Strategies to mitigate the impact of global economic crisis upon Bangladesh
M. Zakir Hossain Khan
Ongoing global financial crises, has been told as financial tsunami, has attacked the global economic giants as well as their capitalized economy. It is said that after 1931, this is the most devastating financial failures of the structured economies; consequently, to restrict total failure of the economy as well as the state, the so-called ‘revolutionaries or promoters of the open market economy’ have publicized the privatized financial institutions. It clearly states the inherent weaknesses of the capitalist economy and suggests reviewing the whole economic policies and justifying the frequent suggestions or intervention the international financing agencies such as World Bank, IMF in the economic decision making process of the developing countries by keeping under pressure for unbridled privatization. The major problems are that the policy makers frequently shift their positions and unfortunately do not appreciate the home-grown policy recommendations and the product as well. In this situation, if the current global financial crisis continues it would affect the export, foreign aid, FDI and remittance of Bangladesh. The major focus of the export strategy would be to enhance the product and market diversification of import substitution products (like palm oil, liquid milk, cell phones, transport vehicles etc.), increasing both the volume and existing exportable goods; inclusion of the ship building as a new potential sector into list.
The key measure is to prepare the own development and economic agenda and implementation strategy based on the own demand of the citizens and taking lesson from China, existing all types of economic and financial policy should be researched to replace so-called open market economy by the efficient and sustainable financial policy. The following remedial measures can be undertaken to mitigate the crisis.
A. Export Market
i) Policy making level
- Applicable strategies presented in Export Promotion Strategy Paper 2006-2009 can be explored and accordingly implement them in an urgent basis
- Declare the special ‘export award’ for the businessmen in two category- volume of export and innovation in adding new item in the export
- A comprehensive modeling exercise can be undertaken to understand global financial crisis, export potentials and availability of future inputs
- EPB can be empowered to act as a key policy-making body and monitor the updates of the global financial crisis and recommend policy options on export-import of Bangladesh and the standard and quality of exporting products
- Immediate setting of World Trade Center in Dhaka and Chittagong
- Regarding exploring the potentials of Bangladeshi goods and products in foreign markets, soon an international export summit can be organized inviting business people and officials of those prospective countries and prepare strategies to bring results to motivate the business professionals
- Immediate review of tax holiday, tax provision and incentives in export and import; readjust the existing policies up to FY 2009 -10 and recommend to the policy-makers in giving priority on non-traditional and labor intensive exportable goods
- Progressive tax on luxury goods
- Evaluate performance of the National Committee on Export and Import Monitoring Group and make them functional and effective
- Bi-lateral contracts with prospective countries for withdrawal of tariff and non-tariff barriers on exports
- More subsidy on import substitution products and export diversifications
- Regroup the list of Priority and Special Development Sectors according to the below categories –
o Highest priority : Ship-building, agro-processed products, pharmaceutical products, light engineering products (including auto-parts and bicycles); software and ICT products, handicraft products, footwear and leather products; home textiles.
o Higher Priority: finished leather products, jute products, uncut diamond; herbal medicine and medicinal plants, hand-woven textiles from hill areas
o Special Development Sectors: frozen fish production and processing, electronic products, fresh flower and foliage, education and health services, tourism
- Anti-dumping policies and countervailing measures should be practiced to protect the dumping of any country by abusing the current crisis
- Appoint special speedy tribunal to settle cases filed against the exporters soon
- Create Special crisis management fund to mitigate any ongoing or upcoming crisis in the economy especially to provide assistance to labor, exporter or industries
- No increase of electricity and gas tariff rate for industrial and commercial units
ii) Improving infrastructural facilities and improve services
A rapid and dynamic policy is required to meet the energy crisis and to focus simultaneously to use both renewable traditional and modern sources including solar and nuclear; in that case the Govt. can collect capital by selling shares to Bangladeshi citizens and a sound public-private partnership can be followed to tackle the management crisis. To reduce operational cost and increase competitiveness-
- More fund to encourage SME at rural areas and immediate construction of cold storages in some potential areas by BOOT process
- Special economic zone for NRB
- Accelerate automation in NBR, export points and port authority
- Bangladesh Bank should have own plan to control financial market and direct private banks to give loan at a reduced or low interest rate to real sectors as well as health and education
- Withdrawal of BERC license fee for users of captive power generator
- Immediate incentives or subsidies at progressive rate for utility services such as electricity, water and gas compatible with WTO agreement
- Provide immediate training and introduce latest technologies to increase productivity and ensure competitive price
- Immediate setting up of display center at all embassies and high commission offices as well as diplomatic offices of foreign missions in Bangladesh
- Decrease private bank lending rates for local investors
- Reduce hassle in getting tax refund from DEDO office
- Auto refund system for VAT for C&F services, telephone, electricity, insurance premium and shipping agent commission/ bill.
