stability, economic confidence and a new development direction.
Under Khaleda Zia's leadership, the country began opening its economy, strengthening institutions and investing in human development - steps that would quietly reshape the foundations of growth while reinforcing the democratic order that had just been restored.
The then government initiated key reforms that opened up trade, strengthened financial institutions and expanded social investment, laying the groundwork for private sector-led growth.
Although the process was led by M Saifur Rahman, the then finance minister, it would not have been possible without Khaleda Zia's political backing and her strong confidence in her finance chief.
In fiscal year 1991-92 (FY92), Bangladesh had 18 tariff bands, with the maximum tariff rate as high as 300 per cent. Within a few years, the Khaleda government significantly reduced both the number of bands and tariff rates. By FY95, tariff bands had been brought down to six, while the maximum rate fell to 60 per cent.
"The rapid tariff liberalisation was largely driven by the need to fulfil conditions imposed by the International Monetary Fund (IMF) and the World Bank to secure financial support for development activities," said Manzur Ahmed, a former adviser to the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
Nevertheless, the reforms also opened new opportunities for the private sector, enabling it to expand and eventually drive economic growth in the years that followed.
"Trade liberalisation actually started during Ziaur Rahman's regime in the late 1970s at a modest pace, and largely continued during Ershad's era," Ahmed added. "After 1991, it gained further momentum."
During this period, import bans and quantitative restrictions were also reduced significantly.
In FY90, 433 items were subject to import bans or restrictions, of which 78 were imposed for non-trade reasons. By FY95, the total number of products under import restrictions had fallen to 114, with 92 for non-trade reasons.
During Khaleda Zia's first term, Bangladesh Bank made the taka partially convertible in 1994, easing foreign exchange transactions for international trade. This move also laid the foundation for a more market-based exchange rate regime in subsequent years.
Her government introduced the value-added tax (VAT) and enacted the Bank Company Act in 1991. The Financial Institutions Act was formulated in 1993, and in the same year the Privatisation Board was established, signalling a clear shift towards financial sector reform and private sector participation.
Between 1991 and 1995, the annual average growth of gross domestic product (GDP) stood at 4.40 per cent, while average industrial growth reached 7.50 per cent, reflecting the early impact of economic reforms.
One of the most significant social policy initiatives of Khaleda Zia's first term was making primary education free and compulsory for all children.
Education was also made free for girls up to Class 10. To support these initiatives, the education budget was increased by 60 per cent in FY94.
To establish direct connectivity between the northern region and the rest of the country, construction of the Jamuna Multipurpose Bridge began in 1994.
Opened to traffic in 1998, the bridge transformed the lives and livelihoods of people in northern Bangladesh, as private investment gradually flowed into the region following improved connectivity.
Together, these political, economic and social initiatives underscored Khaleda Zia's role in both restoring democratic governance and laying the foundations for Bangladesh's transition towards a more open and market-oriented economy.
During her second term from 2001 to 2006, Khaleda Zia's government advanced tariff liberalisation further, reducing the number of tariff bands to four and lowering the maximum tariff rate to 25 per cent, the lowest tariff structure in the country's history.
The MFN-weighted average tariff rate also declined to 16.39 per cent in FY06.
During this period, Bangladesh challenged India's imposition of anti-dumping duties on the import of lead-acid batteries.
In January 2004, it formally requested consultations with India under the World Trade Organization's Dispute Settlement Body, marking the first trade dispute in which a least developed country (LDC) acted as the principal party. Following the consultations, India formally withdrew the anti-dumping duties in January 2005.
Several reforms were also undertaken in the banking sector during Khaleda Zia's second premiership. Notably, her government refrained from issuing licences to any new commercial banks.
The country also transitioned to a floating exchange rate regime, moving away from the earlier practice of administratively dictated devaluation of the local currency.
However, Bangladesh's position at the bottom of Transparency International's Corruption Perceptions Index for five consecutive years up to 2005 cast a shadow over the socio-economic gains achieved during her tenure.
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