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GDP growth rate will be restored by end of FY22′: Says Planning State Minister

GDP growth rate will be restored by end of FY22′: Says Planning State Minister

n an exclusive interview, Planning State Minister Dr Shamsul Alam speaks to the Tanveer Mohiuddin about his visions and goals for developing the economic infrastructure of the country, what the future of the economy holds, and how the government is trying to tackle inequality. Previously, Dr Alam served as a member (senior secretary) of the General Economics Division (GED) of the Planning Ministry for 12 years, and recently took office as a state minister on July 19 earlier this year.

What sort of limitations did you face while serving as a member (senior secretary) for the past 12 years? Now that the role has changed, what has been your experience in the last two months?

As I served as a member of the GED for 12 years, I never felt any limitations or barriers in discharging my duties. Rather, I received all sorts of cooperation from every tier of the bureaucracy and even from the think tanks.

Now, I have many new challenges to handle. Previously, I discharged my duties as an academician which was mostly intellectual work. My approach was always quite participatory; I tried to seek opinions of the ministries, the civil society, and think tanks.

And now, with this new role, my perspective has changed. Previously I prepared plans to be implemented by the ministries. But now I am in a position where I am not only a planner but my major role would be to accelerate implementation — on time and in a transparent manner.

One of the big problems we face is delays in implementation. When there is a delay, costs increase, putting a burden on the government’s resources.

I will be aiming for development projects having appropriate feasibility studies, so we do not regret them later.

Are there any plans for new economic zones? What benefits do we expect from them?

We have at least 100 economic zones to establish. For 62, we have taken steps and the rest will be formulated in due course. We will have to complete all those new economic zones by 2030. We aim to spur economic growth and exert economic influence as we rapidly have social and economic changes, also taking into account the environmental impacts of those projects.

Our economy will be an industrialized one by 2041.

We have already made huge progress in industrialization in the last 12 years as it has become the second-largest contributing sector in the economy after the service sector, followed by agriculture.

By 2041, the industrial sector must contribute to the GDP to the tune of 40-45%, comprising industrial output or industrial sector contribution.

Also read – Dr Shamsul Alam takes oath as state minister

What are your plans to facilitate the inflow of new foreign direct investment (FDI)?

FDI is the only probable big source to tap into because as we are progressing, overseas development assistance has been decreasing and dwindling year after year.

After the LDC graduation, international support mechanisms will be fewer than what we had before.

We need to have more funds flowing into the economy through foreign direct investments as more flow means more economic activity within the country; that will help make our country an export-led economy.

We want to diversify our economy further, as our export basket is not so diversified. We have 82-84% of total exports from the garments sector. It is risky for an economy as any shock in that sector may create havoc in the economy. So, our utmost efforts would be to diversify the economy, both in terms of products and the destination markets. For that, we need to have more investments and have more advanced technologies.

Through new FDIs, we will have more advanced technologies and a more technically efficient workforce, because with FDI, not only do they [investors] bring in funds, but they also bring expert hands.

Bangladesh Investment Development Authority (Bida) has already created a regulated and incentivized environment to encourage more FDI.

We have also established a one-stop service where they can avail services of 18 ministries in one window.

Apart from infrastructural facilities, we are also working to ensure smooth repatriation of their profits to their own countries.

How do you plan on tackling the new barriers to international trade after 2026?

After 2026, we will be formally announced as having graduated from a least developed country (LDC) by the General Assembly of the UN. After 2026, we will get three more years as a concession period, so after 2029, we might be losing the system of generalized preference and new tariffs imposed by the importing countries, which will increase the prices of our export goods.

To compete head-on with other manufacturers, we have to depend on advanced technologies for more output, and we also have to make sure we have more highly developed human capital to ensure more efficiency for higher productivity per unit of labour.

We must be ready to embrace the fourth industrial revolution. We have to be very careful — how we develop our human resources, and how we adapt to new technologies. We also need to ensure that we produce products of the highest quality in order to compete globally.

According to the Commerce Ministry, Bangladesh plans to join the Regional Comprehensive Economic Partnership (RCEP). What benefits can we expect from this?

In our seventh and eighth five-year plans, we said that we will be trying to make our country an export-led economy because we do not have many natural resources. The only way to increase our resources is through trade.

One of the big elements of globalization or international trade is having partnerships with other countries. One of the barriers to the growth of the export market is the imposition of tariffs. If tariffs can be reduced, we can import in a cheaper manner, and we can export more.

I refer to both our seventh and eighth five-year plan, where we emphasize tariff rationalization. We will go with free trade agreements (FTA) and preferential trade agreements (PTA), as many as possible.

And for RCEP, which is a big trading bloc including many countries of the world, certainly, Bangladesh will be greatly benefited without a doubt.

