Mitigating impact of recession
Sunday, 29 March 2009
THE constitution of the task force and the holding of its first meeting last Tuesday could not have come sooner. This is for the growing signs of the global recession impacting negatively on the vital export and remittance sectors of Bangladesh. The signs were not so prominent or alarming until the start of the present year. But falling pictures of export growth and the number of workers going abroad with jobs in contrast to the last financial year, have prompted the significance of forming a special body comprising government leaders, experts and different interest groups, to examine all aspects of the present impact of the recession on the Bangladesh economy and its medium and long term implications for this country and its coping strategies. It was good to see that the task force in its first meeting produced some suggestions in keeping with the requirement of fast decisions expected from this body in view of the worsening external situation for the economy of the country.
But the task force has also rightly indicated in its first meeting that its recommendations would not necessarily mean endorsement of straight cut bailout packages as were adopted in the recession-hit developed countries. The finance minister, while presiding over the task force's meeting, underscored the limitations on the part of the government of this country in the financial and all other senses to be able to undertake big bailout sort of programmes. However, it is notable also that among the immediate responses recommended by the task force, the fastest disbursement of cash incentive to exporters has been one. But it was revealed in a recent investigation of the Bangladesh Bank (BB) that an amount of Taka 500 million was received by fake exporters as cash incentives against their export activities only on paper. A sum of at least Taka 3.0 billion was probably misappropriated in this manner over the last five years under the two predecessor governments.
Therefore, the present government will have to be cautious in disbursing these cash incentives. The disbursement process ought not to be a hasty one. It should be monitored very closely and efficiently to absolutely ensure that the monies would be paid to real exporters to retain and enhance their willingness and abilities to go on exporting. Besides, the exporters will have to be also accustomed to the idea that they cannot rely so much on government bailouts but should contribute their utmost towards improving their own competitiveness. Notwithstanding harsh externalities in the export businesses, there are opportunities probably in every export business to realistically cut down production and other costs to the bare minimum and retain the competitive edge over rivals. The exporters must necessarily explore these ways and the government being not liberal with easy cash handouts, will nudge them in that direction.
What things the government can do best, on its part, would essentially involve non-cash supports of the right type and at the right time. For example, government is expected to take quick steps to ensure that the improvements achieved in operating the Chittagong port efficiently by the caretaker government, are maintained. Media reports were noted about the pressures from various vested interests who are out to undermine the present efficient state of this port through reestablishing their dominance over it. This trend must be nipped in the bud because the port's efficiency is seen as crucial for successful export activities under the present troubled times caused by the global recession. The government should also seek to help out businesses by improving power and gas supply by carrying out the tasks to that end on a war footing. Various supportive fiscal measures and concessions for consumption of energy at concessional rates, will also aid the competitiveness of businesses.
But the task force has also rightly indicated in its first meeting that its recommendations would not necessarily mean endorsement of straight cut bailout packages as were adopted in the recession-hit developed countries. The finance minister, while presiding over the task force's meeting, underscored the limitations on the part of the government of this country in the financial and all other senses to be able to undertake big bailout sort of programmes. However, it is notable also that among the immediate responses recommended by the task force, the fastest disbursement of cash incentive to exporters has been one. But it was revealed in a recent investigation of the Bangladesh Bank (BB) that an amount of Taka 500 million was received by fake exporters as cash incentives against their export activities only on paper. A sum of at least Taka 3.0 billion was probably misappropriated in this manner over the last five years under the two predecessor governments.
Therefore, the present government will have to be cautious in disbursing these cash incentives. The disbursement process ought not to be a hasty one. It should be monitored very closely and efficiently to absolutely ensure that the monies would be paid to real exporters to retain and enhance their willingness and abilities to go on exporting. Besides, the exporters will have to be also accustomed to the idea that they cannot rely so much on government bailouts but should contribute their utmost towards improving their own competitiveness. Notwithstanding harsh externalities in the export businesses, there are opportunities probably in every export business to realistically cut down production and other costs to the bare minimum and retain the competitive edge over rivals. The exporters must necessarily explore these ways and the government being not liberal with easy cash handouts, will nudge them in that direction.
What things the government can do best, on its part, would essentially involve non-cash supports of the right type and at the right time. For example, government is expected to take quick steps to ensure that the improvements achieved in operating the Chittagong port efficiently by the caretaker government, are maintained. Media reports were noted about the pressures from various vested interests who are out to undermine the present efficient state of this port through reestablishing their dominance over it. This trend must be nipped in the bud because the port's efficiency is seen as crucial for successful export activities under the present troubled times caused by the global recession. The government should also seek to help out businesses by improving power and gas supply by carrying out the tasks to that end on a war footing. Various supportive fiscal measures and concessions for consumption of energy at concessional rates, will also aid the competitiveness of businesses.