The Role of Private Sector in Bangladesh
* Compiled from the Speech of One of the
Honorable Former President of FBCCI
In Bangladesh, as a developing country, there is now a growing realization that a vibrant and dynamic private sector is the key to economic progress and sustained growth. The East Asian miracle exemplifies as to how the government can accelerate progress as a partner and as a facilitator. Developing countries, including Bangladesh, have come to increasingly rely on market forces to guide their development strategy. Efforts are being focused on the promotion and supporting of the private sector and creation of an enabling environment for it to flourish and maximize its contribution to economic progress within a business friendly and equitable framework. Bangladesh has been increasingly relying on this philosophy as a strategy for growth. As a consequence of this, the share of the private sector in total investment has risen. Public sector reforms will continue to be undertaken as a complement to the private sector so that it can function more effectively and up to its potential.
Private Sector in Five Year Plans
The growing emphasis on the private sector is reflected in the fact that the share of the private sector investment increased from 11 per cent in the First Five-year Plan to 44 per cent in the Fourth five years Plan. The performance of the private sector was better than what was planned for in the Fourth Plan. In fact, the share of the private sector in the total realized investment was 54 per cent of the total investment in FY95.
In view of the intensification of private sector-oriented reforms, it was anticipated that the private investment would increase substantially during the Fifth Plan period. An amount of Tk.1100.58 billion (56 per cent of the Plan outlay) was projected as private investment in the Fifth Plan.
During the Fifth Plan, it was said that the private sector is the main engine of growth. The public sector will act both as a promoter and as a partner rather than just as a regulator and will facilitate the growth of the private sector by providing improved physical and socio-economic infrastructure through regulatory and effective policy support measures.
The Fifth Plan provided a broad canvas and a framework in which the private sector can play an effective role in the development process for which an indicative guideline is given. The government will take steps to ensure the creation of an enabling environment through legal and administrative measures and infrastructure support so that the private sector can function and contribute according to its potential. The impressive growth registered by many high performing economies including that of East Asian ones has brought into focus some essential ingredients for development, namely the need to have a liberal market-oriented export led strategy along with the involvement of the government to provide necessary catalytic and effective support. The government may, where it is considered necessary, also participate in investment projects along with the private sector. Such ventures will normally be limited to areas where private sector is not forthcoming or where the government’s presence is desirable as a support to the private sector.
Bangladesh desperately needs rapid and sustainable economic growth to make a significant breakthrough in poverty alleviation. In the current development strategy, the private sector has to play a pivotal role in achieving the desired growth. We need to lift the economy from the current state of 5% plus growth rate to one of 7% in the short term and 9-10% within 2008. To attain such a growth rate the investment has to go up from the current level of 23.15% to 28% of GDP. There has also to be major structural change in the economy giving a leading role to industrial development, because for a country like Bangladesh with a low per capita income, heavy population pressure and limited agrarian base, development of manufacturing holds the major long-term hope of guaranteeing high level self-sustaining growth. The Fifth Five Year Plan rightly aimed at increasing share of industries in GDP from 9.28% in 1996-97 to 12.70% in 2001/02 raising the growth rate of the sector to about 14% from the benchmark level of 3.5%. That called for huge investment in the private sector. The Fifth Plan envisaged an investment of Tk. 298.78 billion during the plan period for the manufacturing sector accounting for 27.15% of total allocation for the private sector. It means that average annual private investment in manufacturing was to increase to Tk. 59.78 billion against benchmark level Tk. 33.40 billion. In an aid depleting global environment the big chunk of the investment has to come in the form of private capital inflows, that is, direct foreign investment (DFI).
The achievement of these objectives will depend on the following investment related factors:
– Congenial Policy Framework
– Growth of a dynamic and vibrant private sector
– Arrangement of adequate finance
– Enabling environment and efficient infra-structure
– Development of human capital
– Stable political environment
– Investment opportunities.
