Charting out path thru a few compromises
Monday, 3 September 2007
Shamsul Huq Zahid
The present interim government considers the soaring prices of essentials as its 'enemy number one' for obvious reasons. Until now all the policy measures, starting from duty exemptions down to limited retail operations by the para-military Bangladesh Rifles (BDR), to contain the same have not been successful to produce the desired results.
The volatility in the international commodity market, no doubt, remains to be one of the key factors contributing to the hike in essential prices. The recent floods have made the situation rather worse because of extensive damage to standing crops and vegetables in the affected areas.
The coming month of holy Ramadan, it seems, has made the administration a bit unnerved. A fresh hike in the prices of most food items has been the rule here in recent years. None has ever tried to trace the reason for such hike. But the poor consumers who already have their back to the wall are really scared of yet another round of price spiral.
There is no denying that prices of cereals, including rice and wheat, edible oils and pulses have been on the rise in the international market for the past few months because of the shortfall in production of the same in the major exporting countries. The prices of wheat last week soared to a record level. Even some exporting countries this year have become net importers of food grains. The government can come up with some valid reasons to explain the price hike. But the fact remains that the common men have never been interested in any statistics and policy statements. What they want is a price situation commensurate with their income level. They are very much resentful these days because of the widening gap between the two.
However, there is a general perception that inaction or less than normal activity on the part of a section of businessmen has been responsible for an unwanted situation on the price front. It is believed that many businesses panicked by anti-hoarding and anti-corruption drive have withdrawn themselves from normal business operations, causing disruption in the supply chain. It is a fact that there exists some sort of crisis of confidence among the business circles, mainly because of frequent queries by various government agencies about financial transactions and taxation matters. However, there is no reason to believe that the importers and traders have withdrawn from their normal operations. Had it been the case, there would have been a serious short supply of essentials in the market. But the reality is that there is an abundant supply of all the items in the market.
In the backdrop of a dismal price situation, Chief Adviser of the caretaker administration Dr. Fakhruddin Ahmed and Chief of Army Staff General Moeen U Ahmed will be meeting with the business leaders next Wednesday with a view to bringing back confidence among the latter and dynamism in country's economy.
The past political governments also held similar meetings seeking the help of the businesses to rein in prices of essentials. In most cases, such meetings failed to produce any tangible result. Then there were speculations about 'business syndicates'. The media and government leaders, who were more interested to hide their incompetence and inefficiency, continued to blame so-called syndicates for the price hike. Until now, such syndicates have been found to be ethereal entities.
It is difficult to predict the outcome of the latest interaction between government top brass and the businesses as far as the price situation is concerned. But this could be of great help in putting the normal economic activities on the right track. However, the business might again raise the issue of multilateral lenders' 'interference' in the domestic economic management.
The government leaders do need to assure the businesses that the administration's action is directed towards a handful of corrupt businessmen who indulged in gross irregularities and corruption involving tens of million takas and that too with the backing of politically powerful quarters and there is no reason for others to be panicked.
Before giving such assurance, the administration should decide once for all that it would not chase the businesses involved in minor financial irregularities or tax evasion considering the fact that for the last three and a half decades none bothered much about rules or morality issue while doing his or her job at the national or individual level. However, deviations had not been at the same level. Some indulged in bigger financial crimes and some others in minor ones. The ongoing anti-corruption drives have scared both. The government needs to reach the message loud and clear that small deviations would not be taken into cognisance.
The objective of the government should be to set things right for the future. The agencies concerned do need to find out the real assets and investments of businessmen and fix income tax, value added tax and other duties and taxes so that they do not indulge in irregularities in future even under political governments.
The people who are manning the interim administrations are pro-private sector. So, they should be aware of the role that the private sector has been playing in the economic growth of the country. The private sector has been the main engine of an impressive economic growth achieved during last 15 years. During this growth process, there has been an accumulation of black money, in most cases, through deliberate indulgence on the part of the men or women in power. But the fact remains that the size of black economy is huge and any attempt to undo it on a massive scale is likely to produce disastrous results. This observation is not meant to give a clean chit to the black money holders but just to point out the strength of black economy. The objective of the government should be to plug the sources that help generate black money.
The government is now again allowing the hawkers to return to the city streets and pavements. The shops and small business establishments built on government land and along roads and highways were demolished by the present government. Those are now being rebuilt and the government has decided to ignore all those developments. Legally speaking, eviction of hawkers and demolition of unauthorised structures were right actions on the part of the government. But those were wrong steps in the context of Bangladesh's socio-economic context. Everyone, the government included, has to make some compromises to survive in this land where population-resource gap is huge and the rate of unemployment is high.
