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President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), Mir Nasir Hossain, talked to the FE Tuesday on the economic issues and the impact of the rising religious militancy on business and investment. Excerpts of the interview follow:
Q1: How do you evaluate the present state of the economy?
Ans. The state of the economy appears to be quite good. Macro-economic indicators are in the right direction. Export earnings are increasing. Foreign exchange reserve is comfortable. Capital market is improving. Sizable foreign investment proposals are under consideration. Growth rate of 5.5% is encouraging. The Asian Development Bank (ADB) has predicted that there will be a growth of 6.0% this year. But the recent bomb attacks have given a jolt to the economy. Peaceful atmosphere is needed for healthy growth of the economy. Private sector is acting as the engine of growth. A stable domestic environment is essential for investment and private sector development. Political parties have to deliberate on the issue of bomb blasts and find ways to address it. Due to global petroleum price hike, there is pressure on the balance of payment situation.
Q2: Inflationary pressure on the economy has been on the rise for quite sometime. What the government and the central bank should do to contain the inflationary uptrend?.
Ans. Inflationary pressure is a cause for concern. The central bank is continuing the tight monetary policy. But credit flow to the private sector should not be drastically controlled. The government can take a number of measures in controlling inflation. They may consider reduction of the import duty on some of the essentials. Syndication of hoarders appears to be a major problem. This has to be broken with appropriate measures. We perhaps cannot do much about the impact of rise in international oil prices on the domestic price situation. Prices of essentials need to be monitored on a regular basis.
Q3: The cost of doing business in Bangladesh is said to be high. Has there been any improvement in the situation in recent years?
Ans. Cost of doing business is really high in Bangladesh. There has been some improvement in recent years. Custom procedures and port formalities have been simplified to some extent. Further improvement is needed so that we can be competitive internationally. Simplification of procedures in different areas can reduce the cost of doing business. Transparency in procurement procedures is extremely important. Regulatory measures need to be relaxed.
Q4: Bangladesh has been adjudged the most corrupt country by the Transparency International for the fifth consecutive year. Does Bangladesh deserve this kind of stigma?
Ans. Let us not go into the debate as to whether Bangladesh is the most corrupt country since TI report does not cover all countries. But the fact remains that there is rampant corruption in Bangladesh. The government has set up an independent Anti-Corruption Commission. This Commission has to be made operational as soon as possible. Decentralisation is necessary for reducing the scope of corruption, Many regulatory functions can be delegated to the private sector.
Q5: How far has been the incumbent government private-sector friendly?
Ans. The government is no doubt private-sector friendly. The private sector has to take the initiative for getting the work done by the government. They have to formulate sound proposals for getting the government. support. The government is supportive. They have to be made aware of the process of helping the private sector. There has to be a partnership between the government and the private sector. The FBCCI can play an important role in facilitating the dialogue between the government and the private sector.
Q6: Are you satisfied with the on-going pace of reforms in the country? There has been some backtracking on the part of the government in the process of privatisation. What is your reaction?
Ans.: We are not fully satisfied with the pace of reforms. Privatization process is slow. The state-owned enterprises (SOEs) are bleeding the government of much needed resources. Privatisation has to be accelerated in order to achieve faster growth in the economy. Political considerations are probably the reasons for slow progress in privatisation. Private sector is now the engine of growth. There is enormous scope for privatisation in Bangladesh.
Q7: There have been a few positive signals in recent months about the inflow of foreign direct investment to Bangladesh. What are the reasons, you think, the change of mind among the foreign investors?
Ans.: Foreign Investment is now moving to Bangladesh. Gas and Coal resources are the main attractions for the foreign investors. They are also coming in a big way in the telecommunication sector. Tata proposal will encourage other foreign investors to come forward. Foreign investors will move to country where there is good prospect for return. In spite of political confrontation in Bangladesh, investors are showing interest to invest in Bangladesh. Our politicians must not do anything to jeopardise the investment climate in the country. Bill Gates has commented that there is a congenial climate for investment in Bangladesh.
Q8: Should Bangladesh go for signing FTAs with India, Pakistan and Sri Lanka or try to reap the best out of the SAFTA?
Ans.: Bangladesh should wait and see the outcome of SAFTA before moving to FTA. It is possible that the prospect of FTA may be realised through SAFTA. Same argument applies in the case of FTA with Sri Lanka. FTA with Sri Lanka may not offer a big opportunity.
Q9: How far will be the economy, according to your opinion, affected by the increasing incidents of bomb attack by the so-called Islamist 'jehadis'?
Ans.: Incidents of bomb attacks will drive out the foreign investors. Local investment will also be adversely affected. It will certainly slow down economic progress. We must not make any compromise so far as militants are concerned. The militants do not have any public support. They must be controlled ruthlessly.
Q10: Do you suspect any involvement of outside forces in the terrorist incidents in Bangladesh?
Ans.: It is possible that outside forces are involved. Outside forces may be using the militants. They are probably funding the bomb attacks. The militants by themselves may not be in a position to undertake suicide attacks. There are masterminds behind this. All out effort is needed to eliminate this menace.
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