Changed Policy Framework in Bangladesh Economy
During the last 30 years the economy of Bangladesh has witnessed fundamental changes in economic, industrial and trade policies. At the time of liberation, Bangladesh inherited a mixed economic system. But as a natural consequence of wide-spread destruction and abandonment of industries due to Liberation War as well as on account of change of government policy, the public sector acquired a commanding position. The government nationalized various industries, business enterprises and financial institutions exceeding Tk. 15 million in fixed assets. A total of 725 industrial units were nationalized and placed under the management of 10 public sector corporations. But faced with pressures on financial and management resources, the government soon initiated the process of gradual expansion of the private sector. Private investment ceiling was raised from Tk. 2.5 million in 1973 to Tk. 30 million in 1974. It was further raised to Tk. 100 million in 1975 and totally withdrawn in 1978. By now, the policy has completely been reversed assigning private sector the dominant role, although a heavy burden of losses on account of the state owned enterprises (SOEs) is causing serious haemorrhage on the nation’s economic vitality. The government has also been implementing structural adjustments and liberalization policies enhancing the role of the private sector and opening the economy to free competition.
Potentials and Performance of Private Sector
Though relatively new and inexperienced, the private sector has already demonstrated its capability and buoyancy in the economy. A new generation of private sector entrepreneurs has emerged in Bangladesh who are well educated, hardworking, capable and eager to face the challenges of the globalized competitive market. They have proven their mettle in all sectors where they had opportunities to work with freedom and where the Government played the role more off a facilitator than a controller. The booming industries in ready-made garments, knitwear, shrimps, leather, ceramics etc. are clear indicators of the latent capabilities of the private sector and they also act as pointers to what the Government should do in capturing these potentials. It may be in order to show a few illustrations of promising performance of the private sector.
Firstly, private sector’s share in investment shows a rising trend increasing from 10.27 percent in 1990-91 to 15.61 percent of GDP in 1999-2000 and 16.78 percent in 2001-02 while that of public sector stagnates between 6-7 percent.
Secondly, private enterprises are more efficient than state owned enterprises in respect of utilization of assets for generation of employment and value addition. Owning 37.62% of fixed assets private enterprises accounts for 74.57% employment and 66.2% value addition while owning 62.38% of fixed assets the state owned enterprises (SOEs) account for only 25.43% of employment and 33.79% of value addition as in 1989-90.
Thirdly, the private sector performance is more spectacular in foreign exchange earnings from export. Out of the total foreign exchange earnings of US 5.59 billion in 2001-02, private enterprises represented more than 90% of the total export earning which has risen from 74.27% in 1990-91.
Private Sector in the Poverty Reduction Strategy
Under the Poverty Reduction Strategy of the Government, the private sector is the engine of economic growth. The Government will create an investment-friendly environment and act as a facilitator through pursuing policies to create a stable macro economy, improve law and order, promote good governance, maintain competitiveness, remove infrastructure bottlenecks, ensure cost effective fiscal and financial services, and provide market information and support services. With increasing role of the private sector, competition and transparent rules would be framed for protecting consumer’s rights and trust in the market, minimizing the cost of information and enhancing sustainable growth of the private sector. Women’s participation in private sector activities will be effectively supported both as participants in the labour market and as entrepreneurs.
Under the 1999 Industrial Policy, restrictions on private sector participation in all sectors except defense, nuclear energy, printing of currency notes, and forest plantation and mechanized extraction in reserved forests, have been removed. The Government is aware of the constraints hindering the growth of the private sector and would implement effective measures to remove the hurdles through effective and coordinated policies and actions. The key areas would be: infrastructure development (e.g. power, telecommunications, roads and ports), strengthened financial and capital markets, quality of the labour force, reduced costs of doing business by reforming institutional and regulatory framework, improved law and order condition, and better environment for foreign investment. Specific measures would be worked out in consultation with the private sector. For proper functioning of the private sector, physical improvements and management reforms in the basic infrastructure including power, water supply, port and telecommunications will be given priority along with private sector participation. The government would take effective measures to encourage the private sector to become gender sensitive, facilitate women’s participation in private sector activities and create institutions like childcare centres to facilitate women’s enhanced participation.
Private Sector in the Delivery of Social Services
There are several reasons why increased role of the private sector is perceived in the provisioning of social services. Neo-liberal perception that state organizations are predatory and inefficient, with rent seeking as the primary motive for the behaviour of the public officials, is dominant in current thinking. One offshoot of such a perception recommends privatization. While vigorous pursuit for privatization in the industrial sector is more frequently observed, outright transfer of responsibility in delivering social services to the private sector is not made due to presence of “public goods” agreement. However, inclusion of private and other non-government sectors are perceived to induce competition and make the state more accountable. With the latter perception, the World Bank document on Country Assistance Strategy for Bangladesh notes that, NGO partnership and stakeholder participation make up for weak, centralized public institutions and increase public accountability. As a part of long-term strategy, the WB therefore intends to support civil society and the private sector to help build constituencies that call for accountable and well-performing public institutions.
