Bangladesh urgently needs to go for a fresh round of reforms to strengthen the private sector to tap its economic potentials and accelerate the export-led growth, said a report on Wednesday.
The report titled ‘Bangladesh Country Private Sector Diagnostic (CPSD), prepared by IFC and the World Bank, also said Bangladesh’s post–Covid recovery will force a reimagining of its developmental model, highlighting the importance of the private sector and making the reform agenda even more urgent.
Taking part in the virtual report-launching event, experts said Bangladesh has the potential of becoming an economy of $800 billion by 2030 from the current $300-billion one if proper steps are taken to diversify its export basket and ensure the ease of doing business through necessary reforms.
Launching the report, Prime Minister's Private Industry and Investment Affairs Adviser Salman F Rahman said the diversification of export is very important, though the country has been facing challenges in this regard. “Our dependence on the RMG has been highlighted for a long time that we need to diversify our exports …diversification should be our priority now.”
He said the RMG sector has got tremendous support from the government for its expansion, but similar support has not been given to other areas, and this is something the government is now seriously looking at. “What we really need to do is to identify the reasons for which the garment sector has been so successful and we can apply the same principles to the other sectors.”
Salman said protectionism for the domestic industry is necessary since the country is going to graduate to a middle-income one. “The pharmaceutical industry which has been identified as a real growth sector since it has got that protectionism.
“Bangladesh had a positive GDP growth rate last year despite the adverse impact of the Covid-19 pandemic and it was the only country in South Asia which did not experience a recession. We’ve prepared the Eighth Five Year Plan keeping all the challenges of the pandemic in mind,” he said.
The PM’s adviser said the CPSD recommendations are well aligned with the priorities of the government’s Eighth Five Year plan for setting a trajectory towards a prosperous Bangladesh by 2041.
As the country is aspiring to achieve double-digit growth, Salman said, the government has taken various steps, including developing the infrastructure, increasing foreign direct investment and creating an investment-friendly climate.
He said the economic zones and mega connectivity projects like Matarbari Port and Padma Bridge that are now under construction will be the gamechangers in the coming years.
He said the agro-processing industry is making good progress and it will be another gamechanger for Bangladesh.
Mamun Rashid, Managing Partner, PricewaterhouseCoopers Bangladesh Private Limited, said the report has focused on the private sector capacity building as well as the government’s capacity building.
“When we’re talking about reforms and strengthening capacity building, I try to draw your attention towards the capacity building of our private sector, efficiency improvement of our private sector as well as improving the overall balance sheet of the private sector,” he said.
IFC’s Vice President (Asia and Pacific), Alfonso Garcia Mora said the need for reforms will become even more compelling for Bangladesh to overcome the fallouts of the Covid-19 pandemic. “Finding new sources of income and growth will be an urgent priority.”
He also said the private sector, which already accounts for more than 70 percent of all investment in Bangladesh, supported by a strong financial sector, will need to play an important role in spurring the recovery so the country can grow, export and create quality jobs.
IFC Country Manager Wendy Werner said it is clear the private sector has an important role to play to meet the rising demand for quality healthcare and improving the efficiency of delivering health services, as health financing in the country is low compared to others at a similar level of development.
“Bangladesh could also target high-end markets and introduce new technology in the readymade garment sector, and seize opportunities in footwear, leather electrical goods, and agribusiness exports,” she observed.
World Bank’s Country Director Mercy Tembon said readymade garments have contributed significantly to Bangladesh’s economic growth. “For a more resilient, inclusive and sustainable growth, Bangladesh will need to diversify its export basket and develop a robust and sophisticated private sector, relevant in the post–Covid recovery phase when public resources will be needed most in the social sectors.”
The report says key priority areas for the reform agenda include creating a favourable trade and investment environment for domestic and foreign investors, modernising and expanding the financial sector and removing impediments for developing infrastructure.
“Transport and logistics, energy, financial services, light manufacturing, agribusiness, healthcare and pharmaceuticals sectors are among those with the strongest potential for private investment that could play a significant role in boosting economic growth,” the report observes.