M. Shahidul Islam
The US Ambassador Dan Mozena wants to see Bangladesh as the next Asian tiger. We wish his prescience proves apt. Forget about the unbridled and unprecedented aura of corruption, a stroll across Dhaka’s slums and the country’s interiors where the flood-battered and river-crushed, uprooted millions are striving to keep their body and souls together belie the claims of the government that the ‘bold and dynamic’ leadership of Sheikh Hasina-led AL regime had ushered in an era of milk and honey for the perennially impoverished nation of Bangladesh.
Objective analyses and observational evaluations also fail to correlate neatly with the government’s bravados and the developmental euphoria. The fact that the GDP in 2014 is likely to dip below 6 per cent, which was 6.5 per cent in 2011, also speaks a volume about the overall economic performances of a regime that is vouching profusely to sacrifice democracy for development to indefinitely cling onto power. This indeed is a pretext to hide its illegitimacy as is the crying wolf of Islamic terror.
Data doctoring
The propaganda that the country is gliding faster than anticipated toward a middle income country is not borne by facts or evidences. One can measure the progress in development of any nation by dividing the total national income with the number of population. This data, however, can be easily inflated by showing the lesser number of people due to population censuses not occurring yearly. From all available indications, Bangladesh’s population is well past 160 millions and our per capita income is not $1,190, as is claimed by the Bureau of Statistics (BBS). Another way to appropriate progress is by measuring per capita power consumption; which is 216 kWh for a Bangladeshi, well below even of an Angolan or a Cameroonian.
The economy is dried of investment; domestic and foreign. This scenario is evident from the pattern of employment which still remains concentrated on agriculture. Of the estimated 57 million workers, 63% is stuck in seasonal employment in agriculture due to shortage of jobs in the manufacturing or service sectors. The industries have managed to employ so far only 11% of the workforce while the service sector has absorbed another 26%. If more than half of the GDP is generated by the service sector, why should it absorb only 26 per cent of work force? This anomaly is irreconcilable.
As well, the low official unemployment data, 4.5 per cent, obscures a huge and growing under-employment crisis which compels workers to take the risk of life and go abroad. That notwithstanding, the economy is still vibrant because the demand is growing leaps and bounds, thanks to the Non-Resident Bangladeshis (NRB) who are pumping into the economy an astounding amount of over $14 billion per year, officially, and, added the unofficial transactions through the so called hundi, the amount could be anything between $25 and $30 billion.
Capital flight
The unofficial remittance of money by NRBs is causing the economy irreparable damage by depriving the banks of the fees, hence the corporate tax to the government. It is also adding extra pressure on the economy by injecting huge unaccounted liquidity and exacerbating inflation. Above all, the hundi system is the conduit through which billions of dollars are being smuggled out of the country through a mechanism in which local taka can be deposited on any pretext to another local account of a hundi trader who holds NRBs cash dollar reserve abroad and pays off the beneficiary/nominee in any foreign country. Ill-gotten money within the country triggers this undesirable flight of capital.
A recent investigation revealed how nearly about $470 million remittance from about 175,000 NRBs residing in Singapore disappear through the hundi traders’ sleight of hand who send this staggering amount to the corrupt and un-patriot recipients in Europe and North America in return for ill-gotten taka received inside Bangladesh and given to the NRB remitters’ families. The investigation discovered that not even one per cent of the nearly half a billion dollars worth of remittance from Singapore is processed through any financial institution. The hundi traders are equally active anywhere there are NRBs.
What then is the real benefit to the economy of the overseas remittances? No doubt the remittances spur growth through increased consumer demand, but such gains are compromised by milking off huge money out of the country due to the bulk of the transactions of remittance not occurring through official channels.
Far away from homeland, the unskilled NRB workers suffer due to lack of jobs within the country. If the economy is vibrant, according to the data being revealed by the government, why the domestic and foreign investments remain so stymied?
Wither investment?
According to commerce minister Tofail Ahmed, latest data on export exceeded US$30 billion. This is no doubt good news, but import still hovers to the range of $37 billion; of which capital machinery imports account for only 2.3 billion. The tepid growth in capital equipment import points to lack of investment in industry, which will worsen the employment crisis further.
The gradual decelerating trend in domestic investment is compounded by reduced FDI which too had slipped since its peak in 2009 ($1.08 billion) until picking slightly to $1.59 billion lately. Then again, of the total $39 billion FDI flown into South Asia in 2013-14, Bangladesh’s share is paltry, insignificant.
Another surreal trend is evident in the capital market where domestic companies raise their capital from. The 2010-2011 stock market bubble underscored the embedded weaknesses in the capital markets as well as in the regulatory oversight. In December 2010, the Dhaka Stock Exchange (DSE) market capitalization rose to a peak of $48 billion before sliding to $30 billion in January 2012. The trend has not rectified as yet.
The data on inflation is equally deceptive. When most of the consumer commodities show an upward spiralling proclivity of more than 15-20 per cent annual increase, how the consumer price index (CPI) averages to 6.91 per cent remains a conundrum. The data is not in concordance with the latest Asian Development Bank (ADB) report that states: “Food prices were high for much of FY2014 because political unrest disrupted supply, pushing inflation up by 60 basis points to an average of 7.4% for the year, or nearly the ADO 2014 forecast. This Update retains the April projection, shared by the central bank, of 6.5% for average inflation in FY2015.” According to the World Bank, prevailing inflation in Bangladesh is 7.5 per cent.
Positive and negative
All these do not negate the facts that the foreign remittance and export earnings are in the positive terrain and that the health of the economy is likely to improve under political stability, good governance and rule of law. The only guarantee of these three preconditions can only come from a regime that is credible, representative, inclusive and truly democratic in letter and spirit. The AL-led regime not being of such a model, the dream of becoming an Asian economic tiger is likely to abruptly turn into a shivering nightmare.
Source: Dhaka Tribune
