A number of public administration reforms have been initiated in recent years, although progress remains slower than hoped for. Promotion policy has been improved for Class I (senior) officers and there is enhanced emphasis on merit in performance evaluation and career development. An improved training policy has been issued, and more importance is being given to training, particularly in public sector management, for promotion. A Career Planning and Training Wing was created in the Ministry of Establishment in September 2003 as a result of which initiatives are underway to improve career planning and effective deployment of Class I officers. Further, modalities are being determined to organise ministries around four clusters, based on type of functions. Deliberations and preparatory work that could lead to the development of a senior civil service or management pool are also underway.
The government has contained employment in public administration at around 1.0 million, including the central government and some staff in semi-autonomous bodies. It has left more than 100,000 sanctioned posts unfilled, mainly among support staff at Class III and IV (bottom two categories) levels by limiting new post creation and controlling the filling of vacancies. The previous practice of permanently accommodating staff temporarily hired for projects has been streamlined and a more rigorous process of review has been put in place. Various services, such as cleaning and maintenance, are also being outsourced.
Strengthening and Modernising Revenue Mobilisation: The National Board of Revenue (NBR) has prepared a medium-term modernisation strategy to improve low revenue yields which are depriving the Government of resources needed for key social programs. Tax revenues account for only 8.0 per cent of GDP and Bangladesh relies unduly on highly protective trade taxes. The Government undertook at the start of the Poverty Reduction Growth Facility (PRGF) programme with the IMF, to increase revenue as a share of GDP by 0.5 per cent a year, but the out-turn for FY2005, at 8.3 per cent of GDP, was little-changed from FY2003. Poor taxpayer services, lack of transparency in collection, inadequate audit and enforcement, and protracted taxpayer disputes have all hampered revenues. The NBR suffers from ineffective human resource policies and lack of authority and autonomy to tackle those, and a weak compensation system and lack of training. Renewal of some tax exemptions in the FY06 budget is likely to adversely affect the tax collection levels.
Revenue administration must improve if government is to fund pro-poor expenditures. A low revenue effort also restrains government from paying a civil servant a living wage, allocating adequate resources for operations and maintenance, improving infrastructure or social services. Low revenue thus creates huge incentives both for corruption and poor service delivery, and the rationing of essential public services which ensues, creates opportunities for rent-seeking.
Initial NBR reforms are already underway, but progress is painfully slow. In November 2003, the Large Taxpayer Unit (LTU) for income tax was restructured along functional lines (taxpayer services, revenue collection, accounting, audit, and enforcement). It was also given responsibility for collecting withholding taxes. Steps were taken to strengthen filing and payment procedures, improve detection of stop-filers, increase capacity for conducting audits, and introduce computerisation of certain LTU operations. In October 2004, the NBR established an LTU for value added tax (VAT) and is in the process of operationalising it. Ideally, for effective enforcement, the LTU needs to combine both income tax and VAT, and NBR is being encouraged to revisit this design. A Joint Commissioner has been appointed but other staff are temporary or part-time, pending approval of the LTU's organogram by the Ministry of Establishment. To improve enforcement and expedite the processing of appeals, two special High Court tax benches have been established. In addition, to discourage fraudulent appeal cases, the Government has increased the amount that taxpayers will have to pay upfront from 15 per cent to 50 per cent of the difference between the contested and admitted amount. Finally, a "Tax Ombudsman" has been established, to assist citizens with their complaints against NBR.
Establishing and Operationalising an Independent Anti-Corruption Commission: An independent Anti Corruption Commission Act was passed by the Parliament in February 2004, providing the Commission with a mandate to prevent corrupt practices and investigate specific offenses. Three Commissioners of the Anti Corruption Commission (ACC) were selected in November 2004, of whom one was appointed Chairman. The Government has sanctioned an initial 500 posts. The Commission has screened 85 senior former Bureau of Anti Corruption (BAC) staff for recruitment. These will be reviewed by a placement committee for suitability for specific posts in the ACC. The ACC also needs to present its organogram and procedural rules to the Government for approval before it can effectively undertake operations.
Reforming the Civil Justice System: Settlement of civil court cases quickens. Major reforms in the Civil Procedure Code were made in 2003, with the objective of modernising court processes, reducing case backlog, expediting dispute settlement, and facilitating access to justice. These reforms facilitated different forms of case management, including introduction of court-annexed mediation, alternative dispute resolution mechanisms, and enforcement of pretrial procedures in pilot courts to weed out frivolous lawsuits. These efforts have resulted in an increased number of out-of-court settlements and in quicker disposal of court cases.
The Money Loan Court Act 2003 provided money courts with exclusive jurisdiction over credit disputes and has vastly improved the loan recovery mechanism. Creditor institutions are now required to exercise self-help by selling collateral in public auction after giving due notice to the defaulting debtors. The Act also provides for summary procedure and disposal of cases solely on the basis of written pleadings and documentary evidence. The maximum time for case disposal is 180 days, although most cases are settled well before that time. As a result, in the 12 months after the new law became effective, recovery increased by over 200 per cent.
Full separation of the judicial branch from the executive remains a contentious issue. The Supreme Court is (sometimes awkwardly) independent, but district court magistrates are recruited by the Public Service Commission, drawn from the administrative cadre and have their careers managed by the Establishment Ministry. As a step toward full separation, a Judicial Service Commission has been created under the jurisdiction of the Supreme Court to take over the recruitment process. (This is the fourth instalment of a report -- Bangladesh Poverty Reduction Strategy Paper Forum Economic Update: Recent Developments and Future Perspectives -- prepared by the World Bank that the FE is publishing in a serialised form. The third instalment of the report was published on January 21)