Strong policy reforms with homegrown approaches needed

Speakers at discussions on Saturday said there should be strong and vigorous policy reforms with homegrown approaches to counter new challenges the country's economy following national elections.
They said the government must focus on immediate problems in the economy, including taming inflation, stable exchange rates, pressure of external loans, etc.
However, they urged the government to take actions on removing taxation distortion and protectionism, diversify exports and do major reforms in banking, including cutting non-performing loans for longer targets.
They also said if the political leadership did not back the major reforms, there would not be any middle-income status and graduation from the least developed country status.
The speakers were talking at a session styled "Expert panel on economic policy: addressing policy challenges in the context of global and domestic uncertainty" on the last day of BIDS three-day conference in a city hotel.
Speaking aa chief guest, former state minister for planning Samsul Alam said limits and questioning should be removed in airport on amounts of foreign currency and gold bar to help increase foreign currency reserves and assets of the country.
He said price escalations could be handled using the market mechanism by mainly allowing imports rather than raiding hoarders.
He also urged the government to be extra careful in taking new foreign loans.
"Only income generating sector can take loans," he said.
Mr Alam said inflation control should be the focus now rather than high growth.
He said the low tax-GDP ratio was not a concern for Bangladesh for short-term growth as the country was already achieving more than 7 per cent growth rate with around 7 per cent tax-GDP ratio.
But the ratio needed to be higher for long-term alongside sustainable growth," he said.
Executive Director of Economic Research Group Sajjad Zohir said the country needed strategic redefining within the mechanism of nationalism rather than finding solutions to local problems abroad.
Urging redefining of dual citizenship, he said depending on dual citizens of Bangladeshi origin would make the country vulnerable.
Former economic affairs advisor to PM Mashiur Rahman said politicians were not only people who made policies but they were mainly responsible.
He said independence of regulatory body was a very sensitive issue.
He said they had social accountability and political parties had accountability to people.
Professor Emeritus of BRAC University Ainun Nishat said there had not been much progress in climate discussions currently going on in the UAE.
He said India, Pakistan and China were alligned in climate discussions while Bangladesh was mainly in the LDC group.
He said 3 trillion new trees needed to be planted to reduce green house gas.
Executive Director of Policy Research Institute of Bangladesh (PRI) Ahsan H Mansur said the real challenge for the country's economy would be in the post-election period.
He said political leadership must back major economic reforms after election.
"Act now and act forcefully," he said stressing immediate reform issues.
Professor Emeritus of Occordia University Syed Moinul Ahsan said middle income country's tax-GDP ratio should be at 20 per cent.
"Our tax structure is the reason of our low tax-GDP ratio and corruption and lack of transparency in the system are the obstacle for higher tax-GDP ratio.
ICCDR'B Executive Director Tahmeed Ahmed said the country must address stenting and nutrition issues for children.
Dhaka Tribune editor Zafor Sobhan said it was crucially instrumental to have robust media but issues like good governance, freedom of speech, democratic process were also important.
Professor of Department of Economics at University of Dhaka Masuda Yeasmeen said rather than western view, the country needed to focus on home-grown context while making policy.
"We should include policy formulation in the university level curriculum," she said.
She also said: "We should have panel of advisors for policy formulations outside the government from different backgrounds."
Chief Economist of Bangladesh Bank Dr Habibur Rahman said the low tax-GDP ratio was not always bad. It had some good side as well.
Former Senior Secretary Sharifa Khan said external public sector loan was $55 billion, not $100b as some news reports said.
Senior Secretary at Commerce Ministry Tapan Kanti Ghosh said import ban on some essentials needed to be reviewed for controlling market.
"Market agents are misusing the ban on imports," he said.
"Not only market mechanism, exchange rates and duty structure on imported essentials also matter in determining price," he said.
He said policy mix was required for raising and declining tax on imports.
He said negotiations were going on with India over 10 products for continued supply even during ban.
PRI Chairman Zaidi Sattar said if existing protectionism continued, no export diversification would actually happen.
"There should be time limit for domestic sector protection," he said.
He said there was no justification and rationality for different tax benefit rates for different sectors.
"Stronger lobby groups get better benefits," he said adding that it should go away.
SANEM ED Dr Selim Raihan said rather than technical solutions to policy problems there should be a focus on long-term and broader-context solutions.
Journalist Mahbub Ullah said national consensus would find a way out from the existing crisis.
"Our institutions are not functioning properly and we can make them function by letting democracy function," he said.
Bangladesh Bank Governor Abdur Rouf Talukder said three Rs- rice production, remittance and RMG -- were still ruling the economy.
"Inflation, stable exchange rates and NPL are the major challenges," he said.
"We have made a road map to reduce NPL very soon."
By end of June, inflation would be 6 per cent," he said as most of the discussants raised concerns.
BIDS DG Binayak Sen moderated the session.

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