The economic situation of the country is in great crisis. In this situation, economists, business leaders, and industry experts believe that the new interim government should prioritize the private sector's business activities to bring dynamism across the board.
They said that it is crucial to revive the business sector first, which has been in crisis for a long time. Afterward, the government should focus on reforms to curb corruption.
The recent mass uprisings have further aggravated the ongoing economic crisis. With the new government taking charge, there is now hope for the normalisation of public life. In line with this, uplifting business activities is essential for economic recovery. The advisers of the interim government are promising swift solutions to pull the economy out of its current state of collapse.
This special report gathered expert opinions on how to restore normalcy in business and industry.
Reviving economy should be the first priority
By Dr. Zahid Hussain
Instead of focusing on growth, we must ensure first the economy is functioning properly. It is crucial to verify that the existing systems are working effectively. For a long time, various economic sectors have been paralyzed, and they need to be revitalized first.
We must ensure the operation of factories, shops, buses, trucks, and trains. The first step towards this is restoring law and order. Without security, people cannot engage in business. After ensuring that law and order are under control, the government must work to build public trust by taking visible actions.
A key measure should be controlling inflation, which is critical both for GDP growth and the general populace. A significant problem in managing inflation is the extortion syndicates in the market, which must be eradicated. Currently, with less extortion, sellers are making higher profits even by selling at lower prices. Therefore, monitoring these extortion activities is essential for reducing inflation. The government must also stop financing the budget by printing money, as such actions are necessary to control inflation. If inflation is kept in check, people will be happier, which is vital for growth.
Ensuring an adequate supply of foreign currency is another area that requires attention. Reforms are needed to address the existing challenges in the financial sector, and the government must take visible steps. Additionally, the accuracy of our statistics must be improved. We often struggle to accurately gauge our true growth rate because our definitions of growth, exports, and GDP are flawed.
The author is the former Lead Economist, World Bank, Dhaka Office
Effective monetary policy to curb inflation
Dr. Ahsan H. Mansur
The current monetary policy is not effectively contributing to reducing inflation. To bring down inflation, monetary policy must function properly, and this requires coordinated efforts from all relevant institutions. Monetary policy needs to be tightened, and the exchange rate must be kept stable. Simply raiding markets and imposing fines will not control inflation. The interest rates, which are market-driven, should be maintained or even allowed to increase. Forced control of interest rates, expanding credit, or printing money will not curb inflation. Excessive liquidity support should be avoided, and the exchange rate should be kept high and market-based. The existing policy framework is adequate and should not be tampered with significantly.
To reduce inflation, the policy interest rate could be slightly increased, perhaps from 8.5% to 9.5%. The government should also reduce borrowing from banks to finance the budget.
Market controls are generally ineffective; no one can fully control the market. However, actions must be taken to eliminate extortion, as it increases business costs and leads to higher product prices. Anti-corruption measures are also essential.
Mentionable, inflation has been hovering around 10% for the past 14 months. While inflation has been increasing, wages have been rising at a rate of 2% lower, forcing individuals to borrow money every month to make ends meet. In June, inflation was at 9.72%, with food inflation being particularly high. Although there was a slight decrease in inflation in June, it is expected to rise again in July. In June, food inflation was at 10.42%, while non-food inflation was at 9.15%.
The author is the Executive Director, Policy Research Institute
Revenue will increase if NBR is free of corruption
Dr. Mohammad Abdul Mazid
The National Board of Revenue (NBR) should not be treated merely as a government office rather as a state office. Reforms are needed to ensure that NBR operates independently, rather than according to the whims of government leaders. NBR officials claimed that the Chairman should be appointed from within the organisation rather than from outside. While there is some merit to this, the primary focus should be on reforming the working methods, along with administrative reforms, to improve the revenue situation.
Automation has not been implemented for a long time, because neither businesses nor NBR have shown interest or responsibility. Both parties have their own issues. While the country is executing large-scale projects, there is often no budget allocation for NBR’s reform and automation, nor are the necessary machines purchased. The government has not taken significant steps in this regard, and businesses are also resistant to automation as it might pose challenges for them. However, automation is essential for ensuring transparency in accounting and revenue collection. For it to be effective, both NBR and its users must be sincere and responsible. Otherwise, automation will not yield any benefits. The state can implement an online system if it takes responsibility.
The author is a former Chairman of the National Board of Revenue (NBR)
Priority must be given to private sector
Md. Amin Helaly
On 5 August, the anti-discrimination movement led to the fall of the former government under Sheikh Hasina. In the aftermath, like many across the country, the business community also felt insecure. It was in this context that, 72 hours later, an interim government was formed, bringing relief to the nation’s business sector.
However, there is an expectation that the new government, led by Chief Advisor Dr. Muhammad Yunus, will prioritize restoring law and order to revitalize the country’s business and economy.
Business leaders believe that governments may come and go, but the economy must remain active. For this, good governance and supportive policies from the government are essential to maintaining a dynamic economy. Every year, over 2 million people enter the labor market in Bangladesh, with only 5% finding employment in the public sector and 95% in the private sector.
The private sector accounts for 85% of the country's economy, making it crucial to ensure investment in business to engage the youth workforce. To invigorate business activities, the government must provide effective policy support; otherwise, the economy cannot be revitalized.
Dr. Muhammad Yunus, the current head of the government, is highly respected and accepted by global leaders. His leadership has alleviated the anxiety among the people of the country. Given his esteemed position among global policymakers, it is possible for him to swiftly revitalize the economy. While Bangladesh may lag in the global economy, Dr. Yunus is ahead in his standing with world leaders. Therefore, he must make timely and strategic decisions to advance Bangladesh in the global market.
According to private sector entrepreneurs, restoring law and order is essential to reviving the economy, which has faltered due to the political turmoil. The government must also focus on restoring public confidence and bringing back a sense of security among the people.
The author is the Senior Vice President of FBCCI (Federation of Bangladesh Chambers of Commerce and Industry)
Source: Kalerkantho
BDST: 1337 HRS, AUG 11, 2024
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