New industrial policy
Tuesday, 15 December 2009
A new industrial policy is in the making. The minister for industries has recently explained to the media the salient features of the draft policy, now available on the web-site. From what the minister told the press, the high points of that policy are promoting private industrial investments, facilitating environment-friendly enterprises, encouraging foreign investors and expatriate Bangladeshis to invest in the industrial ventures, creation of enterprise zones backed up with various incentives and infrastructural supports, continuation of the tax holiday scheme and promotion of thrust sectors namely information technology and shipbuilding.
The stress on environment-friendly industrial enterprising is a significant addition to the new policy. It marks a departure from other such policies in the past. Bangladesh has built up considerable industrial sinews over the years but much of its present industrial capabilities are outdated and largely polluting. Being a physically small country with the highest population density in the world, Bangladesh cannot afford to increase further industrial pollution without paying a serious price of the same exacted from its environment, people and the quality of life. Therefore, the reorientation in the policy towards industrial enterprising with environmental safeguards ensured, has been timely. It may be expected that under the new industrial policy upon its operationalisation, truly sincere efforts would be made to switch over to clean technologies and production methods.
Meanwhile, the emphasis of the policy on accelerated pace of industrial growth through government's pro-active role in encouraging private investments has clearly been spelt out. This is welcome because Bangladesh badly needs to diversify its economic activities through stepped-up efforts for value addition, particularly in industrial ventures, for income generation, job creation and poverty alleviation. Its agricultural sector alone will not be able to facilitate the transition of its economy to a sustained growth trajectory; accelerated pace of industrialisation through the support of appropriate technology for upgradation and modernisation of the economy will be needed for this.
The proposed industrial policy states that privatisation as a policy would be continued and encouraged. This has to be done in actions through a transparent process. Policy flip-flips on this count will only give wrong signals. That will not be supportive of the stated policy goals of the government to help foster the growth of a competitive market-oriented private sector, not crony capitalism. The government will also need to make efforts for the those state-owned enterprises (SoEs) which it would not like to divest for a variety of reasons, otherwise valid or acceptable. But there should be no dualism here. That will be highly undesirable and will, thus, mar the prospects for making the entire economy more efficient in the longer run. Bangladesh does, indeed, need to push privatisation as hard as possible, in areas where the government should have no business to be in the business of commercial activities.
There is no denying that a largely privatised economy, functioning on proper lines, can lead to more cost-efficient use of resources and plug government spending and the routing of resources into more useful spending in the social sectors. This should also facilitate consumers to benefit in terms of better quality of products and their lower prices as a result of competition. With private entrepreneurs investing funds into new industrial enterprises, more employment opportunities can be created on a sustained basis. This should also help broaden the taxation base for the government.
However, the proposed industrial policy with its stated objective of providing encouragement and other necessary supports, coupled with assurances about policy continuity and stability, will hardly serve any useful purpose, without a synergy of actions for creating a environment congenial to creating a healthy investment environment. Law and order, maintenance of macro-economic stability, effective diregulations, pro-active monetary policy, availability of infrastructural facilities, quality of human resources etc., are all important factors. The government will have to take the supportive policy measures in all such inter-related areas for achieving the goals of the proposed policy.
The stress on environment-friendly industrial enterprising is a significant addition to the new policy. It marks a departure from other such policies in the past. Bangladesh has built up considerable industrial sinews over the years but much of its present industrial capabilities are outdated and largely polluting. Being a physically small country with the highest population density in the world, Bangladesh cannot afford to increase further industrial pollution without paying a serious price of the same exacted from its environment, people and the quality of life. Therefore, the reorientation in the policy towards industrial enterprising with environmental safeguards ensured, has been timely. It may be expected that under the new industrial policy upon its operationalisation, truly sincere efforts would be made to switch over to clean technologies and production methods.
Meanwhile, the emphasis of the policy on accelerated pace of industrial growth through government's pro-active role in encouraging private investments has clearly been spelt out. This is welcome because Bangladesh badly needs to diversify its economic activities through stepped-up efforts for value addition, particularly in industrial ventures, for income generation, job creation and poverty alleviation. Its agricultural sector alone will not be able to facilitate the transition of its economy to a sustained growth trajectory; accelerated pace of industrialisation through the support of appropriate technology for upgradation and modernisation of the economy will be needed for this.
The proposed industrial policy states that privatisation as a policy would be continued and encouraged. This has to be done in actions through a transparent process. Policy flip-flips on this count will only give wrong signals. That will not be supportive of the stated policy goals of the government to help foster the growth of a competitive market-oriented private sector, not crony capitalism. The government will also need to make efforts for the those state-owned enterprises (SoEs) which it would not like to divest for a variety of reasons, otherwise valid or acceptable. But there should be no dualism here. That will be highly undesirable and will, thus, mar the prospects for making the entire economy more efficient in the longer run. Bangladesh does, indeed, need to push privatisation as hard as possible, in areas where the government should have no business to be in the business of commercial activities.
There is no denying that a largely privatised economy, functioning on proper lines, can lead to more cost-efficient use of resources and plug government spending and the routing of resources into more useful spending in the social sectors. This should also facilitate consumers to benefit in terms of better quality of products and their lower prices as a result of competition. With private entrepreneurs investing funds into new industrial enterprises, more employment opportunities can be created on a sustained basis. This should also help broaden the taxation base for the government.
However, the proposed industrial policy with its stated objective of providing encouragement and other necessary supports, coupled with assurances about policy continuity and stability, will hardly serve any useful purpose, without a synergy of actions for creating a environment congenial to creating a healthy investment environment. Law and order, maintenance of macro-economic stability, effective diregulations, pro-active monetary policy, availability of infrastructural facilities, quality of human resources etc., are all important factors. The government will have to take the supportive policy measures in all such inter-related areas for achieving the goals of the proposed policy.