Reassess protection given to domestic industries
Bangladesh should reassess the protection granted to the domestic industries in order to help them grow up and accelerate the growth of non-garment export sectors, said experts.
Zaidi Sattar, chairman of the Policy Research Institute of Bangladesh, said protection structure was preventing the country in getting traction in the non-garment exports.
"We have some of the highest tariffs to protect the domestic industries. There have been protection decades after decades. But if you try to support an adolescent for too long, he is no longer going to be an adult."
"The protection and tariff structures are hurting the emergence of non-garment exports because the profitability from the sales in the domestic market is higher than in the export markets."
"We must have the right kind of trade policies in order to continue the progress we are making in the trade area."
He spoke at a roundtable in the final session of the three-day Annual BIDS Conference on Development: Celebrating 50 Years of Bangladesh at the Lakeshore hotel in Dhaka on Friday.
The Bangladesh Institute of Development Studies organised the event.
Mashiur Rahman, economic affairs adviser to the prime minister, also touched upon the issue whether Bangladesh can operate in a protected market and at the same time, expand exports.
He agreed that if infants were supported beyond the time when he should have grown, then one has to conclude that it is undernourished and under-nurtured and maybe there are some other problems.
Ahmad Kaikaus, principal secretary to the prime minister, said garment factories employ less workers than the real estate sector.
"How much protection did we give to the real estate sector during the coronavirus pandemic? Zero. Are they asking for money? Not at all."
"We have to understand huge advantages internally that we have to cherish and nourish," said Kaikaus.
He said it was sometimes true that "we promote inefficiency when we are giving protection. But without markets, businesses don't exist."
"So, we have to understand it and give proper attention."
Nihad Kabir, president of the Metropolitan Chamber of Commerce and Industry, Dhaka, pointed out the lack of quality data as a major challenge.
She said the last labour survey was done by the Bangladesh Bureau of Statistics in 2016-17.
"It is really five years since that time. It is really out of date. If you want to keep progressing, we need our research entities, universities and business chambers an access to up-to-date information."
Even if where data is available, Bangladesh is yet to have the analytical capability to use the data, she said.
"We need to collect data in a timely manner. Bangladesh also needs to analyse the regulatory frameworks to align them with its aspiration in the areas of manufacturing, trade, and commerce."
Sultan Hafeez Rahman, director of the BIDS Graduate School of Economics, who chaired the session, said diversification of both manufacturing and exports is important and should continue to be on the agenda.
"There are enormous constraints to this on the policy, regulatory and enforcement sides. We also need to create a level-playing field. There should be continuation of the trade policy reforms."
He urged state-run commercial banks to act like banks and earn profits. "They don't need to be continuously recapitalised every few years. This is a huge public interest issue."
Abdur Rouf Talukder, senior secretary of the finance division, said the government was implementing one of the largest skill development programmes in Bangladesh. It is purely a market-oriented support.
The government has partnered with 14 industry associations. "The associations have designed their own programmes, outlining the skill sets they need. We are financing the programmes."
The government is working on developing higher level of skills, said Talukder.
He said more than 200,000 foreigners were working in Bangladesh. And the government did not know how much money they were remitting to their home countries because they were mostly transferring the money through illegal channels.
"We are trying to develop local managers so that in three to five years' time, we can replace those foreign workers."
Shamsul Alam, state minister for planning, said Bangladesh was on the high growth path and would achieve double-digit growth by 2030. Bangladesh will be free of poverty by 2030 and free of unemployment by 2041.
He said export-led growth is the only end-target of the country as Bangladesh does not have huge natural resources.
"For that, whatever policy support is needed should be given."
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