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     Volume 9 Issue 13| March 26, 2010|

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Cover Story

Bangladesh Striding Forward

When Bangladesh got independence through a bloody war in 1971, it promised to build a country on the

Food production has more than doubled over the last three decades.

basis of equality and economic justice. Freedom from the clutches of the Punjabi-dominated Pakistani ruling class had been the war cry of Bangladesh's independence struggle. Thirty nine years on, there have been significant developments on the economic front: the country's central bank now boasts a healthy reserve; the economy has withstood the world-wide recession; export earnings have skyrocketed; absolute poverty has declined by 30 percent; food security has been ensured; and Bangladesh, once infamously dubbed a bottomless basket, now generates most of its development budget on its own. Still, stories of inequality haunt us. Under the razzmatazz of South Asia's largest shopping mall walk malnourished children, who take birth in the streets to grow up forever famished and stunted; life for them is mere survival, a day-to-day existence. As Bangladesh dreams of becoming a middle-income country soon, The Star tries to explore the true meaning of economic freedom and ways to achieve it.

Ahmede Hussain
Photos: Zahedul I Khan

Jahanara Begum was 13 years old when the marauding 'khansenas' occupied her village in Daudkandi, Comilla. Her father, a farmer who earned his living off a small acre of land, was brutally murdered as he gave shelter to the Muktijoddhas of the area. She went to school for a few years, her education has been limited to the bare basics. "My mother was in distress; I don't have anyone save for a younger sister, so she thought it was not possible for us to make use of the land," Jahanara says.

The family soon sold the land, its only source of income, and concentrated on raising cows. "There were three cows, but one died later," she says. Jahanara doesn't quite recall when that happened ("Somewhere during Ziaur Rahman's rule," she says), but she remembers a relative's advice that changed her life for the better.

Jahanara's maternal uncle is a sprightly man of 60 now, still full of energy. He runs a thriving restaurant in the bazaar that caters to around 300 people everyday. Twenty two years ago, long after the death of the second cow, when Jahanara was finding it difficult, impossible almost, to make ends meet, Yakub Miah came up with a novel idea: Why didn't Jahanara, a mother of two now, take a loan from that bank, which is offering loans to poor women like her?

The idea was quickly accepted, loans taken, new cows bought along with some chicks. And it worked well. Of Jahanara's three daughters, one is now studying at Chittagong University, another is a nurse and the third will take her higher secondary examinations this year.

Jahanara's is not the only success story the Bangladeshi economy has to offer. A silent but quick revolution has taken place on the economic front. "Bangladesh has increased its growth rate from below four percent to five and despite the global recession it has been able to maintain a growth rate which is above five percent," MM Akash, professor of Economics at Dhaka University, says. He thinks that over the last couple of decades, the country has made some significant progress when it comes to social development indicators.

Annisul Haq, president of Bangladesh's largest apex body FBCCI, comes up with a set of successes. "There are a lot of milestones: Garments, microfinance, girl's education," he says. What is common about them is that a significant portion of the growth has come from internal economy.

"Dependency on foreign aid has also been decreased. During the eighties we received foreign aid ranging between 80 and 110 percent of the development budget, which has come down to 50 percent," says MM Akash. The driving force behind this is the inflow of remittance earnings.

"There are two other sources that have contributed to Bangladesh's economic success--a quantum jump in the crop production in the early nineties and the rapid growth of the readymade garments industry," Akash says.

President of the Metropolitan Chamber of Commerce and Industry Anis Ud Dowla thinks agriculture is an area where there is room for improvement. "There must also be a policy on agriculture and food prices. Government must subsidise fertiliser and diesel and all other inputs that are crucial for the agro-based industries. At the same time the government expects a stable food price that will be within the reach of the masses," he says.

He thinks that the government is yet to work out what should be the expected cost of this subsidy and at what price the government expects rice to be sold on the market. "There should also be a calculation, which must formulate the price at which a farmer can make reasonable profit. At the same time the government must also take the private sector onboard to ensure that the farmers are better equipped with technical know-hows of modern farming such as the timely utilisation of fertiliser," he says.

All is however not well. Dowla complaints that there are hundreds of companies that have failed to start operations because of an acute power crisis. "Shortage of electricity and unavailability of gas for industrial use and the lack of a coal policy because of which coal cannot be used as a source of energy," he says.

Haq of the FBCCI also identifies energy crisis as the major obstacle to businesses flourishing. "If it goes on like this we will come across a crisis soon," he says. Dowla, however, is quick to call the current situation dangerous and says, "We are on the brink of a disaster as many businesses have been shut down because of inadequate supply of electricity."

Many think that the root of all evil lies in the lack of political will rather than hiccups in the economy. Freedom fighter and former adviser of the caretaker government Akbar Ali Khan believes political problems are not problems if they are handled by pro-people political leadership.

