Capitalising economic potential

Despite natural calamities, overpopulation, political unrest, low per capita income and poverty, Bangladesh has immense potential as acknowledged by development specialists, who are also of the opinion that we lag behind in terms of achievement compared to our potential. It is therefore important that the world attention focused on our potential should be capitalised and in order to do that, efforts should be made to introduce newer economic and development models. Such models should be based on partnership between the government, regulatory or supervisory authorities and the private sector. Transparency, accountability, efficiency and governance should be considered as the key factors in such partnership.
New models should include a clear explanation as to how the conflict between creation and distribution of resources will be viewed and tackled. We have adopted market economy for competitive market-based economic system. We must be careful so that we do not have to retreat from our position. We shall have to ensure that the process of resource creation is not impeded by any means. The trend of resource creation will be sustainable when effective distribution process is in place. It should be appreciated that good governance is not just a moral value, it is also a great capital to enhance growth. Absence of governance or lack of it may produce some short term benefits for some people, but in the long run, it will deprive majority of people of the benefits of long term sustainable development.
Over the last four decades, we have reached a consensus that private sector will be the main driving force of our economic growth. The private sector will now have to proceed with a creative and far-sighted vision. At the same time it can not take the cake and have it too. It can not take advantage of a free market economy on one hand, and seek bail-out facility from the government at times of trouble, on the other. In order to avail the benefits of free market economy, it will have to pay attention to capacity building so that it can compete with its counterparts elsewhere in the world. The government can only extend strategic or policy support. The private sector will have to carry forward its vision itself. If it wants to see the government spending money for infrastructure development and other associated fields, it will have to bear in mind that unless corporate governance is strengthened and taxes are paid properly, it is not possible for the government to finance its projects.  But the necessity of corporate governance is not just limited to these purposes only. Strengthening of corporate governance is essential for strengthening of competitiveness and capacity of the private sector.
Special attention should be paid to three vital areas, which will help us decide on a new economic vision. These are: subsidy, privatisation and nationalised enterprises.
It is indispensable that public and private sectors work together. Priority should be given to the sectors where spending or investment will bring the highest return. In course of the transition process under the arrangement, there may be a tendency to associate inefficient sectors with productive ones. Spending taxpayers' money on inefficient sectors can not be acceptable and the financial loss incurred in the process can only be accepted when government subsidy is justified. In this case also, it must be ensured that the subsidy will not pose any hindrance to free market operation. The government generally will not be involved in commercial activities. If it is involved for some reason or the other, issue of society's benefit and not profit will take precedence over all other considerations. Besides, privatisation process should be pursued on the basis of well-structured sets of principles. At the same time, perpetually declining nationalised enterprises will have to be strictly supervised. To top it all, highest possible transparency will have to be ensured in spending money paid by taxpayers and development partners. There is really no room for cheap sentiments.
Overall, depth of money market will have to be increased. For this, dependence on financing through banks should be reduced and emphasis should be given to collection of money from capital market. Capital market not only requires abundance of capital, but also introduction of long-term bonds. Moreover, government securities and debt instruments will have to be geared up through secondary market. Apart from foreign organisations, large national enterprises will have to be drawn to the capital market. In addition, the process of credit rating will have to be strengthened and independent.
To successfully implement such an economic strategy, the regulatory authorities and public administration should be more agile to be able to provide service support quickly. During the process of bringing about economic change, capacity-building of regulatory authorities and public administration will have to be considered with due importance. If the regulatory bodies and concerned government officials want to impose control over something, the process for the same will have to be justified, transparent and effective. Capacity-building of the planners, regulators and public administration will be made through proper training, otherwise they will not be able to understand global economic trend, direction and allied issues properly. As a result, it will be difficult for them to effectively bargain with international organisations and counterparts and competitor organisations and uphold our national interests. In addition, they will not be able to play an effective role in strengthening two pillars of our economy, i.e., external sector and remittance from non-resident Bangladeshis. The private sector will also have to develop its human resources. At the same time, in order to fully utilise the country's development potential, priority should be given to projects in infrastructure and energy (particularly gas) sectors, rather than attaining 'duty-free market entry'. Weak infrastructure and lack of energy security are the two main bottlenecks for our economic growth.
The success of any economic process depends on transparency and good governance. Ensuring transparency guarantees prompt decisions. A coordinated effort from, and unity of opinion among government, business community and civil society, are required to ensure good governance.
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