MIC status: Functional democratic system

Bangladesh and 10 other nations were branded as the 'next eleven' by the Goldman Sachs investment bank and economist Jim O'Neill in a research paper showed its high potential of becoming, along the BRICS, one of the world's largest economies in the 21st century. JP Morgan talks about the 'frontier five' including Bangladesh. The Mckinsey report said Bangladesh could be the world's largest exporter of readymade garments and household textiles. Bangladesh has the potential to become a big player in the areas of pharmaceuticals, building small and medium freighters and tugboats, footwear, finished leather products, frozen shrimp etc. Bangladesh has attained food sufficiency. More than 94 per cent of our budget is now allocated from our internal resources whereas in 1980s, 80 per cent of our budget allocation came from foreign aid.
Bangladesh has been at the centre of attention of international agencies, developed nations and neighbouring countries. Over the past decades, Bangladesh has made remarkable progress in economic and social development. It has been maintaining an average GDP (gross domestic product) growth rate of over 6 per cent for years. It is heartening to see that Bangladesh has been attaining such a GDP growth rate for a couple of years despite a lot of obstacles. During the economic slowdown in 2008-09, Bangladesh's economic growth was extraordinary and it posted a steady rate of over 6 per cent, whereas each of India, Pakistan and other sub-continental countries saw a lower GDP growth rate than that in Bangladesh. It proves that our economy has been resilient.
Bangladesh is maintaining such a growth rate thanks to the service sector, the readymade garment export which accounts for 70 per cent of the total exports, and the inflow of foreign remittance. The service sector's contribution to the GDP growth is about 53 per cent, agriculture nearly 20 per cent and industrial sector nearly 28 per cent. If we could attain the GDP growth rate of 8 per cent for consecutive years, then Bangladesh could achieve the status of middle income country within a short time.
There is a positive correlation between poverty alleviation and GDP growth. At present 23 per cent people remain below the poverty line, which was 60 per cent in 90s and 45 per cent in 2000. Due to government initiatives every year 1.8 per cent people are coming out of the vicious cycle of poverty. Bangladesh has achieved three targets of millennium development goals, which were set by the United Nations and development partners in the millennium summit held in 2000. The three targets were achieved out of eight two years before the deadline of 2015. Prime Minister Sheikh Hasina was awarded the South-South award by the UN secretary general for achieving the targets earlier, that was possible only for a handful of countries. The three targets are: reducing the child mortality rate, mitigating extreme poverty and hunger, and attaining the universal primary education. It was possible due to the government's various steps. Other millennium development goals (MDGs) are: eradicating extreme poverty and hunger, sustainable development, women's empowerment etc. Those targets are being achieved in phases. Here Bangladesh is a role model for other countries.
However, over the last few months our economy saw a negative impact due to political turmoil that left the country virtually handicapped. Many people lost their lives and economy faced big challenges. Export of readymade garments (RMG) and import of capital machinery suffered bottlenecks or shrank. Due to the political impasse, imports and exports fell drastically and economic activities were disrupted. Nevertheless, the economy is again on the right track just after the election. Garment factory owners are again receiving orders. However, it is expected that imports and the influx in foreign direct investments will rise, if the political situation remains stable.
Our forex reserve sees a robust upturn. It has reached the level of $ 18 billion, which can meet the import payments for six months.
The foreign remittance inflow is increasing every year. In the fiscal year (FY) 2011-12 a total of $ 12.85 billon was remitted into the country against the $ 11.65 billion remitted home in the FY 2010-11 due to the government's initiatives that facilitated export of manpower.
Bangladesh has been a right choice of foreign investors, since cheap labour available here provides the competitive edge. In the FY 2012-13, the country attracted foreign direct investments worth $ 128 million. It will rise, if the government takes appropriate measures to attract foreign investments by ensuring a political turmoil-free environment and infrastructure and power sector development.
Bangladesh since its inception has been a least developed country (LDC) and as an LDC it is enjoying some benefits, for instance, duty-free and quota-free access of its products to developed countries. The government now looks to attain the middle income country (MIC) status from an LDC by 2021. To achieve that goal, we have to post a GDP growth rate of 7.5-8 per cent every year and the per capita income should be raised above $ 1200. Attaining the MIC goal is neither impossible nor easily achievable. We have to make perceptible development in the fields of education, health and human resource development. At the same time the gap between the rich and the poor should be bridged. In order to attract more foreign direct investments, the government needs to create an investment-friendly environment, facilitate trade and commerce and ensure infrastructure development. Politics, not economy, is dominant in our country. So, we need a functional democratic system to boost economic activities. Political stability and good governance are the preconditions for attaining the MIC status by 2021.
The writer is a banker. zonaed.emran@gmail.com