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Media Round Table

DC to NIC — Prospects for Bangladesh
** HELD ON NOVEMBERS, 1991, AT THE SONARGAON HOTEL, DHAKA.
FOR far too long the debate on the state of the economy and future options for our development has been confined to the policy makers, bureaucrats and the experts—not to forget the donors. (fyi Bxflt ^trr wanted to open up the debate to the general public. We therefore brought together a very broad-based representative group of thinkers and conducted a frank, Irformal and highly rich discussion on our prospects for breaking out of the poverty cycle. In today's supplement we present a verbatim report of the proceedings to provide full access to our valued readers to ihe deliberations of our distinguished participants.
We hope that our endeavour will trigger a serious nationwide debate and we offer the pages of your favourite newspaper and invite you— our readers— to parttctphte tn It. This public debate should act as a feedback for our decision-makers and help to bring about a national consensus which Is Imperative for overcoming the monumental obstacles that block our path towards development.
This Is Ihe first of several such Round Tables that ihflu fa will organise for the benefit of our readers and as our contribution towards democratic governance and participatory development process.
— Editor-in-Charge
Mahfuz Anam : The Daily Star was launched on 14th of January this year. A deep commitment to the development of Bangladesh has motivated us to organise this Round Table. We have decided to bring together' some of the leading thinkers of the country — the two senior ministers, leading politicians from the ruling party and the opposition. policy makers of the gov ernment, scholars and the representatives of the business sector and multilateral organisations here to havc a free and frank discussion — an unstructured, across the table exchange of views. What wc hope to get out of this Is a bundle of ideas which we would like to convey to our readers. With these words, I request Prof. Rehman Sobhan to conduct this Round Table. Thank you all for Joining us here today.
Rehman Sobhan : 1 wish to stimulate discussions from this very distinguished conclave of people who have assembled here for The Daily Star. Wc have quite extraordinary richness and diversity of expertise. There are two ministers who arc in a position lo represent our policy making capacities at the highest level. To react lo ideas we havc Mr Kibria, who will give us the richness of his experience at the regional level. We have other distinguished policy makers like Mr Syeduzzaman. and a number of senior secretaries. We have representation from two premier International agencies in Bangladesh We have distinguished members of the opposition from Jattya Sangshad. We havc leading businessmen represented over here snd wc hsvc some distinguished academics So that all the relevant basis are represented In this exchange
To Initiate the discussion it would be appropriate for us lo InvHc ihe two ministers lo talk about their assessment of the process of realising a transition for Bangladesh from a Least Developed Country io what at the moment appears the remote stratosphere of a Newly Industrialised Country. Let me Invite to begin with. Mr Shamsul Islam Khan, the Industries Minister, to say s few words.
Sbsmsul Islam Khan WMesh's position as a
World country is a bit delicate. Our government has given a very a well-defined tn-Si ax ate the opportunity to set up industries we can change a lot. I would like to identify some of the main points at our Indu* triM policy To chw.^ the so-cio-cconomic condition of the masses, and provide sdf-rv-liancc through involvement in producttoe activities, the present pokey has been for mu feted to conformity with the 5
1) To evolve a realistic industrial reform plan. In this regard in-depth studies will be taken to assess the problems of Ihe industrial unfa and sug-
corrective action. Our to-dustrial policy to not a rigid one. It to flexible We will evolve a realistic industrial policy after a fufi stutfy of thepre adopt proper and appropriate strategies and after strength enlng the Industrial base and making the Industrial sector more efficient, internally. comparatively. Based on the lessons of past industrial policy and strategic*. 3) To expand and strengthen the cottage and small industries sector and rural Industries. Eighty-five per cent of the people are living in the villages. We want to develop our village as well as semi-town areas of industrial sector to change the lot of the common people. 4) The immense potential of the Industrial sector will create employment opportunities for the rural and semi urban population. They will have positive contribution In income generation of low income groups.
5) To accelerate the growth of export oriented industries through appropriately designed export strategy. To accelerate foreign investment by offering positive encouragement for the new and existing foreign investment. These are the basic Industrial policy that wc havc given.
Wc can utilise our cheap work force which is the lowest in the world, our labourer* who arc also working outside have proved themselves very efficient. See. the garment industry has proven to be very successful.
We arc not facing any problem In marketing our garments tn Europe or America.
At the need of the hour we can change according to the International currency ups and downs as well as scientific developments. I have come to learp from tht* meeting.
Zshlraddla Khaa, Planning Minister : The real problem that Is in front of the government is to arrest the rot that is hampering the economy of the country. There has been considerable drainage of resources in the form of losses tn the public sector. And this 1* a staggering figure. The World
erence to this. In 1988-89 the k>*s In public sector organisations amounted lo Tk. 1572.88 crore. In 80-90 It Jumped to Tk. 2353.87 crore. And In 90-91. It is Tk. 2382 crore. The loss is a staggering figure and unless we arc able to prevent this hemorrhage. 1t will be very difficult for the country to generate the required resources to fuel our development programmes.
