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UNTIL recently the private sector in Bangladesh meant a few family owned enterprises that dominated its business. From 1980s the private sector has become increasingly important for achieving rapid economic growth, alleviating poverty, enhancing productivity and improving services. It is encouraging that the private sector now features prominently in the development strategy of Bangladesh. It has been elevated to a dominant position in the economic growth process.
The private sector has already demonstrated its capability to create dynamism in the economy. A new generation of entrepreneurs have emerged who are well educated, hard working and eager to face the challenges of globalisation. They have proven their worth in many sectors such as textiles, readymade garments, knitwear, ceramics, cement, housing, construction, frozen-food, poultry, fishing, banking, insurance, packaging, pharmaceutical and cellular telephone. There is yet an apathy towards the private sector largely due to lack of proper appreciation of its potential and capability as the engine of growth. The private sector, which struggled for survival in the early years of independence following large scale nationalisation, has gradually gained momentum as successive governments brought about sectoral reforms and carried out trade liberalisation programmes. As the free market economy has taken roots, the government's involvement in production related and commercial activities is now becoming limited. This is in line with the current global trend. Even former socialist countries of East Europe have now embarked upon privatisation programmes in a big way.
In Bangladesh the private sector has travelled a long way amidst difficulties. It is now operating as the engine of production and growth. In order to exploit its full economic potential, the private sector must be allowed to grow without any hindrance. The global environment is changing fast. Sweeping changes are taking place internationally in the economic and trade spheres and in production processes. These changes are posing formidable problems for the private sector. If the private sector is to survive and thrive, it must face the challenges of global competition in right earnest.
In order to be competitive, we have to reduce production cost, improve efficiency, adopt new technologies and improve management. Inefficient and loss-incurring public enterprises have a depressing effect on the private sector as the latter buys some inputs and services at high prices from these state-owned enterprises (SOEs). The SOEs are incurring colossal losses which consume up about 2.0 per cent of the GDP. This lost amount could have been utilised for development projects. The privatisation programme of SOEs needs to be accelerated. Delay in privatisation is holding back progress from gaining further momentum. Strong political will is needed for faster disinvestment of the SOEs.
Modern infrastructures are the prime requirements for efficient private sector growth. Congenial physical, social and economic infrastructures are critical to speed up the private sector-led economic development. As the private sector is expanding, the role of the mass media and financial, education and health services and better governance including improvement of corporate governance are becoming more and more important. The effectiveness of corporate governance depends on the quality of monitoring, the legal system, a good operating environment, stable and market friendly regulations.
Cooperation between the government and the private sector is also very critical for stimulating the private sector led growth. The government must play a decisive role for high rate of such growth by improving the infrastructure and creating a more conducive environment for rapid industrialisation. The private sector led industrialisation is only possible if government ensures pro-active and pro-competitive public policies. The nature of relationship between the government and the private sector is not yet very conducive to private sector development. It so happens that the government and the private sector are at times suspicious about one another. Creative ideas cannot be translated into reality by the private sector unless government support is available. The civil society's support is also needed for this purpose. Good governance and substantive reforms are also needed to accelerate the development process. Deliberate action is essential to delegate more responsibility to the private sector.
We must now analyse the challenges faced and the opportunities missed by our nation since independence. We must forget the conflicts of the past and give the nation a chance to unite. The government, the opposition, the civil society, social organisations and institutions must reorient themselves with a renewed commitment to accelerate the momentum of sustained growth. Policies have to change to make faster progress possible.
We must institute good governance, create employment opportunities, return to the rule of law and enthuse our civil society to actively participate in nation building. We have to adopt the appropriate technology to bring about rapid development for improving the standard of living of our people. We must also formulate implementable policies to optimise the use of our human, energy, water and agricultural resources. We must reform and strengthen the financial sector including the capital market. We must also take lessons from the success of micro finance activities.
As the private sector has demonstrated its ability to implement projects and programmes, state regulatory functions may be minimised realistically. The private sector should be gradually inducted in areas like road construction, air lines, power generation and distribution, oil import, fertiliser manufacturing and gas distribution.
The confrontational politics has been slowing down the pace of progress in different sectors. We have lost enough time. We have to renew our efforts for attaining faster progress. China and India are averaging growth rates of 8.0 to 10 per cent. There is no reason why we cannot achieve the growth rate of 7.0 to 8.0 per cent with better governance and a creative national approach. The public and the private sector can jointly achieve miracles, given the right environment. The mindset of the government and the opposition must change for achieving rapid progress.
The writer is an economist and
columnist
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