Sixth Five Year Plan - Challenges and opportunities

Ferdous Ara Begum. Sixth Five Year Plan (SFYP) has laid its key focus on strategies, policies and institutions to help guide the private sector in helping Bangladesh achieve the goals set in Vision 2021. The set target, if achieved will transform the country's socio-economic environment from a low income economy to the first stages of a middle income economy (MIC). Providing incentives to private sector and instituting regulatory policies for safeguarding public interests will be a major guiding policy and institutional framework of the SFYP. SFYP is organised into three parts: Part I of the Plan provides the strategic directions and policy framework for implementing the main socio-economic targets of Vision 2021 while detailed sectoral strategies, programmes and policies are presented in Part II. Part III outlines detail statistical annex and technical framework. Indicative sectoral development resource allocations are discussed in Part I. SFYP approved in July 2011 targeted to create 25 per cent employment in the manufacturing sector by 2015, and GDP will be raised to 8.0 per cent. Electricity production target is 15,200 MW by 2015; if this target is fulfilled 65 per cent of the people of the country will come under electricity. Total investment under the Plan would amount to Tk13.47 trillion in constant 2011 prices. Much of the investment will be undertaken by the private sector, although public sector investment will play a bigger role in stimulating much greater private sector investment. Private sector investment (including PPP programmes) will account for 77.2 per cent of total investment, much of it from domestic sources. External financing, primarily in the form of foreign direct investment (FDI) is expected to grow, but will still remain very small in relative term at about 4 per cent. Most of the projected private sector finance to the five-year development plan will come in the forms of public private partnership (PPP) and foreign direct investment (FDI). The plan differs from earlier five-year plans as the document focuses mostly on strategic direction and policy framework for boosting the country's economy and make a hunger-free nation. The development plan will facilitate the country in reducing poverty to 26 per cent from the current 38.7 per cent. It also targets boosting per capita income to US$1,000, and eradicate illiteracy FY 2015. SFYP lays the foundations for a welfare state so that its citizens have access to social amenities. The plan is targeted to achieve 91 per cent primary school enrolment even though there is no mention of any tertiary enrolment targets where the most productive part of education starts. National education policy is in place but provides no direction for Madrasah education that absorbs one third of all students in Bangladesh. The policy should be formulated in line with the existing National Education Policy. With regard to education, the Bangladesh Economic Association (BEA) recently stated that there should be separate definitions for fundamental, psychological, humanitarian, modern education and international standard education. Currently both quality and access to education at all levels is severely limited. The poor sections of the population are handicapped in availing basic services including quality education, healthcare, water and sanitation. If inequalities cannot be reduced, distributive justice cannot be ascertained as per expert opinion. It is viewed that Constitution should be the basis of the country while SFYP and Vision 2021 could help creating the basis. The constitution clearly mentions that food will be the first and foremost need for all that has to be ensured by the government. According to World Bank, three things are required by a country to reach MIC status: emphasis on agriculture; urban benefits, unitarily opening the markets. To MIC standard, these issues need to be discussed and addressed. 'Digital Bangladesh' has been embraced as one of the strategies to achieve the targets set in SFYP. To help further the poor's access to water, electricity, agriculture inputs, financing, etc., introduction of ICT in all these sectors can give security of services. Investment to address unemployment situation is another challenge. Presently Bangladesh's 5-6 per cent growth is underpinned by an average investment rate of 22 - 24 per cent. Assuming no increase in productivity over the present level, an 8 percent GDP growth will require an investment rate of 32 per cent while a 10 per cent GDP rate will require a 40 percent investment rate. We need to think about all other pre-conditions for creating an enabling business and investment environment. Population growth (presently at 1.4 per cent) and increasing density of population in urban centers presents another challenge. Consequently, Dhaka's population has been increasing at an alarming rate. In 2002 the rate was 4.5 per cent (source: UN, world urbanisation prospects), and presently the rate stands at about 7 per cent not taking into consideration seasonal migration. Were we to equip our surplus population with requisite skills that are in demand in de-populating nations of the world, we could have an answer to the quandary. Our economy simply cannot absorb the 2.5 million new faces entering the job market. Agriculture suffers from massive fragmented ownership. Without large-scale and consolidated land ownership, productivity will not be increase. SYFP keeps no provision for land planning and zoning for marking farm land and khan land specially earmarked for agriculture. With reference to health sector factor endowment and food security, it is commonly perceived that lack of entitlement in food production adversely affects food production. SYFP needs to address this situation through appropriate strategy. Increase production will not occur overnight but it is possible to address the situation gradually. Hence, to meet 91 per cent food needs from domestic sources, a mechanism will have to be devised first. Bangladesh is going through several structural adjustments. Agricultural production increased from 10 million tonnes (mt) in 1973 to 32mt in 2010, but still people remain unfed and food price hike is one of the serious concerns. Coordination between fiscal and monetary measures to tackle food inflation is indeed one of the biggest challenges at the initial stage of the plan. In Bangladesh, the informal sector alone absorbs about 78 per cent of the labour force. This needs to be redressed if we want to better efficiency. Poverty reduction target in 2015 is 30 per cent and 14 per cent in 2021; again the issue of inequality and regional disparity has been one of the critical areas that require addressing. Some districts like Barisal, Khulna and Rajshahi suffer higher poverty. Unemployment and underemployment, low income productivity are critically linked with the poor quality of education. Plan presented trade to GDP ratio of Bangladesh as 41.9 per cent, while the figure is 33.4 per cent in India, 28.1 per cent in Pakistan, 40.9 per cent in Sri Lanka and 32.5 per cent in Nepal. This figure is another testimony that not only internal issues, but Bangladesh should also be prepared to address external setbacks. The world is proceeding to a deeper depression and this time round Bangladesh will not be able to avoid getting caught up in it. Hence we need to arm ourselves with proper policies so that external vulnerabilities can be cushioned and do not hamper targeted growth. Accelerating economic growth, investment is some of the answers but in practice savings and investment gaps are increasing. Plan proposes that most of the resources required will come from domestic resources, public and private savings including remittances. This is a challenge while domestic source and foreign borrowing is uncertain. Infrastructural impediments like, gas, electricity, port, marketing and transport facilities, telecommunication governance, local governance, corruption, inefficiencies and wastages, managing externally originated risks along with oil price rise, global recession, Climate Change and gradual increase of informal sectors including agriculture are some identified areas. There is inconsistency in the SYFP document. Most probably individual chapters are written by different people. The document is too large for consumption. In some cases there are examples and comparison from economic indicators of different countries which gives the document a shape of a study rather a plan document. For the first time the plan has initiated a result-based monitoring system. In the past the focus has been on monitoring public spending in terms of achieving financial targets. To achieve this, the capacity of the Planning Commission and the line ministries to undertake results-based monitoring and evaluation (M&E) is questionable. This will entail adopting proper M&E frameworks, improving the database, and strengthening technical skills. In view of the above a draft framework has been worked out which will be followed for proper monitoring under four broad areas: improving enabling policy environment, land availability for private sector development, increasing capacity for power generation, transmission and generation and distribution and alternative means of transport for freight, improving skill required for private sector development. The writer can be reached E-mail: nothing_man2000@yahoo.com