Participation of private sector in the delivery of social services, either on humanitarian grounds or for commercial motive, is a historical phenomenon and no single agency may be credited to have initiated it. However, awareness about it paved the way for a wide range of experiments; and these experiments have unfolded new sets of relations among various agents involved in the process. Thus, there is a need to have fresh looks into the classification of social services, roles to be played by the state, for-profit and non-profit private sectors, and by the civic society. Such ventures will help in designing a new set of rules of business to be put in place with a view to ensure greater social welfare.
Response of Private Sector in Globalization
Globalization is almost entirely market driven. The process has gained momentum and is based upon liberalization of trade, capital and currency markets. Private sector responded in full measure to opportunity thus opened up. The role and function of the private sector in globalization is obvious. Integration of national economies into a global market has been the work of multination stock market operators, currency traders and speculators motivated by profit. Business and industry has been the vital force behind innovations in production, distribution and marketing.
Reform measures undertaken by organizations like GATT, WTO, IMF, World Bank and individual governments provided the enabling environment in which individual companies and firms looked for better market for goods as well as for investment of capital. Among 200 biggest economic entities 160 are not states reflecting the command of private sector in to-day’s global economic activities.
In view of the above, private sector needs some assistance and facilities for playing its role in the development of the country. Those issues are;
A) Arrangement of Adequate Finance for Private Sector
The private sector of Bangladesh has a notable contribution to the industrial sector. But the industrial sector is currently starved of term lending. Institutional arrangement for meeting the credit requirements for industrial investment is grossly inadequate. The commercial banks are basically ill suited to meet the requirements of term lending for industrial projects. By the very nature of their functions the commercial banks are used to borrow short-term and as such lending for long-term would create serious mismatch between the assets and liabilities of the banks. So, commercial banks can’t be relied upon for heavy involvement in industrial project financing. Unfortunately the traditional development financing institutions (DFI) namely, the Bangladesh Shilpa Bank (BSB) and Bangladesh Shilpa Rin Sangtha (BSRS) are now virtually defunct. The government should devise new institutions and instruments for financing industrial projects. The experience with the investment companies is not also encouraging, as most of them are currently operating like retail bankers. The stock market can be an important source of mobilizing equity, but the present state of the stock market does not hold any promising outlook for mobilizing equity for new ventures. So, debt financing of new projects will remain an indispensable requirement. The government will have to mobilize on a priority basis funds for financing industries and develop an efficient mechanism for their disbursement.
B) Enabling Environment and Efficient Infra-Structure
Liberalization and market economy have exposed the domestic industries to global competition. But the private sector enterprises, although they have enough potentials, are grossly hamstrung by the absence of a requisite enabling environment to survive and thrive. Undoubtedly liberalization has brought in both opportunities and challenges. True, the enterprises can have easier access to inputs and can have share in the vast and growing global market under a liberalized trade regime. But the challenges are much more serious. Local enterprises are to face global competition from those who are more experienced and enjoy better infrastructure and other supportive environment. They have to be efficient in cost, quality and marketing. They need a level-playing-field which is improving but remains grossly inadequate in Bangladesh. The problems and inadequacies in infrastructure facilities in electricity, port, telecommunication, roads and highways need to be attended and improved on a priority basis.
C) Business-friendly Administration
The change of development strategy towards private sector-led growth and market economy does in no way mean marginalization of the role of the government. The experience of East and South Asian miracle economies shows that the government institutions played a significant role in enabling the private sector to spearhead the growth process. The growth and performance of a vibrant and dynamic private sector need a lot of support and facilities from the government institutions. There must be an efficient and business friendly administration. The facilities and services that an investor need are; among others, acquire land, have connection of electricity, gas, telephone, water and sewerage, clearance from local authorities and environment authority, port facilities, customs clearance, etc. These should be available promptly and without hassle. But what is the real situation? Are these easily available? The need for these are well recognized in government policy. There is no dearth of interest and intentions in the top leadership in government. It is an accepted and declared policy that government shall act as a facilitator. But there are problems at mid and operating level of the administration that in fact provides the service. The perception and mindset of them need change. Administrative reform is a must. Administrative efficiency is crucial in facilitating investments in the prospective sectors like power, gas, telecommunication and port development which have been opened for private investment and have already attracted a large number of foreign companies. But delays, indecision and lack of transparency in the bureaucracy in processing and finalizing deals are working as deterrents. We should show more professionalism in negotiation capability. Time and opportunity will not wait for us forever.
