Private sector and its importance

M Azizur Rahman All economies are divided into two sectors: private and public. In reality, the major sector of the economy is the private sector. Private sector consists of private individual, entrepreneur, investor, broker, commission agent and their firms and companies working under private ownership. State-owned enterprises do not belong to private individuals. The government is the caretaker of the state, its interest, safety of its assets and property and the state-owned enterprises. The expansion of the private sector including micro, small and medium-sized enterprise development is necessary for the aggregate economic development. These entities are the prime source of job creation. As far as employment is concerned the private sector employs most of the people in the economy. For example, Bangladesh having a population of 160 million people, less than five million people are employed in the public sector. About 10 million people are directly and indirectly involved in the activities of the garments sector. More than 10 million people are employed in the multi-national and local companies in the private sector. The major portion of employment is generated by the private sector in Bangladesh; this is true for all countries operating free-market economies. Private firms of all sizes face problems, such as ensuring property rights, security, corruption, limited access to finance and inadequate policy support. If we can resolve all of these problems, entrepreneurs can raise their income, expand their activities, employ a lot more people and thus help alleviate poverty. Consumers would like to purchase quality goods and services at a reasonable price. Countries with a successful private sector can provide the production of a large number of goods and services at a reasonable cost which in turn increases consumer satisfaction. The private and public sectors are both complementary and supplementary to each other. Without the one, the other is not productive. But the size of the private sector should be as large as possible and the size of the public sector should be as small as possible. In this spirit, the public sector will have to play a regulatory and supporting role. It is noteworthy that the private sector finances itself and finances the public sector indirectly through the payment of taxes. The role of the government is to protect the interest of the state and its people. The government machinery should be as small as possible no matter how big the country. For example, America is a big country with a small government, whereas India is a big country with a big government. America has been doing much better than many countries including India. Finally, policymakers in Bangladesh should think alike the principle of minimal government intervention and maximum production of goods and services through a smooth and efficient operation and expansion of the private sector. Private sector must perform efficiently in their production of goods and services to make them available for the consumer at competitive prices. The government or the public sector must provide all support to the private sector to help maximise the consumer satisfaction. (Professor Dr M Azizur Rahman is the Vice-Chancellor of Uttara University)