That is why we specifically said we will have at least eight FTAs or PTAs in our eighth five-year plan period.

We have already completed an FTA deal with Bhutan. But having free trade with a bigger economy will help us more. So, we have to sign at least seven to eight FTAs during the five-year plan within 2025.

Joining the RCEP will not be a threat to our local industries as competition can make them more skilful.

We must join RCEP and we must have a trading partnership with Asean countries as Bangladesh will be benefited by cooperating with all these economic blocs and trading partners. It will help accelerate our businesses and therefore create more jobs, which in turn will create more scopes to earn more foreign currency.

Are there any plans to facilitate the growing e-commerce sector?

Of course, we have a plan and we will have a new lookout for how we move forward with the e-commerce sector. Since 2009, Prime Minister Sheikh Hasina’s government has emphasized a lot for digitization of the economy and e-commerce can play a big role to this end.

We see digitization has progressed largely, as the e-commerce sector has flourished during the Covid-19 period over the last one and a half years.

The pandemic has hurt our economy and slowed down our growth in many ways as it did in every other country, but one progress we made during the Covid-19 period is accelerated digitization of our businesses and improved way of life through availing internet facilities.

Even seminars, conferences and workshops, were organized using the online facilities that reduce cost of travel and other expenditures related to organizing the events. Thus, it helps reduce the overall cost of business.

We were also able to export ICT products more than ever during this Covid-19 period as well as even teaching techniques have improved through digitization.

In recent times, we have seen a lot of commotion regarding e-commerce businesses. As a representative of the government, do you believe that these problems can be fixed with reforms to the existing laws?

This was not completely unexpected; we are travelling through a new path when it comes to online businesses. We are learning through our shortcomings, but I have to say we have come a long way and have progressed a lot with the e-commerce sector.

We can see many scrupulous people have availed the opportunities that come with digitization and e-commerce for their profit.

In many cases, there are some who operate illegally. So certainly, I think laws should be passed in the parliament where the rules are framed in order to encounter these digital flaws or digital ways of exploiting people in the name of online businesses.

The exploitation and cheating needs to be stopped with an iron hand through legal means, otherwise, the consumers will be frustrated, leaving the e-commerce sector handicapped.

As we are still within the grasp of the pandemic, do you think that has affected our path to becoming a developed country within 2041?

The pandemic, to some extent, has slowed down our economic growth, but we are still in the positive zone in expanding our economy. Even some strong economies like the US, EU and our neighbouring India were all in the negative zone in terms of growth during the 2019-20 fiscal year. We have seen that in the first year of the pandemic, their economy shrunk to the tune of 10% in the US, the EU witnessed an 8% negative growth, and India too experienced a similar fate of around negative 7%.

On the other hand, during that year, Bangladesh had a positive growth of 3.51%. Certainly, it is not the rate we achieved before — having an 8% growth rate — but the good thing is we were in the positive range.

And now, in the second year of the ongoing pandemic, international organizations such as the World Bank and IMF predict that the growth rate would be around 5.51%.

But whether that will hamper our milestone target as we cherished in our vision, I think this is a temporary phenomenon where we expected slow growth in its first two years of the worldwide pandemic.

But mind that we are recovering very fast and at the end of this financial year next June, our economy will be back to its previous growth rate.

I think we can recover and recoup what we lost during these two years of the pandemic in the following five years.

What measures do you plan on taking to reduce income inequality?

This is a big concern for all economists and social thinkers. It is true that inequality is creating division in society. But whenever in a particular stage where the economy grows faster, one can observe an increase in inequality because those who are financially better-off tend to invest more.

In comparison to that, the lower middle and the low-income groups cannot invest that much as they have meagre or no capital. So certainly, they fall behind in terms of adding resources to the economy.

We cannot stop them [those who invest as rich entrepreneurs] from working or ask them to go slow. At the end of the day, we have to look into the total resource creation within the whole economy.

Of course, we are quite mindful of that inequality gap, that is why this government led by Prime Minister Sheikh Hasina has adopted social security programs for the country to ensure the social security strategy, providing more money to the vulnerable and the marginal groups in terms of social benefits and allowances such as widow allowance, maternity allowance, freedom fighters allowance and many more as such.

On the other hand, we have deliberately increased the flow of money to the rural areas by creating roads and other infrastructures, including educational institutions. All these are aimed at allowing poorer people become skilled citizens through training and education and this has helped reduce the gap.

The same commodities that we find in the cities can now also be found in the rural areas, suggesting there is market integration, which helped reduce inequality. That is why our expenditure inequality has not increased.

The income inequality gap has not increased after 2014-15 but I would like to emphasize the fact that we are mindful of how to tackle the existing inequality situation. Courtesy: DHAKA TRIBUNE

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