“Devolution is a must”

Interviewed by Wafiur Rahman.
Thursday, September 14th, 2017


 

Bangladesh needs to focus on potentially big domestic market, ex-Commerce Minister Amir Khosru tells Dhaka Courier.

 

While recognising the country’s potential in external trade, former Commerce Minister Amir Khosru Mahmud Chowdhury says it is high time the country focused on development of its domestic market. He feels that potential of each region must be tapped through zoning, policy supports and resource allocation. ‘Devolution of power is a must if we want to deliver services to the doorstep of the people,’ he said in an interview with Dhaka Courier recently.

 

The businessman-turned-politician ventilated his frustration at the business environment and flight of capital but said if voted back to power, his party, Bangladesh Nationalist Party (BNP), would address the issues of business at hand and a number of critical issues would be accommodated in the party’s next election manifesto. Excerpts:

 

How do you evaluate Bangladesh’s current environment for doing business?

 

The business world structure is built on a combination of factors such as physical infrastructures, energy and power, financial sector, capital market, policy supports, rule of law and law and order situation. All these have now been plagued by problems, causing deterioration in the business environment of Bangladesh. We see infrastructure deficiency, not to mention governance failure. Cost of doing business is very high. The entire banking sector has sunk into problems. High cost of funds is not allowing businesses to be viable. Financial scams like Hall-Mark and Destiny have destroyed public confidence. In fact, the Hall-Mark scam has created a hallmark of corruption and mismanagement. The culture of impunity is a big problem. The share market has been a playground for some people – blessed with power to pocket money from the people who lost money, that could have contributed to investments and job creation. And because of uncertainty in security and absence of the rule of law, some businesspeople are physically migrating to other countries, causing flight of investible capital.

 

What are the major strengths of the country’s external trade, especially readymade garments?

 

In our external trade, we have a great potential in readymade garments (RMG). It can transform and could have already transformed the Bangladesh economy because of our advantage and competitiveness. So far, we have failed to take advantage of the situation created after the financial meltdown in the West. On the demand side, we could have captured the market of the entire lower end products since the purchasing power of Western consumers has come down. On the supply side, cost of manufacturing in countries like China has gone up, creating opportunity for us to attract investment through relocation of industries. Our growth would have exceeded 8%, had we been able to take full advantage of the RMG potential. I am still confident that we have advantage where it is a labour-intensive industry. Leather and pharmaceuticals are among the industries where we are in strong position in terms of external trade.

 

What kind of preparedness should Dhaka have and of economic diplomacy it needs to pursue to exploit maximum potential of earning remittances in the coming years?

 

We could not capitalise on opportunities in the Middle East and Southeast Asia. This is because of diplomatic and political failure. We failed to raise remittances earning up to our potential for mismanagement at home. We could not give the right signal about us to the foreigners. On the diplomatic front, you have to allow professionalism – something which has not been followed in recent times. Instead, diplomats are engaged in partisan political activities instead of making them bound to serve the country and we see misuse of political appointments.

 

Do you foresee more benefits for Bangladesh from the ongoing process of regional integration in South Asia, particularly from India in changing circumstances?

 

Regional integration is particularly important at a time when all regions are getting integrated. I think, we need to have a regional outlook without doing politics with it, with only one country or another. It should be a holistic regional integration – a process in which all the parties should be involved and benefited. It should cover business integration, financial sector movement and also movement of natural persons as specified in the WTO (World Trade Organisation) process. It should be handled not in isolation, but under a package of incentives for all, to take advantage of strengths of each party. We could be benefitted from, for example, India’s knowledge base and we too can offer whatever we can to all countries for mutual benefits.

 

How do you look at our national drive for attracting foreign investments? What are the prospective areas?

 

Unfortunately, we have not witnessed much movement in terms of flow of FDI (foreign direct investment) into the country recently. FDI not only helps secure capital inflow but also helps transfer technology and create jobs in countries like ours because of labour-intensive nature of industries. However, FDI will not come if we simply invite foreign companies and entrepreneurs to come. They would have their choice based on right atmosphere and signal. You have to put everything right – infrastructures, regulatory regime and so on. A country like Vietnam (having similarity with economic status of ours) has attracted US$12 billion in a most recent year and I don’t think the annual FDI inflow into Bangladesh should be anything less than that.

 

What would you suggest to facilitate strong and sustainable industrialisation in Bangladesh in view of challenges coming from globalisation? What about devolution of power and decentralisation of economic activities?

 

We once embarked on the export-led growth strategy because of lower purchasing power of our people at that time. But time has come to cash in on the opportunity of our own domestic market by creating employment opportunities for people and developing the market. Just imagine, if we can develop the market with 50% of our population of 16 crore, it is a huge market, even bigger than many in European countries. We have to exploit the potential, whatever and wherever we have. We have to go for zoning to identify such potential in, for instance, Rajshahi, Chittagong or any other place and allocate resources accordingly. Dhaka alone cannot be the control tower of Bangladesh and we have to come out of it. Devolution of power is a must as if we want to deliver services to the doorstep of the people.

 

What do you think of the current trends of the stock market? Is it stock market at all and what needs to be done to make it a major source of raising funds and ensure discipline and fair play in the market?

 

It is not a stock market at all. It is risky and there are dictated interventions in the market. Unless and until the Securities and Exchange Commission would be run with professional people independent of external influence, the market will remain volatile. Banks cannot be the only source of funding for large industrial projects but companies are still scared of going to the stock market for raising funds for absence of confidence in the market and regulatory regime.

 

As a former commerce minister, what do you think are the missing areas in national policymaking in promoting and supporting businesses and creation of jobs?

 

Regulatory bodies and oversight institutions have been nakedly politicised. They are manned politically and transparency is not there. An institution like ACC (Anti-Corruption Commission) cannot function properly or in other words it is acting on the advice of some in the government. The same applies to BTRC (Bangladesh Telecommunication Regulatory Commission). The power sector has been politicised through rental power plants and all that. Genuine businessmen are being deprived of business opportunities. There is no significant increase in employment in the private sector while in the public sector, right people are not in right position and there is no adequate manpower where it is required but there is excess manpower where it is not required.

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