D) Development of Human Capital
The much talked about comparative advantage of low wages and cheap labour no longer holds well. The gap between developed and developing countries is now not so much of a resource gap, as it is a knowledge gap. It should be a matter of concern to all of us that this gap is widening rapidly. Our companies can’t survive simply by increasing output with the use of capital and so-called cheap labour. Productivity must be increased. To raise labour productivity investments have to be made in human capital. The source of competitiveness should continue to shift from labour intensive to more skill-and-capital intensive investment. But enhancing technological capabilities must propel that shift. We lack adequate trained accountants, technicians, engineers and managers. So the investment in human capital development should draw adequate attention of the government. It is heartening to note that the government has assigned highest priority to the education sector in terms of budgetary allocation. But the quality of education is deteriorating. Discipline and proper environment in the educational institutions must be ensured. Allowing student politics in educational institutions is a major cause disturbing the educational environment.
E) Stable Political Environment
Social and political stability is an indispensable pre-condition to development. Although there is a broad political consensus among the political parties of Bangladesh as regards economic policy of market economy and private sector-led growth, confrontational political programmes and activities like hartals, work stoppages and blockades are vitiating the peaceful environment for pursuing productive and new investment initiatives. These are discouraging domestic investment as well as keeping foreign investment at bay. There is urgent need for having a consensus among the political parties to abandon the programs of confrontations that impede development.
Economics and Politics
You are aware that we are going to face formidable challenges in every field of our trade and industry after 2004 under the WTO regime.
We also know that ‘the strongest link between economics and the real world has always been politics’. In any organised society there is a structure that simultaneously encompasses both markets and governments. Societies both poor and rich necessarily have their own economics and politics. The economics move the politics and the politics govern the economics; No ideology of markets can leave out governments or politics. If an economy is exogenous, it cannot but be unstable and unbalanced.
The economists in the past have long been evading the matter of dependence of economics on politics, and preparing models on the assumption of steady socio-economic conditions. Realizing the folly of that assumption, the economists now a days are taking into account interrelated aspects of social anthropology, industry, commerce, culture, and politics etc while making new economic models or policies. We have thus come to recognize that socio-economic development is most likely to be on positive dynamics when there is a balance of economic and political pioneering par excellence.
Currently in Bangladesh, the standard public response, indeed the only option available to the citizens in reaction to amoral practices, abuses of power, extra-constitutional behaviour and poor economic policies of successive governments is to elect one of the two major parties, in alternate tenures. They both are widely perceived as autocratic in their conduct of state affairs, without caring much for a democratic process or the rule of law. The democratic ritual of transfer of power from one party to another, now badly needs to be replenished by a moral philosophy which would seek real “solutions to social problems,” in the least by advocating a greater balance of power among existing social groupings. Only if rights and obligations are redefined to reflect such a balance then private sector can do the job entrusted to them in efficient manner.
Economic theory teaches us that a classic liberal society leads to a maximum economy: Contemporary economic indicators clearly show that the distribution of both wealth and income is more skewed in less developed and less democratic societies than in more developed ones, and that distribution of income tends to become more egalitarian with economic growth. Less developed countries have certain characteristics in common, like excessive power in the hands of rulers and ruling parties. Holders of excessive political power accumulate economic and financial resources excessively and prevent productivity of the people and the economy from functioning optimally, thereby preventing the maximum possible production of goods and services. They prevent balanced growth of rules and regulations for the market forces to function properly, or prevent the market from functioning by excess of rules and regulations. They prevent the diffusion of power among the social groupings, and allow corruption unabatedly.
Therefore, it is imperative that in order to achieve full economic potential, to reduce income inequality, reduce the gap between the rich and the poor, and to reduce poverty, the civil society which includes economists as much as businessmen and trade unionists, must work hand in hand to remove obstacles and impediments to our production process and economic growth.