The present interim government considers the soaring prices of essentials as its 'enemy number one' for obvious reasons. Until now all the policy measures, starting from duty exemptions down to limited retail operations by the para-military Bangladesh Rifles (BDR), to contain the same have not been successful to produce the desired results.
The volatility in the international commodity market, no doubt, remains to be one of the key factors contributing to the hike in essential prices. The recent floods have made the situation rather worse because of extensive damage to standing crops and vegetables in the affected areas.
The coming month of holy Ramadan, it seems, has made the administration a bit unnerved. A fresh hike in the prices of most food items has been the rule here in recent years. None has ever tried to trace the reason for such hike. But the poor consumers who already have their back to the wall are really scared of yet another round of price spiral.
There is no denying that prices of cereals, including rice and wheat, edible oils and pulses have been on the rise in the international market for the past few months because of the shortfall in production of the same in the major exporting countries. The prices of wheat last week soared to a record level. Even some exporting countries this year have become net importers of food grains. The government can come up with some valid reasons to explain the price hike. But the fact remains that the common men have never been interested in any statistics and policy statements. What they want is a price situation commensurate with their income level. They are very much resentful these days because of the widening gap between the two.
However, there is a general perception that inaction or less than normal activity on the part of a section of businessmen has been responsible for an unwanted situation on the price front. It is believed that many businesses panicked by anti-hoarding and anti-corruption drive have withdrawn themselves from normal business operations, causing disruption in the supply chain. It is a fact that there exists some sort of crisis of confidence among the business circles, mainly because of frequent queries by various government agencies about financial transactions and taxation matters. However, there is no reason to believe that the importers and traders have withdrawn from their normal operations. Had it been the case, there would have been a serious short supply of essentials in the market. But the reality is that there is an abundant supply of all the items in the market.
In the backdrop of a dismal price situation, Chief Adviser of the caretaker administration Dr. Fakhruddin Ahmed and Chief of Army Staff General Moeen U Ahmed will be meeting with the business leaders next Wednesday with a view to bringing back confidence among the latter and dynamism in country's economy.
The past political governments also held similar meetings seeking the help of the businesses to rein in prices of essentials. In most cases, such meetings failed to produce any tangible result. Then there were speculations about 'business syndicates'. The media and government leaders, who were more interested to hide their incompetence and inefficiency, continued to blame so-called syndicates for the price hike. Until now, such syndicates have been found to be ethereal entities.
It is difficult to predict the outcome of the latest interaction between government top brass and the businesses as far as the price situation is concerned. But this could be of great help in putting the normal economic activities on the right track. However, the business might again raise the issue of multilateral lenders' 'interference' in the domestic economic management.
The government leaders do need to assure the businesses that the administration's action is directed towards a handful of corrupt businessmen who indulged in gross irregularities and corruption involving tens of million takas and that too with the backing of politically powerful quarters and there is no reason for others to be panicked.
Before giving such assurance, the administration should decide once for all that it would not chase the businesses involved in minor financial irregularities or tax evasion considering the fact that for the last three and a half decades none bothered much about rules or morality issue while doing his or her job at the national or individual level. However, deviations had not been at the same level. Some indulged in bigger financial crimes and some others in minor ones. The ongoing anti-corruption drives have scared both. The government needs to reach the message loud and clear that small deviations would not be taken into cognisance.
The objective of the government should be to set things right for the future. The agencies concerned do need to find out the real assets and investments of businessmen and fix income tax, value added tax and other duties and taxes so that they do not indulge in irregularities in future even under political governments.
The people who are manning the interim administrations are pro-private sector. So, they should be aware of the role that the private sector has been playing in the economic growth of the country. The private sector has been the main engine of an impressive economic growth achieved during last 15 years. During this growth process, there has been an accumulation of black money, in most cases, through deliberate indulgence on the part of the men or women in power. But the fact remains that the size of black economy is huge and any attempt to undo it on a massive scale is likely to produce disastrous results. This observation is not meant to give a clean chit to the black money holders but just to point out the strength of black economy. The objective of the government should be to plug the sources that help generate black money.
The government is now again allowing the hawkers to return to the city streets and pavements. The shops and small business establishments built on government land and along roads and highways were demolished by the present government. Those are now being rebuilt and the government has decided to ignore all those developments. Legally speaking, eviction of hawkers and demolition of unauthorised structures were right actions on the part of the government. But those were wrong steps in the context of Bangladesh's socio-economic context. Everyone, the government included, has to make some compromises to survive in this land where population-resource gap is huge and the rate of unemployment is high.