The agonising dilemma of anti-graft drive
Monday, 5 November 2007
Shamsul Huq Zahid
MANY men, many minds-the old adage seems to be true in case of the impact of the ongoing anti-graft drive in Bangladesh.
The International Monetary Fund, IMF, in a recent draft aid memoire submitted to the government for consideration said the 'anti-corruption campaign has led to uncertainty in business community, temporarily disrupted activity in some sectors, particularly construction, and has dampened overall investment. As a result, the growth in FY'08 is projected to slowdown to 5.5 per cent (from the 7.0 per cent growth projected earlier).
British High Commissioner in Bangladesh Anwar Chowdhury while speaking at the monthly luncheon meeting of the Foreign Investors' Chamber of Commerce and Industry, FICCI, in Dhaka last week said "trade and investment seem to be suffering from an unforeseen and paradoxical consequences (of the anti-corruption drive)".
"The anti-corruption drive has upset the old ways, the old system of understanding, and this has led to near collapse in business confidence. As a result of this and other factors, economic growth this year is predicted to be lower, may be up to 2.0 per cent lower", Chowdhury said.
The IMF officials and the British High Commissioner who have been closely watching the recent developments in Bangladesh are strongly supportive of the government's anti-corruption drive. But what they said was nothing but the statement of fact.
The current chair of the Berlin-based anti-graft watchdog, the Transparency International, TI, Huguette Lebelle, has, however, expressed a different view.
Lebelle, who was on a visit to Bangladesh, delivered a public lecture at a function in Dhaka and stated there was virtually no link between anti-graft drive and economic slowdown. At her press conference, she later noted that things had happened differently in Dhaka. "While anti-graft drive in other parts of the world leads to better economic performance, the situation in Bangladesh appears to be different", she said and added, something else could be responsible for economic slowdown and erosion of business confidence in Bangladesh.
The TI chairperson referred to the current US housing slump and the 1997 Asian financial crisis and said neither of the incidents had anything to do with anti-corruption drive. Lebelle was right in her observation. The ground realities in Bangladesh, particularly about the economy, dominance of the black money and crony capital are the specifics of the situation here that merit a close scrutiny to assess the impact of the anti-graft drive on the economic activities. On their part, the people have appreciated the drive against corruption and do firmly support the same. But they also want that the drive should not adversely affect the economy, particularly in its present depressed state of activities. It is in consideration of this that the government sponsored a dialogue with the representatives of the business community last month in the capital city with the prime objectives of dispelling fear developed among the businesses due to the anti-graft drive and encouraging them to engage in normal trade and investment activities.
On their part, many people tend to hold the actions against high-profile corruption suspects and tax evaders responsible for the abnormal hike in the prices of essentials, one of the major worrying factors for the incumbent government. The after-effect of anti-graft drive, however, demonstrates the strength of black money and its influence over formal economy. None also made attempts to workout the possible impact of the anti-graft drive. Such unintentional failure, however, facilitated the drive against corruption and other financial irregularities abusing state power. Had the government been aware of the possible impact of its action, it might have been handicapped by indecision.
However, it is not the anti-corruption drive that has unsettled the price situation. There are external factors that have contributed much to the rising prices. But some rash actions in the initial days of the present interim administration, such as anti-hoarding drive, had created severe panic among the importers and wholesale traders of essential goods. Some traders feel that the government could have avoided such ill-conceived actions.
While talking to this scribe last week, a couple of importers of essential items in the port city of Chittagong said law enforcers sealed off a number of warehouses containing a few thousand maunds of rice or wheat in Chittagong. The food grains stored in those warehouses were not even enough to meet a day's food requirement of a fraction of the population. Such actions created panic among the traders and a good number of them stopped importing food items. However, the panic does not exist anymore and most businesses dealing in essential items are back in normal trading activities.
Some big businesses are already in jail, some others are on the run and the names of a few more are on the list of suspected corrupt persons. The business units owned by these people have been facing problems in carrying out their normal operations. This development has created worries among other business houses which have decided to go slow and maintain a low profile. The less than normal activity has affected investment and thereby poor demand for funds.
Serious actions against individuals, who have amassed resources through irregular means, including corruption, have been long overdue. But unsettling effect of such actions on the economy is now hurting everybody, the poor being the worst sufferers. In the event of official actions against corrupt elements in a developed economy are unlikely to release similar results since black money there does not have the strength to dictate terms on the formal economy. The situation in Bangladesh, however, is the opposite.
