Economic aspirations for a ‘sovereign land’

Economic aspirations for a ‘sovereign land’

Sajjad Zohir | Prothom Alo  Feb 05, 2019

Prothomalo file photoIn an earlier posting on 31 January 2019, my views on centrality of current politics and its implications for the long-term dynamics in Bangladesh were discussed. Reference was made to the ‘strategist,’ which needs clarifications before some thoughts on desired action for economic development are presented.

In any system of exchange, if one party is a strategist, others in the system ought to be either passive takers (such as the consumers under monopoly), or, respond as (counter) strategists with varying degrees of bargaining power. Defining an identity in a multi-actor setting is tied to one being a strategist.

At home, we often pretend to be sovereign, but essentially enforce instructions from the ‘higher-up’, and often, do so willingly to avoid the cost of thinking. It is also possible that we have been trained (‘programmed’) to think in specific ways, or, not to think at all! Independent thinking and planning are prerequisites for one to be a ‘strategist’, and sovereignty can be achieved by being strategic.

Or else, policy discourses may get trapped within the parameters set by the regional or global ‘strategist’.

As mentioned before, my aspirations as a residing citizen in Bangladeshis are to see a sovereign land where unhindered human creativity and inclusive development flourish. Without rationalising and without framing the inter-linkages between various dimensions of development, let me only list some of the areas where economic development efforts of policymakers and political leadership may focus. Rather than providing an exhaustive coverage of sector-level policies, other than the first proposal, this posting illustrates how the government may engage strategically.

(i)    Fast completion of ongoing mega projects and sequencing of the ones in pipeline: To keep a cap on financial cost and ensure positive returns, projects where physical investments have been made ought to be completed quickly. Sequencing of the mega projects in pipeline should account for optimum utilisation of capital machineries brought into the country and maximum transfer of know-how (human skills).

(ii)   Need to manage both public and ‘public-guaranteed’ external debt: Mega investments along with push factors in the global lending market matched by hunger of local government and private agencies for external borrowings, combinedly led to rapid increase in the size of external debt.

 

According to IMF source, the public and public-guaranteed (PPG) external debt stood at $35 billion at the end of financial year (FY) 2017, of which, public external debt stood at all-time high of $28.57 billion. Bangladesh Bank’s QFSA Report (April-June, 2018) mentions of long term debt of $33.85 billion and another $6.98 billion under short term debt, at the end of FY 2016. The corresponding figures at the end of FY 2018 are respectively $42.5 billion and $12.53 billion.

Those keen on maintaining global financial stability can downplay Bangladesh’s vulnerability to external shocks. In a country where there is no transparent audit of public borrowingand the regulators have revealed their weakness in regulating non-performing private borrowings from the banking sector, the rapid increase in the size of external debt and in “public guaranteed” private borrowing are extremely worrisome developments! On this count, there are concerns for the country’s sovereignty.

(iii)  Disperse risk by urging for cost sharing in projects benefiting the region with multiple countries: I would not be critical of borrowing for worthy investments, and surely, many of the projects under finance are important for the country.

However, many of those are meant to bring returns to countries beyond our borders. Examples may include conversion of train lines (from meter to broad or dual gauge, gridlines for transmission of electricity, or submarine cable connection). It is a global practice to share the costs among benefiting partners. It is unclear how the negotiating policymakers on Bangladesh side are protecting the future generation from undue liabilities. Clearly, the country needs to be strategic in those negotiations with regional partners!

(iv) Begin to reduce dependence on remittances from overseas employment: Current emphasis on preparing Bangladesh’s labour force for overseas employment appears strategic since it absorbs the potential unemployed and brings remittances. Past experiences however suggest that the provisions to work in countries may be easily stopped to suit the interests of the external ‘strategist’.

 

Moreover, interests in grabbing that fund have strengthened, making the country increasingly vulnerable to external shocks! Thus, it is urgent to draw up a medium to long-term plan to move out of our dependence on overseas employment into a strategy of sustained employment generation inside the country. In order to create favourable environment for local businesses to start and grow, the corporate tax structure, along with the accounts and audit-based governance of the (local private business) sector by fiscal authority, needs major restructuring.

All these need to be supplemented by more judicious use of current remittance earning and negotiating foreign direct investments (FDIs) to include sub-contracting with local agencies so that employment and transfer of know-hows may be ensured for inclusive development.

(v)  Improve governance of money and banking sector: Money and banking provide important ways to mobilise resources, and their appropriate and efficient governance is necessary for ensuring in-country capital formation and employment generation. Sovereignty of the monetary system is an important indicator of a country’s sovereignty.

(vi) Introduce efficient and client-neutral land management: It is important to recognise that IT-based solutions to land management can employ youths and may groom them for furthering their employability in markets linked to IT and IT-enabled services (ITeS). Improved land management will also reduce risk associated with bank finance tied to properties on account of collateral requirement. Unfortunately, not taking an action on land management itself may have been a strategic choice – bit for the wrong reason. This needs to be reversed to get the society rid of many interlinked vices.

(vii)        Incentivise collective actions in the fields of economic cooperation between households, communities and business entities: Individuals competing for limited resources often engage in actions (such as, setting up suction pumps to get water from WASA line) which lead to higher cost to the society.

 

Similarly, cooperation in buying or selling of goods and services and sharing of labour can reduce aggregate costs (of an economic activity) to the society. Given Bangladesh’s long history of successes in social action, it is important to recognise the potential of economic cooperation at policy levels and identify areas where such engagements may be incentivised.

Finally, turning into a strategist, be it a government or a group in political sphere, requires one to acquire adequate information on other players in the international as well as in the domestic arena. Fulfilling such a huge task demands capacity, well-coordinated collection of information and their processing for specific authorities within the government. Unfortunately, the administrative and political culture of decision-making in Bangladesh, as well as the project and consultancy-based global practices relegate the roles of governments in weaker countries to monitors. The difficulties of transforming roles from a monitor to a strategic player is further aggravated by increasing control of information gateways by supranational players.

The metamorphosis may not begin unless a minimum degree of sovereignty is established in the field of information.

  • Sajjad Zohir is a researcher on economic issues. The views expressed in this paper are his own and do not represent Economic Research Group, the organisation where he works.

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