The success or failure of any country over the next few decades hinges on economic growth, which requires profound change in our society. We must identify the areas in which change would help economic performance. The most important of these are:
– Diffusion of power by way of distribution of constituted authority to various social groupings;
– Constitutional reforms to dilute the concentration of excessive power in few hands or few focal points through proper checks and balances, so that a small elite does not possess the power to direct all aspects of citizens’ lives;
– Decentralisation of power by establishment of autonomous local government with adequate political and financial devolution;
– Reform of electoral process for comprehensive representation;
– Breaking the nexus between politicians, criminals and the police;
– Eradication of Mastaani Chandabazi (extortion) culture from politics.
– Observance of vertical to horizontal accountability necessary to liberalise polity; (Rulers must become more accountable to their constituents. Investors, traders and financiers must become more accountable to one another for the proper quantity, quality and prices of their merchandise, for payment obligations, and for their promises).
– Complementary formulation of fiscal and monetary policies;
– Enforcement of contracts freely negotiated by independent parties with the full force of law by the state;
– Introduction of international standards in accounting; (Government monopolies, and private businesses often do not adhere to standards of accounting and auditing necessary for their transparency to creditors and stockholders. Strict rules must be made and enforced by the state).
– Redirection of political confrontation and political violence, if not altogether eliminated by a process of conflict resolution;
– Elimination of ambivalent laws and practices of arbitrary enforcement; (Many laws are unclear and antiquated. Frequently a law, on the books but defunct and widely ignored, is suddenly enforced against a political opponent or as a rent-seeking tool).
– Improvement of law and order situation; (Crime rate must be reduced. The moral case against crime is beyond dispute. Our civil society, however, hardly takes into account the effect of crime on economic performance. Bangladesh in all probability will continue to have a high rate of crimes for another generation, but if the crime level is not reduced to a tolerable limit it will impose a grave burden on the competitiveness and economic performance of the productive organs of the polity and render the country unfit to govern).
– Enforcement of a strong Human Rights regime; (A large degree of personal cruelty is found in Bangladesh like torture of suspect felons and repression of political opponents. Constitutional responsibility must be placed on those in power so that human rights are protected, and not violated without being punished. There should be no immunity for violation of human rights).
- Strict observance of meritocracy; (Ministers and public officials must be appointed on the basis of capability, knowledge and experience, not basis of political favour).
- Regulatory Framework
Reduction of government monopolies in the market place: (Though some people argue that some of the state monopoly products or services of “national importance” such as oil, gas, railroads, ports, airlines, fertilizers and banks are better retained in the public sector because they belong to “the people”, in practice they are “operated by the few for the benefit of the few.” Prices are fixed, often capriciously, by those who hold excessive power, and are far from cost-related. It is “the people” who pay out of their noses for what belongs to them. There is need for immediate change in the attitude of the Government in this role).
Giving up state monopolies does not mean that there will be little role for the Government in economic management over the coming decades. The government will continue to set policy over a large range of issues, and will continue to provide the basic legal and financial infrastructure under which the market will operate. The Government will retain, or may even increase, its responsibility for ensuring social order and underwriting the basic needs of the underprivileged in the society. But the Government must increasingly look for ways to streamline the economy by regulations rather than intervention. But the current regulatory practices of the government also need to be streamlined, such as:
– Fickle Regulations – Many regulations are often imposed in a capricious manner. They are enforced in one year and repealed or ignored next year. Changes of taxes, duties, subsidies & incentives year to year make business budget difficult: one must understand that every ill-conceived regulation carries economic costs, so does lack of adequate regulation.
– Excessive Restrictions – Excessive pre-requisites of rules and regulations must be eliminated so that people can take initiative at will, as and when they wish. The Government also incurs certain costs of interventions, regulations and restrictions, and needs to balance the gains against these costs. The negative economic effects of over regulation of commercial activities are widely recognized since 1980’s.
Momentum of Change
The momentum of change in any society has to be generated from within the society itself. In addition to suggested changes in the administrative agenda, our society as a whole, at the civil society level as well as at the community level must address many issues, such as:
– Removal of socio-cultural inhibitions and restrictions on freedom of speech;
– Containment of corruption, which has now infested the society from the highest to the lowest level;
– Total respect for the Rule of Law;
– Public demand for transparency in the style of governance;
– Modernization the civil service, customs, and police services;
– Surveillance against abuse of public funding; (For instance, teachers, engineers, doctors in government pay roll are often engaged in full time consultancy, private tuition and private practise, which apart from dereliction of duty results in inequity of professional opportunities).