MANY men, many minds-the old adage seems to be true in case of the impact of the ongoing anti-graft drive in Bangladesh.
The International Monetary Fund, IMF, in a recent draft aid memoire submitted to the government for consideration said the 'anti-corruption campaign has led to uncertainty in business community, temporarily disrupted activity in some sectors, particularly construction, and has dampened overall investment. As a result, the growth in FY'08 is projected to slowdown to 5.5 per cent (from the 7.0 per cent growth projected earlier).
British High Commissioner in Bangladesh Anwar Chowdhury while speaking at the monthly luncheon meeting of the Foreign Investors' Chamber of Commerce and Industry, FICCI, in Dhaka last week said "trade and investment seem to be suffering from an unforeseen and paradoxical consequences (of the anti-corruption drive)".
"The anti-corruption drive has upset the old ways, the old system of understanding, and this has led to near collapse in business confidence. As a result of this and other factors, economic growth this year is predicted to be lower, may be up to 2.0 per cent lower", Chowdhury said.
The IMF officials and the British High Commissioner who have been closely watching the recent developments in Bangladesh are strongly supportive of the government's anti-corruption drive. But what they said was nothing but the statement of fact.
The current chair of the Berlin-based anti-graft watchdog, the Transparency International, TI, Huguette Lebelle, has, however, expressed a different view.
Lebelle, who was on a visit to Bangladesh, delivered a public lecture at a function in Dhaka and stated there was virtually no link between anti-graft drive and economic slowdown. At her press conference, she later noted that things had happened differently in Dhaka. "While anti-graft drive in other parts of the world leads to better economic performance, the situation in Bangladesh appears to be different", she said and added, something else could be responsible for economic slowdown and erosion of business confidence in Bangladesh.
The TI chairperson referred to the current US housing slump and the 1997 Asian financial crisis and said neither of the incidents had anything to do with anti-corruption drive. Lebelle was right in her observation. The ground realities in Bangladesh, particularly about the economy, dominance of the black money and crony capital are the specifics of the situation here that merit a close scrutiny to assess the impact of the anti-graft drive on the economic activities. On their part, the people have appreciated the drive against corruption and do firmly support the same. But they also want that the drive should not adversely affect the economy, particularly in its present depressed state of activities. It is in consideration of this that the government sponsored a dialogue with the representatives of the business community last month in the capital city with the prime objectives of dispelling fear developed among the businesses due to the anti-graft drive and encouraging them to engage in normal trade and investment activities.
On their part, many people tend to hold the actions against high-profile corruption suspects and tax evaders responsible for the abnormal hike in the prices of essentials, one of the major worrying factors for the incumbent government. The after-effect of anti-graft drive, however, demonstrates the strength of black money and its influence over formal economy. None also made attempts to workout the possible impact of the anti-graft drive. Such unintentional failure, however, facilitated the drive against corruption and other financial irregularities abusing state power. Had the government been aware of the possible impact of its action, it might have been handicapped by indecision.
However, it is not the anti-corruption drive that has unsettled the price situation. There are external factors that have contributed much to the rising prices. But some rash actions in the initial days of the present interim administration, such as anti-hoarding drive, had created severe panic among the importers and wholesale traders of essential goods. Some traders feel that the government could have avoided such ill-conceived actions.
While talking to this scribe last week, a couple of importers of essential items in the port city of Chittagong said law enforcers sealed off a number of warehouses containing a few thousand maunds of rice or wheat in Chittagong. The food grains stored in those warehouses were not even enough to meet a day's food requirement of a fraction of the population. Such actions created panic among the traders and a good number of them stopped importing food items. However, the panic does not exist anymore and most businesses dealing in essential items are back in normal trading activities.
Some big businesses are already in jail, some others are on the run and the names of a few more are on the list of suspected corrupt persons. The business units owned by these people have been facing problems in carrying out their normal operations. This development has created worries among other business houses which have decided to go slow and maintain a low profile. The less than normal activity has affected investment and thereby poor demand for funds.
Serious actions against individuals, who have amassed resources through irregular means, including corruption, have been long overdue. But unsettling effect of such actions on the economy is now hurting everybody, the poor being the worst sufferers. In the event of official actions against corrupt elements in a developed economy are unlikely to release similar results since black money there does not have the strength to dictate terms on the formal economy. The situation in Bangladesh, however, is the opposite.