Base policies on credible data

Policies framed with the support of evidence and credible data benefit the economy and the society as a whole, economists said yesterday.

They also said decisions taken on populist notions and prescriptions from donors may not bring desired results.

The views were shared at the launch of a book—Evidence based policy making in Bangladesh—penned by Sadiq Ahmed, vice-chairman of the Policy Research Institute of Bangladesh.

The book highlights the importance of research and evidence-based policymaking. 

If policies are formulated in the framework of informed decision making, they are more likely to work than those that are purely politically motivated with insufficient evidence or analysis, Ahmed said at the event.

“In our experience, we have found that government has limited analytical capacity,” he said, adding that the government addressed the issue in recent years by partnering with think-tanks.

Some efforts are also underway to develop in-house evidence-based policymaking capacity in key line ministries in coordination with the cabinet division.

“These are very good efforts,” Ahmed said. But elaborate policy models using rigorous quantitative methods are unlikely to work in developing countries like Bangladesh owing to insufficient data, limited analytical capabilities, severe time-constraint and short attention span of policymakers.

“Proper communication with top policymakers is crucial for successfully conveying the main focus of the proposed policy decision.”

Evidence needs to be broad-based and easy to understand and conceptualised in the context of Bangladesh and its development challenges.

Organised in nine chapters, the 182-page book sees Ahmed making use of case studies to discuss the regulatory framework for private investment.

He later dealt with issues such as ICT revolution, financial inclusion, Bangladesh's “Look East policy”, tax structure modernisation, poverty and income distribution, urbanisation and reforms on public enterprises.

Citing his experience as a former finance adviser to a caretaker government, AB Mirza Azizul Islam said he looked for studies on tax holidays in Bangladesh but did not find any.

“Evidence-based policies and the capacity to implement those are important,” he added.

Zakir Ahmed Khan, former secretary to the finance ministry, said the tax ombudsman office was established without a clear idea. “The book is diagnostic as well as prescriptive,” he said.

Mustafa K Mujeri, executive director of the Institute of Microfinance, said policymaking in Bangladesh was not always based on evidence.

“Policymakers need to understand the importance of evidence,” he added.

When policies are based on populist notions or anecdotes, they are at best inadequate and at worst lead to more harm than good, and potentially cause long-term damage to the economy and society, said PRI Chairman Zaidi Sattar.

Selim Raihan, professor of economics at the University of Dhaka, said there are problems with the quality and consistency of data.

Citing the government's implementation plan for VAT law 2012 and businesses' opposition to the law, Wahiduddin Mahmud, a noted economist, said it appeared that both the National Board of Revenue and the businesses were “shadow boxing”.

None had information on the number of VAT-eligible entities, he said, adding that the economic survey of the Bangladesh Bureau of Statistics could be instrumental in collecting turnover data.

“Not enough was done to explain how VAT works,” said Mashiur Rahman, prime minister's economic affairs adviser.

He also said the export data used by the Export Promotion Bureau, the Bangladesh Bank and the NBR are not uniform. “Of them, BB's data is the most reliable.”

Subsequently, he suggested building up the capacities of agencies such as the Planning Commission and the BBS for reliable data gathering.