– Patronisation of invention and scientific discovery;
– Reduction of high unemployment by increasing investment in infrastructure and industrial sector;
– Improvement of educational standard to support industrial economy;
– Further reduction of population growth rate;
– Improvement of medical services.
Most people would see these tasks as political, and indeed they are political tasks in the sense that the country looks forward to politicians to guide it. The system of government in Bangladesh, however, has structural deficiencies which make it difficult to respond to change. The civil society must therefore come forward and take the initiative for fulfilment of these tasks. That would indeed be the first step towards addressing the issue of income disparity.
Impediments to Private Sector Growth
The impediments to entrepreneurship and growth of the private sector are numerable and multifarious. These not only impede initiatives but also make many enterprises fail and go into default. I would enumerate for your information the major ones:
- The lack of long-term capital availability through banking channels;
- The lack of long-term capital in the capital market / bond market;
- Dumping of products, largely by smuggling;
- Inefficient support infrastructure:
- (a) in the utilities sector, specifically in power,
- (b) of port services, including land ports,
- (c) high transportation costs,
- (d) a largely inefficient telecommunications system which is also very costly.
- Widespread tariff anomalies.
- High customs’ duties.
- Complicated and cumbersome customs procedures aggravated by extensive arbitrary powers exercised by customs officers.
- Low productivity and a highly politicised labour sector;
- Inconsistency among different government policy statements;
- An inefficient and corrupt judicial system;
- Widespread corruption;
- Political instability leading to frequent hartals or strikes;
- High-interest rates in the banking sector;
- A lack of credible statistics;
- The lack of transparency and unaccountability in government decision-making;
- The lack of an appropriate education system to support an industrial economy;
- Too many holidays;
- A slow process of deregulation and privatisation;
- Lack of industry friendly social and political environment;
- Lack of good governance;
- Lack regulatory bodies;
- An “uneven playing field” between the private sector and the public sector;
- Lack of local technology;
- Lack of research and development;
- Government control on public utilities.
Legal Reforms for Private Sector Growth
In addition to above major impediments to social, political, cultural and economic progress are antiquated laws and rules based on those laws. All these antiquated laws must be immediately identified and abolished or amended. Many new laws may also need to be enacted that reflect the democratic practices of the 21st century and to establish rule of law. The impact of new technology, synergies of globalisation, the dynamics of a free economy and the demands of liberal democracy have made many old laws ineffective, unnecessary and even detrimental to social and economic growth. Antiquated rules, regulations and laws have become a real block to citizens’ ideas and aspirations of social, political and economic development.
The interdependence of various economic agents and the complexity of their relationships increasingly demand a better legal framework. The main purpose of a better legal framework is to reduce the cost and risk of transactions, as well as to harmonise regulations across different jurisdictions. Hence, business leaders look forward to the judicial reform commission who can expeditiously perform these reforms by suggesting priority action on the following:
- The company law should be so amended to allow entrepreneurs and enterprises to operate in a modern environment.
- Laws to regulate “hundi” and to prohibit money laundering should be introduced.
- The Foreign Exchange Regulations Act should be amended.
- The Banking Companies Act should be amended.
- The Insurance Companies Act should be amended.
- The Financial Instrument Act should be amended.
- Environmental laws should be amended.
- The Power Act should be amended.
- The Petroleum Act should be amended.
- The Industrial Policy should be enacted as an enforceable instrument.
- The Port Authority Act should be amended.
- The Dock Labour Management Board should be restructured by law.
- The T&T Board should be restructured by law.
- The Arbitration Act should be amended to conform to international standards.
- Foreign investment laws should be amended to ensure a minimum 15% to 20% local partnership except in the EPZ. This is very important for Bangladeshi citizens to acquire foreign technology and expertise.
- Labour laws should be amended.
- Factory laws should be amended.
- The Shops and Establishment Act (1961) should be amended.
- New transparent laws protecting civil rights should be enacted.
- Anti-terrorist laws should be reinstated.
- The Special Powers Act should be abolished.
- Bankruptcy laws should be amended to allow debt restructuring and shielding of the company’s finances against disturbing pressures of creditors while restructuring takes place. Directors should have legal protection.