We are already short of counter-fund Taka. It is a funny Situation in Bangladesh. We arc rich in foreign exchange but poor In taka. The lack of normal expansion of economy. I am happy that thia round table meeting has been Initialed toy The Daily Star. From thia meeting we should be able lo take the issues across the nation and even to the parliament. Today, ft to a national problem. It to not the problem of the government alone. You must appreciate through tiring and very exhaustive struggle by the then opposition and the present government. we have come to a form of parliamentary government. This gives us the moral courage to take strong ^gj^ I’oZkfcftCTtM IS year* our pokey maker* and unfortunately our politicians Imve played to the gallery al a transition to NIC from Mr Rehman Sobhan If we had really put our thoughts to this 15 years back, possibly we would have been very near toe-ing a NIC today. Unfortunately the blunders we made along the line has created an economy which is totally dependant on external assistance. The trend is a deteriorating one. During 1073-75 our dependence on external resources was to the extent of 79.0%. That was the First Five Year Plan. If you come to the Second Five Year Plan which was for the period 1980-85 the dependence was reduced to 60%. There was a healthy trend, which was again reversed in the period 1985-90. Here we get a foreign resource dependence of 88.80%. Hardly 20% is provided for by the national economy to support development programmes. I would today, say we are dangerously dependent on external resources even to pay our revenue expenses. This not a healthy scenario. Before we speak of any expansion of our economy. We are hoping that in 90-95 the 4th plan period which is in draft form. Unfortunately there are many carry over programmes They have been going on and on. Now we are consciously look ing into whether we should cut our losses and put our money where we can get a real return. As a businessman this would be my guideline. Except for the social sectors, health, educa tlon, and population control, I think there cannot be any other guideline but the internal Investment I hope wc will be able to put these elements in our planned consideration as we go along. By 90-95 our dependence on external aaais lance would be to the extent of 52%. This shows a great tm provement from 88.80%. We must ask this question — why the deterioration in the last ten years? This was because financial discipline and planned discipline was avoided. Although you may say days of planned economies are over but poor countries like Bangladesh where we have resource constraint, we have to husband our resources. Therefore the need for pla-sured discipline is very much there. The free market economy that we talk about — is it a free market ? The extent of subsidies they give to agriculture, the antl-cartcl laws these are the things that keeps monopoly tendencies in the private sector under check. If we want free market economy tn Bangladesh we need a code of conduct. Where It is taken into account, the concept whether monopoly in the government or in the private sector is not a desirable phenomenon.
The World Bank tells us to open odr economy. It is true that it Is only through free trade that the NIGs have been able to develop their economies rapidly because If you compare the figures of the early sixties between Korea and Bangladesh the per capita Income of the then East Pakistan and Korea were the same. Korea's export were 100 million dollars. We were exporting about 250 million dollars out of which the major export was from East Pakistan.
I mean 150 million dollars Wc were exporting 50 million dollars more than South Korea If you take the scenario now 1t is unbelievable what they have done with themselves. The way the trade export Increased ft pulled up the country by the shoe strings, such a rapid development is phenomenal scenario in the economic development of the region
South Korea Is Ibrnforr a very interesting example But then there were conditions. It was the stability that was there which helped
I have friends from the op positions who arc with us. It Is a Joint problem of the country and the opposition and the party In power have to put their heads together to find a solution. Stability Is a very Im portant precondition for any economic development and continuation of policy You have changes of government and suddenly you have a change of direction. This is not healthy. These countries who have made a breakthrough in their development have common aspects : stability, continuation of policy, and a directed resource allocation. The most positive element of central planning is allocation of resource according to needs. You cannot debate this. Nobody can say that conceptually it is wrong. Where it gets bogged down is at the implementation stage.
The Japanese have uniquely combined these two elements, their resource allocation Is centrally done, but in a subtle way. Their method Is so subtle that now the Americans have come to realise this when they talk of target planning. Americans arc very critical about Japan's targeting. Targeting means resource allocation where It Is needed. The Japanese combine the positive elements of central planning which is resource allocation according to need and the best elements of the private sector. Private sectors arc very efficient In Implementing.
If you can combine these two elements you have an exceptional condition for economic growth. I've been to Japan many times. The way they have been able to make a success of every sector. Is not possible under free market condition. This Is very much orchestrated. It Is very much planned clown to detail
The Koreans havc followed the same approach. Taiwan followed the same approach. In Malaysia and Thailand this la a little bit leas. Because they have lot of natural resources. They are rich In agricultural resources. Even Indonesia Is In a unique position.
