Aziz defends trade liberalisation, trashes CPD study on employment
Monday, 10 December 2007
FE Report
Finance Adviser AB Mirza Md Azizul Islam said Sunday inefficiency in management and use of modern technology, rather than the trade liberalisation, has contributed to negative growth of employment in some sectors.
"Trade liberalisation has helped a lot in employment generation," he said in reaction to views made at a dialogue on 'Impact of Trade Liberalisation on Employment in Bangladesh' jointly organised by the Centre Policy Dialogue (CPD) and the International Labour Organisation (ILO) in the city.
A study paper on 'Impact of Trade Liberalisation on Employment in Bangladesh' prepared under a programme jointly implemented by the CPD and the ILO, however, said the trade liberalisation in the last two decades has created a negative impact on employment in Bangladesh, as interest of the country's many potential sectors was not properly protected.
Because of tariff liberalisation, it said, a number of import substituting industries like those of sugar, edible oil, paper, textile, machinery and transport equipment have faced a decline over the last two decades.
Dividing the period of trade liberalisation in the country into three phases --(1981-1990) as moderate, (1991-1995) as rapid and (1996 onwards) as slowdown -- the CPD in its paper said Bangladesh seems to have followed the classical sequence of relatively lower protection for capital goods and intermediate products and relatively higher production for final goods.
Throughout the period of analysis, manufacturing employment has remained stagnant. Employment in manufacturing sector continues to be low and it has not shown any increasing trend indicating the failure of this sector to absorb the growing labour force, it said.
Refuting the CPD study, the finance adviser further said: "Due to inefficiency in the management we could not even compete with the neighbouring country India forcing shutdown of some jute industries."
He, however, said the government is concerned about protecting the interest of the local industry through proper policy measures and providing tax relief although it becomes a difficult task because of the presence of the vested quarters.
He further said it is not the tariff liberalisation rather the cross-border smuggling that has affected growth of some sectors.
Presenting the study paper, Mustafizur Rahman, executive director of CPD, said observing the sectoral and overall employment growth it can be stated that during the second phase of trade liberalisation employment in general has suffered.
According to the Poverty Reduction Strategy Paper (PRSP), "the projected total employment for Financial Year (FY) 2006 was 51.69 million against a base of 44.03 million in FY2003." The PRSP document has also set a target of total employment to be 58.08 million in FY 08.
Given the current macroeconomic scenario and the recent employment and growth relationship experience, the CPD executive director said, "we think this will indeed be a Herculean task."
He said factors such as the state of business support services, adequate supply of infrastructure, adequate supply of skilled labour, easy access to credit on reasonable terms, a conducive business environment, good governance and global business environment, including market access situation, are important in this context.
In his concluding remarks, Prof Rehman Sobhan, who chaired the dialogue, said Bangladesh will face a setback in export if it is unable to get market access to the USA.
He said it is not the trade liberalisation rather the special packages offered under various packages like GSP and quota system that have helped the growth in various sectors including the RMG export.
Referring to success story of emerging China and India, the discussants urged the government for ensuring some protective measures for local potential sectors.
They, however, said unless the interest of some potential sectors is protected through proper policy measures the country's dependency on import will be increased in future.
Rezwan Islam, an adviser of ILO, Zaidi Sattar, senior economist of the World Bank, Kamran Tanveerur Rahman, president of Bangladesh Employers' Federation, Wajedul Islam Khan, general secretary of the Bangladesh Trade Union Kendra, professor Ali Rashid of North South University and Saiful Islam, former president of the Dhaka Chamber of Commerce and Industry were among others who took part in the dialogue.
Mustafizur Rahman, executive director, Wasel Bin Shadat, senior Research associate, of CPD and Selim Raihan, associate professor of Dhaka University, prepared the study paper.
Finance Adviser AB Mirza Md Azizul Islam said Sunday inefficiency in management and use of modern technology, rather than the trade liberalisation, has contributed to negative growth of employment in some sectors.
"Trade liberalisation has helped a lot in employment generation," he said in reaction to views made at a dialogue on 'Impact of Trade Liberalisation on Employment in Bangladesh' jointly organised by the Centre Policy Dialogue (CPD) and the International Labour Organisation (ILO) in the city.
A study paper on 'Impact of Trade Liberalisation on Employment in Bangladesh' prepared under a programme jointly implemented by the CPD and the ILO, however, said the trade liberalisation in the last two decades has created a negative impact on employment in Bangladesh, as interest of the country's many potential sectors was not properly protected.
Because of tariff liberalisation, it said, a number of import substituting industries like those of sugar, edible oil, paper, textile, machinery and transport equipment have faced a decline over the last two decades.
Dividing the period of trade liberalisation in the country into three phases --(1981-1990) as moderate, (1991-1995) as rapid and (1996 onwards) as slowdown -- the CPD in its paper said Bangladesh seems to have followed the classical sequence of relatively lower protection for capital goods and intermediate products and relatively higher production for final goods.
Throughout the period of analysis, manufacturing employment has remained stagnant. Employment in manufacturing sector continues to be low and it has not shown any increasing trend indicating the failure of this sector to absorb the growing labour force, it said.
Refuting the CPD study, the finance adviser further said: "Due to inefficiency in the management we could not even compete with the neighbouring country India forcing shutdown of some jute industries."
He, however, said the government is concerned about protecting the interest of the local industry through proper policy measures and providing tax relief although it becomes a difficult task because of the presence of the vested quarters.
He further said it is not the tariff liberalisation rather the cross-border smuggling that has affected growth of some sectors.
Presenting the study paper, Mustafizur Rahman, executive director of CPD, said observing the sectoral and overall employment growth it can be stated that during the second phase of trade liberalisation employment in general has suffered.
According to the Poverty Reduction Strategy Paper (PRSP), "the projected total employment for Financial Year (FY) 2006 was 51.69 million against a base of 44.03 million in FY2003." The PRSP document has also set a target of total employment to be 58.08 million in FY 08.
Given the current macroeconomic scenario and the recent employment and growth relationship experience, the CPD executive director said, "we think this will indeed be a Herculean task."
He said factors such as the state of business support services, adequate supply of infrastructure, adequate supply of skilled labour, easy access to credit on reasonable terms, a conducive business environment, good governance and global business environment, including market access situation, are important in this context.
In his concluding remarks, Prof Rehman Sobhan, who chaired the dialogue, said Bangladesh will face a setback in export if it is unable to get market access to the USA.
He said it is not the trade liberalisation rather the special packages offered under various packages like GSP and quota system that have helped the growth in various sectors including the RMG export.
Referring to success story of emerging China and India, the discussants urged the government for ensuring some protective measures for local potential sectors.
They, however, said unless the interest of some potential sectors is protected through proper policy measures the country's dependency on import will be increased in future.
Rezwan Islam, an adviser of ILO, Zaidi Sattar, senior economist of the World Bank, Kamran Tanveerur Rahman, president of Bangladesh Employers' Federation, Wajedul Islam Khan, general secretary of the Bangladesh Trade Union Kendra, professor Ali Rashid of North South University and Saiful Islam, former president of the Dhaka Chamber of Commerce and Industry were among others who took part in the dialogue.
Mustafizur Rahman, executive director, Wasel Bin Shadat, senior Research associate, of CPD and Selim Raihan, associate professor of Dhaka University, prepared the study paper.