The IMF President said recently in Thailand that;
(a) the private sector must feel confident of the legal system and of legal protection so that entrepreneurs can again undertake the risk of business venture,
(b) if the market economy is to work, then laws must be effective, and the legal system must work efficiently,
(c) nations must allow entrepreneurs to take risks under the protection of the law and all bankruptcy laws must be revised to help entrepreneurs or bankers to take prudent risks to contribute to the healthy growth of the economy.
- New foreclosure laws should be enacted to allow financial institutions to take over mortgaged assets without going to court.
- The Artha Rin Adalat Act should be amended.
- A new bankruptcy court separate from the “Artha Rin Adalat” is to be established.
- Admiralty laws should be amended to protect foreign flag vessels in conformity with international law.
- Secrecy laws should be amended and a “Rights of Information Act” shall be enacted.
- Patent laws should be amended and IPRL should be immediately enacted.
- New laws should be enacted making it mandatory to pay interest on delayed payments.
- No laws should have retrospective effect unless so approved by a three-fourths vote in the Parliament.
- A new law should be enacted to create a land port authority.
- The public must have a chance to interact with lawmakers before any new laws are created or old laws amended.
- New laws should be enacted so that affected citizens can file cases against ministers, government officers, elected officials, police officers, customs officers, etc. for injustice, delayed decisions, wrong decisions, malafide decisions, etc.
- A new law shall be enacted to protect witnesses.
- A new “law of libel” shall be enacted so people can safeguard their rights and liberties.
Dynamic and vibrant Private Sector: FBCCI and other Trade Bodies
It is now widely recognized that a dynamic and vibrant private sector is crucial to rapid and sustained economic growth. The government policy has put the private sector to the driving seat of the engine for the growth of the economy.
The contribution of the business leaders, trade bodies and the FBCCI were enormous. The transition and the formation of the private sector were directly linked to the opportunities or facilities that the prevailing policies allowed. This is borne out from the outlook each five-year plan allowed as well as the perception the World Bank and IMF had. The private sector started off without a right to be. Individual efforts were channelized gradually to formation of trade bodies and then the FBCCI.
When some 80 percent of trade and 95 percent of the industry were in the public sector, we in the private sector were either suppliers, contractors, overseas suppliers agents at one end or agents and distributors at the other end. Private sector permission to enter the raw jute export trade was secured by the FBCCI and member bodies in late 1975. The industrial ceiling waiver was an uphill task with first relaxation made in 1974 and final withdrawal in 1978. The FBCCI and the member bodies raised issues of return of Bangladesh jute and textile mills; denationalization and return of mills to owners; divesting of government-held shares to activate the stock market; introduction of two sectors – reserved and free; allowing banks and insurance companies in the private sector; abolition of octroi, restricting export trade to the private sector and a host of other demands which were raised.
The private sector has demonstrated its ability to undertake most sophisticated industries and meet the demand of the nation. The pharmaceutical industry is a case in point. Not only has the production capacity doubled but also the prices for the consumer have come down substantially.
While conducive policy environment has made rapid progress, the procedural problems appear to be a major stumbling bloc. It is foremost on the present agenda of the FBCCI and trade bodies to highlight and seek simplification and transparency of procedures. There is a visible extortion at each stratum, which dissipates initiative and threatens industry and commerce.
The private sector is in its early stage and the entrepreneurs of this generation are at work and contribute from their experience and wisdom to innumerable issues that it confronts. FBCCI is the focus and contact point for business viewpoint and manifestation of the thought process of the private sector.
In the two dominant areas of export-led growth and privatization, FBCCI recognizes and endeavours to play its role. The private sector growth imperative makes a strong demand and imposes great responsibility on the FBCCI. The strength has to be augmented to effectively facilitate the change it had so long targeted. FBCCI interacts closely with member bodies; contributes to policy through various avenues including consultative committees; it renders a wide range of services in connection with international trade opportunities. FBCCI has the avenue of constructive access to the overseas markets through counterpart apex organizations with whom joint chamber agreements exist and the International Chamber of Commerce (ICC), Islamic Chamber of Commerce and Industry (ICCI), SAARC Chamber of Commerce and Industry (SCCI) and Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI). These are useful mediums but inadequately exploited due to resource constraints. The FBCCI hopes with the support of the members and the government it will continue in the path of progress and national well being with pride and dignity.
Now, to perform the desirable responsibilities as an apex representative of the private sector, FBCCI needs to remove the existing impediments against it.
