Supports and conducive policy environment for private sector
Amirul Islam | Saturday, 24 May 2008
Accelerated growth is the main expectation and need in the economic realm of Bangladesh. This is largely desired in the private sector. It is for the simple universal realisation that has dawned that the smaller the role of the government in the economy and hence the limitation achieved in waste and profligacy that accompany governmental involvement in the economy, the better the prospect for efficient use of scarce resources which ought to be every economist's goal.
Following this principle, Bangladesh has been striving to achieve private sector-led economic growth for over the last three decades. This has led to the transformation of its economy remarkably. The state sector has considerably shrunk and the economy has added substantial sinews to it and diversified under the private sector. Nonetheless, it is acutely felt by private sector entrepreneurs in different fields that they could achieve a great deal more if only they were better supported in their endeavours by official policies and facilities in place.
Sometime ago, a multilateral capital donor made a detailed report about properly aiding the country's private sector. Prescriptions, as such, for attaining faster private sector-led growth are nothing unknown. However, coming as they do from an important donor organisation, the government does need to take a hard look at them with enough seriousness and attempt whatever needs to be done in line with these proposals.
Poor power supply has been identified in that report as the single-most important infrastructure constraint to private sector development. Power is the life-blood of any economy. It is the basic requirement for industries or the running of services. But the gap between the demand for power and its availability has been widening alarmingly in the country with negative consequences for the latter. Many industrial investments are on stream but these could hit snags after going into operation if new generation capacities are not added to the power sector. The rate of new industrial investment initiatives would be also surely adversely affected by the dwindling power supply. It is imperative on the part of the government to engage in very urgent actions for undertaking or executing development activities in order to create substantial additional capacities for power generation at the fastest. All government-sponsored plans to this end must be hurried towards completion.
Private sector was allowed to generate power on a limited basis. But generation of power in the private sector remains on hold because of the from government's not extending due assurances about the sale of this power. This uncertainty must be overcome at the soonest to increase private sector involvement in power generation. The availability of the other main source of energy, natural gas, must also increase. Gas supply to existing industrial areas needs to much improve; extension of gas supply to areas of the country not covered by such a network will help the private sector to rapidly industrialise those areas. Also, the government needs to take decisions, on a priority, for facilitating new explanation activities in the sector.
There are also other infrastructural bottlenecks of significance such as roads, telecommunications, etc. The establishment of these in greater number can be supportive to private investments. Expansion of ports, their modernisation and improvement of their handling capacities are badly needed. These works are on progress but quicker progress will motivate the investors or entrepreneurs.
Private initiative is encouraged when government policies are seen as favourable over the long term. Withdrawal of tax breaks, high lending rates that are changed by the skewed tariffs that favour imported products over their rival local producers, high rate of corporate taxes and other fiscal and monetary policies that do not assure potential investors about the longer-term dependability on them for the viability of the enterprises they would otherwise like to build, come as disincentives to entrepreneurship. Thus, it needs to be a singular aim of the government to create and sustain a policy environment that can truly keep the private sector interested and going in the path of entrepreneurship.
Following this principle, Bangladesh has been striving to achieve private sector-led economic growth for over the last three decades. This has led to the transformation of its economy remarkably. The state sector has considerably shrunk and the economy has added substantial sinews to it and diversified under the private sector. Nonetheless, it is acutely felt by private sector entrepreneurs in different fields that they could achieve a great deal more if only they were better supported in their endeavours by official policies and facilities in place.
Sometime ago, a multilateral capital donor made a detailed report about properly aiding the country's private sector. Prescriptions, as such, for attaining faster private sector-led growth are nothing unknown. However, coming as they do from an important donor organisation, the government does need to take a hard look at them with enough seriousness and attempt whatever needs to be done in line with these proposals.
Poor power supply has been identified in that report as the single-most important infrastructure constraint to private sector development. Power is the life-blood of any economy. It is the basic requirement for industries or the running of services. But the gap between the demand for power and its availability has been widening alarmingly in the country with negative consequences for the latter. Many industrial investments are on stream but these could hit snags after going into operation if new generation capacities are not added to the power sector. The rate of new industrial investment initiatives would be also surely adversely affected by the dwindling power supply. It is imperative on the part of the government to engage in very urgent actions for undertaking or executing development activities in order to create substantial additional capacities for power generation at the fastest. All government-sponsored plans to this end must be hurried towards completion.
Private sector was allowed to generate power on a limited basis. But generation of power in the private sector remains on hold because of the from government's not extending due assurances about the sale of this power. This uncertainty must be overcome at the soonest to increase private sector involvement in power generation. The availability of the other main source of energy, natural gas, must also increase. Gas supply to existing industrial areas needs to much improve; extension of gas supply to areas of the country not covered by such a network will help the private sector to rapidly industrialise those areas. Also, the government needs to take decisions, on a priority, for facilitating new explanation activities in the sector.
There are also other infrastructural bottlenecks of significance such as roads, telecommunications, etc. The establishment of these in greater number can be supportive to private investments. Expansion of ports, their modernisation and improvement of their handling capacities are badly needed. These works are on progress but quicker progress will motivate the investors or entrepreneurs.
Private initiative is encouraged when government policies are seen as favourable over the long term. Withdrawal of tax breaks, high lending rates that are changed by the skewed tariffs that favour imported products over their rival local producers, high rate of corporate taxes and other fiscal and monetary policies that do not assure potential investors about the longer-term dependability on them for the viability of the enterprises they would otherwise like to build, come as disincentives to entrepreneurship. Thus, it needs to be a singular aim of the government to create and sustain a policy environment that can truly keep the private sector interested and going in the path of entrepreneurship.