Ultimately Thailand. Indonesia and Malaysia will be the real giants because not only their manufacturing Is taking off but also their agriculture Is taking off too.Within this perimeter. If wc picture Bangladesh I would like to make a remark here. Bangladeshis outside Bangladesh are one of the best workers. Workers who have gone to Japan have left a mark there. The Japanese come back and say they are the best immigrant workers in Japan. The same story is in Taiwan and Pakistan. Unfortunately the workers in our country, who arc highly intelligent, somehow or the other the same workers when they come back here their performance deteriorates. Their pride in workmanship also deteriorates. May be our social scientists and economists should look into this.- In this scenario I feel our priority should be to arrest the huge losses that have been Incurred In the public sector organisations. How wc do It Is the real challenge. Our plan Is to accelerate economic and employment opportunities in the rural areas. This is where over 80% of our people live and the destiny of the countty lies. The Investment in the agricultural sector gives me the quickest return. After so many years agriculture is still the main contributor in our GNP.
Wc would like the Industrial growth to be export oriented. You will appreciate that sustained Industrial growth can only lake place if there Is surplus purchasing power In the hand of the consumer and there is the clement of saving. But our people are so poor that, afier consumption, there is very little In the form of purchasing power and In the form of saving. We want to shift away from import substitution. My recommendation is to have export oriented Industries which will tap the purchasing power of the Eropcans, the Americans, and Japanese which are many times higher than ours.
Another thing we keep In mind. Normal GNP will not bring about the poverty allcvla-tlon that we expect. It is only through accelerated trade that wc can break the vicious circle of poverty. There Is no other way. Because our population is growing, the normal growth of GDP cannot keep up. The only way wc can accelerate our export, which the other NICs have done. This alone can break the chain of poverty. We cannot have too many goals. We are a poor country. Wc are trying to do too many things at the same time. We must prioritise. In a poor country like Bangladesh If any development takes place it should be with the objective of sustaining productive employment. This Is the only thing that can provide the necessary Impetus in the economic growth. If there Is any other way of alleviating our poverty this group should let me know. The target of all planned programmes is to accelerate productive employment In every sense.
8A.M. 8 Kibria : When democratic rule was restored In Bangladesh the thought occurred that this was an opportune moment for the country to seek new ways to break out of the Image of an international basket case. For too many years I have observed with dismay and a sense of humiliation that Bangladesh was not only an LDC but was diligently cultivating the image of an LDC. It was almost recon ciled to be an LDC forever. There didn't seem to be any thoughts about planning to get out of the LDC status. It was eroding international standing for the country and also our national dignity. But can we not start planning our way out of this disgraceful situation ? When wc look around the region we find there are countries In our region which were no better than Bangladesh tn any way
The Republic of Korea in the late 4Os was way behind Bangladesh. It was not an in dustriahsed country Thailand. Malaysia or Indonesia these were countries in no way bet ter off than present Bangladesh and yet we have seen to our surprise and a bit of envy how these countries have forged ahead.
Is It really possible to get out of the LDC status and move to NIC status? I believe that it is possible. It Is possible to shed the LDC status by the turn of the century There are many countries who are not LDCi and yet they are able to receive all the benefits of international cooperation. International cooperation Is one thing. Going around with a begging bowl for alms to another. Today the dominant philosophy of international cooperation does not make any room for the kind of charity implied In the development efforts of the LDC countries. Some of the characteristics In South East Asia and East Asian countries that I have observed over the last 10 years. They have forged ahead for a number of reasons which deserve careful attention from all of you. First and foremost, we do not have a national consensus on the basic economic issues whereas those countries have. People very often glibly say political stability is a big problem and we have not been doing very well. Political stability is certainly most desirable but I find that Thailand did not have po iltlcal stability. It had many problems Korea didn't have. There are other countries which have not had very great political stability But there was national consensus on the basic Issues, in the matter of labour, export and Industrial policy, education policy, there was convergence of opinions from all segments of society. So that when the government was trying lo do something the opposition did not consider that It's main mission In Hfe was to frustrate those policies Since the opposition also believed in the basics of those policies they tried to let it work. They confined their political manoeuvres to certain other areas and not the buic economic issues of the country. The basic economic Issues must be those tn which the interest of the nation are at stake
This reminds me of one thing. In seme advanced countries like the United States or even many other countries they haw bipartisan policies When they feel there Is some thing tn which thetr future and national interest are at stake they forget their party differences in order to deal with those problems effectively. Sometimes, some countries form national gowrnments. We haw seen this tn UK and other countries too. My con cept of national consensus is not just between the government and the opposition. My concept is a little bit deeper and wider Consensus must pervade the society as a whole. The academics. the business community, the private sector, the cMl servants, even military — certainly the political parties in power and in opposition. There must be an understanding that this Is something in which the nation should be totally united Otherwise It just cm I survive. Certainly If rich countries cannot afford lo haw disunity on basic Issues how cm a poor country like ours haw the luxury to fritter sway
pie, the education policy In this matter there Is need far