"The problems that we are facing are more political than economic. When we came into being, politically we were a united nation, but the economic future of the country was in question. At that time people started to call Bangladesh a bottomless basket," he says, "Over the last few decades we have proven them wrong, we have established the fact that this country has a bright economic future. We have doubled our per capita income, we have more than doubled the production of food, we have reduced poverty to 40 percent, we have made a lot of progress." But, Akbar thinks over the last two decades, Bangladesh has also become a divided nation and it is not possible to tell where its politicians are leading it. "And that is the greatest worry for Bangladesh," he says.

Akbar believes that the greatest challenge that lies before a developing economy like Bangladesh is rising inequality. Bangladesh is shining, but beneath the veneer of prosperity the ugly face of poverty is hidden. The National Gini Coefficient that measures the level of inequality has been increasing in Bangladesh and it is the highest in South Asia. "People are drawn into the cities without any proper infrastructural facilities, inequality is going up, which will create serious political problems," Akbar says. Akash echoes Akbar's views and says, "As a result of indiscriminate or non-pragmatic privatisation, liberalisation and deregulation the top five percent of the rich and powerful in our country have been able to enjoy a relatively larger share of the growing real income and wealth of our country."

Akbar Ali Khan thinks that legitimacy is the key issue. "Now ordinary people do not accept the way things are. They think no one in this country deserves to be rich. There is inequality in many countries but in Bangladesh this inequality has no legitimacy; people have no belief in any institution, and they do not have any respect for the authority," he says, "You are not giving them electricity or any of the necessary services, and they are unhappy. It is a combustible condition and we need a political leadership that will deal with this with sagacity."

Presently, the political leadership, which Akbar thinks, is needed turn the wheel fast towards a double-digit growth is hard to find. Anis Ud Dowla says the government needs to come up with a solution to the current energy crisis. "We at the MCCI think the open pit mining will be the most feasible and cost-effective solution," he says, "India does that in West Bengal and Bihar, so there is no reason why we cannot do this. The government has already floated tender for power projects based on coal that is a welcome development. We request the government to implement them as fast as possible. It must also set up LNG terminals so that we can import liquidified natural gas. Meanwhile the government should also expedite the explorations of gas on and offshore."

Inadequate supply of electricity has been one of the biggest obstacles for development.

Along with the energy crisis, the problem of improper utilisation of land also comes to the fore. "We need to use our lands in the right way," Haq says. A land reform commission can be set up and land can be redistributed to the farmer after making big cooperatives.

Social insecurity also dissuades people from making investments, one reason why Bangladesh's internal investment generation is so low. Akbar Ali Khan thinks people must be allowed to walk in the streets first before they are coaxed into making investments. The country's capital market has so far shown bullish trends, the two burses are crowded with first time investors who have seen the market as an outlet of investment.

But diverting the money into more productive channels such as short and medium enterprises (SME) remains a Herculean task. Akash thinks SMEs, especially the agro-based ones, will work miracles. But Akbar is cautiously optimistic; he says, "Setting up businesses in Bangladesh is an extremely complicated affair. You need to address these problems before you pin your hopes on the SMEs. There is a limit to where they can go."

Khalid Mahmood started Kay Kraft, a designer boutique, in 1993 with a meagre capital of Tk 5000. The company now runs 13 showrooms across the city. He complains of impediments that are slowing down the progress of the boutique industry. "To set up a boutique one needs to give bribe to different officials," he says. Alluding to a recent declaration by the Commerce Minister that boutique will be declared an industry, Khalid suggests that a comprehensive study on the sector is carried out first.

Khalid also thinks economic reform is needed to create an investment-friendly atmosphere for the new and existing SMEs. Akbar, who was Chairman of Regulatory Reforms Commission when he resigned five months ago, says that politicians are not interested in reform. " What have they done since I have resigned five months ago? They have not done anything," he says, " Most of the time the executive is not interested in any reform. We have not initiated any reform whatsoever in the last 39 years. "

Export earnings have skyrocketed.
Our government industry has withstood the global economic meltdown but the energy crisis is a major threat.

So, how faraway are we from becoming a middle-income country? Dowla thinks very faraway. But Akbar Ali Khan remains an incorrigible optimist. He says, " I won’t say it's not possible, on the contrary I think it is very much feasible because the people of this country are creative and enterprising. The farmers have repeatedly given us bumper food production, the migrant workers in the Middle East have sent foreign currency, and the private sector has shown its promise."

Akash believes instead of micro-credits, small loans can be given to the poor to set up shops and businesses. Jahanara, whose farm now has an annual turnover of around 200,000 takas, agrees. "If I can buy five more cows and three new vans, my profit will treble in six months," her eyes shine with hope as Jahanara talks about her investment plan.


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