iii) Expansion of market
- Market and product diversification and special focus on the markets of developing, poor and neighbor/regional countries
- Appoint an internationally reputed advertising firm to adopt strategies for marketing Bangladeshi products with special focus on leather, agro-based products, handicrafts and education and health services and other traditional products such as dry fish , ceramics
- Strict monitoring on the standards of exporting goods and exemplary punishment for the dishonest exporters
B. Foreign aid and internal resource mobilization
Due to shrinking of capital in the crisis prone developed countries, the aid providing countries may not meet their commitment, therefore we may have to readjust or rationalize our ADP through prioritizing the needs. Internal revenue generation has to be expanded through judicious review of tax net.
C. Manpower export and wage earning
Due to the fall of USA and European economy, many Bangladeshi working in those countries may loose their jobs and ultimately, it will affect the remittance flow. Besides, due to fall of oil price the overall revenue of major oil-exporting countries will fall, though OPEC has decided to cut down the production but it would not really work due to cheat, where a large number of Bangladeshi works. In this situation the following steps are required to implement-
- Explore new markets for manpower export
- Under the guidance of the Chief Advisor, a special mission should be sent to the prospective countries where there is still scope for manpower export
- Govt. should provide incentives to the manpower agencies that export skilled and quality manpower.
- Govt. should issue special share certificate to utilize their remittance for the generation as well as development of the power and energy sector and allocate areas for set up of the special economic zone for Non Resident Bangladeshi
- Govt. should make a provision of pursuing the training in the technical subject by the prospective manpower and ensure minimum wage for the labors
- Export manpower exploiting special arrangement with the countries where Bangladesh Peace Keeping Mission are appointed
We believe that due to global linkages Bangladesh has to determine its own pathway to overcome the economic shocks and any ongoing and upcoming crisis can be managed through wishful political commitments and taking right decision at right moment. General people expect highest level of consciousness from policy makers and a dynamic policy and strategy can protect the affect. (The opinion belong to the writer, not to his organizations)
The writer is a researcher of Economics and Governance;
zhkhan@ti-bangladesh.org
Thanks for your research about Economics & Governance, i want your kindness about how can i get finance for buildup a business like Agro-based ( Fish,Poultry, dairy & Agriculture) 4-in-1 type. is there any investor in Bangladesh , if yes please let me know,
Thanks Again,
Best Regards,
Sattyajit.
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khulna university থেকে mazharul islam লিখেছেন,
০৯ জানুয়ারি ২০১০; সকাল ১১:৪৩
It is really a excellent work for mitigating the economic crisis but you should concern that not only strategy making is only solution but also should need implementation without any self interest and corruption.
6699
বাংলা (ইউনিকোডে) অথবা ইংরেজীতে আপনার মন্তব্য লিখুন:
khulna university থেকে mazharul islam লিখেছেন,
Thanks for your research about Economics & Governance, i want your kindness about how can i get finance for buildup a business like Agro-based ( Fish,Poultry, dairy & Agriculture) 4-in-1 type. is there any investor in Bangladesh , if yes please let me know,
Thanks Again,
Best Regards,
Sattyajit.