Facilitating the private sector
Thursday, 7 August 2008
The private sector in the country has emerged as the main driver of economic growth in the country following the gradual unbundling of the state operated sectors, privatization and greater stimulus given to private entrepreneurs from the mid-seventies. Thus, the private sector, according to a report in this paper on Wednesday, generates some 80 per cent of the country's gross domestic product (GDP) and 90 per cent of the employment in the country today. The report focused on the massive investments planned under the second Poverty Reduction Strategy Plan (PRSP) by the private sector. The private sector will be expected to invest a substantial amount, some Taka 4508.5 billion, under the second PRSP period. On its part, the government will undertake supportive measures so that the projected investments can actually take place.
Undoubtedly, the economy will rise to a higher plane if the private sector is enabled to get a big boost from the implementation of the second PRSP. But this boost will be crucially dependent on the government playing its part truly and timely as the facilitator of the private sector. It must help in the creation and sustaining of an investment-friendly environment for the private sector to remain motivated in enterprising. As it is, the current energy availability in the country is a big source of undermotivation for the entrepreneurs. The insufficiency of power and gas is proving to be a great detriment in the way of running existing industries, not to speak of setting up new ones. Thus, under the second PRSP period, government's highest priority will have to be given to increasing substantially energy supplies and their efficient distribution. This must take precedence over other matters.
The development of infrastructures is also very important. The functioning of the Chittagong port has improved but the same can be further improved and the improvements must be sustainable. The port should acquire more capacities and new port development should be speeded up. Projects have already been taken up for the establishment of a special zone for making active ingredients for the pharmaceutical industry. These and more similar ones should be implemented on schedule. The coming into operation of the active ingredients park , for example, will likely trigger very fast growth of the pharmaceutical sector. Then, transportation-related costs of business will fall substantially from building of expressways between the vital Dhaka-Chittagong transportation corridor. All export-oriented industries as well as other businesses will gain much competitiveness from the building of an expressway in this corridor and from similar transportation related improvements in other areas of the country.
Government's fiscal and monetary policies and continuity of policies are very important for keeping the private sector interested in new investment activities. Frequent policy changes lead to loss of confidence of investors as they cannot be sure that their planned investments will not fail due to changes of conditions from the changing official policies. Thus, continuity of policies will count as very important for the success of the second PRSP. A policy environment that creates a level playing field for the private sector involves providing proper fiscal incentives and monetary incentives to this end. Therefore, the government will have to do better than it so far has in keeping the fiscal and monetary policies attractive for the private sector investors. The policies must be seen as not fleeting ones but to remain unchanged over, at least, the PRSP period.
Undoubtedly, the economy will rise to a higher plane if the private sector is enabled to get a big boost from the implementation of the second PRSP. But this boost will be crucially dependent on the government playing its part truly and timely as the facilitator of the private sector. It must help in the creation and sustaining of an investment-friendly environment for the private sector to remain motivated in enterprising. As it is, the current energy availability in the country is a big source of undermotivation for the entrepreneurs. The insufficiency of power and gas is proving to be a great detriment in the way of running existing industries, not to speak of setting up new ones. Thus, under the second PRSP period, government's highest priority will have to be given to increasing substantially energy supplies and their efficient distribution. This must take precedence over other matters.
The development of infrastructures is also very important. The functioning of the Chittagong port has improved but the same can be further improved and the improvements must be sustainable. The port should acquire more capacities and new port development should be speeded up. Projects have already been taken up for the establishment of a special zone for making active ingredients for the pharmaceutical industry. These and more similar ones should be implemented on schedule. The coming into operation of the active ingredients park , for example, will likely trigger very fast growth of the pharmaceutical sector. Then, transportation-related costs of business will fall substantially from building of expressways between the vital Dhaka-Chittagong transportation corridor. All export-oriented industries as well as other businesses will gain much competitiveness from the building of an expressway in this corridor and from similar transportation related improvements in other areas of the country.
Government's fiscal and monetary policies and continuity of policies are very important for keeping the private sector interested in new investment activities. Frequent policy changes lead to loss of confidence of investors as they cannot be sure that their planned investments will not fail due to changes of conditions from the changing official policies. Thus, continuity of policies will count as very important for the success of the second PRSP. A policy environment that creates a level playing field for the private sector involves providing proper fiscal incentives and monetary incentives to this end. Therefore, the government will have to do better than it so far has in keeping the fiscal and monetary policies attractive for the private sector investors. The policies must be seen as not fleeting ones but to remain unchanged over, at least, the PRSP period.