Graft takes 2-3pc off the economy
Muhith says punitive measures are not enough to deal with the problem
Bangladesh lost as much as Tk 24,735 crore last fiscal year due to corruption, according to an estimate by Finance Minister AMA Muhith.
Widespread corruption costs the economy 2-3 percent every year, the minister said yesterday, citing studies.
Bangladesh's gross domestic product was worth Tk 824,532 crore at constant price last fiscal year, according to provisional estimates of Bangladesh Bureau of Statistics.
In line with the BBS figure, the finance minister's estimate hovered between Tk 16,490 crore and
Tk 24,735 crore last fiscal year.
“Corruption prevails in every sector. It's a serious problem,” he said in reference to the prime minister's recent comments on the issue.
Social disruption, including political unrest, also eats up around 1 percent of GDP growth.
Muhith's comments came at a special plenary meeting of the Local Consultative Group at the NEC conference room in the capital.
He said punitive and detection measures are not enough to deal with the problem, but ICT could turn out to be an important tool in tackling it.
Planning Minister AHM Mustafa Kamal was also of the same view. “We have to take the help of information technology to curb corruption."
The government has installed large scanners at Chittagong port, which resulted in a fall in corruption, he said.
Zahid Hussain, a lead economist at the World Bank's Dhaka office, said it is widely recognised across the globe that corruption has economic, social and political costs. Corruption slows growth and induces high levels of growth volatility, he told The Daily Star.
The World Economic Forum estimates show that the costs of corruption equal 5 percent of GDP.
An IMF research has shown that investment in corrupt countries is almost 5 percent less than in countries that are relatively corruption-free, Hussain said.
A 2012 report by Transparency International Bangladesh showed that about Tk 22,000 crore is lost annually to bribery and unauthorised payments. This is equivalent to 2.3 percent of GDP of fiscal 2012.
Estimates of costs of corruption vary widely because quantifying corruption and costs of corruption is extremely difficult, Hussain said.
Commenting on the seventh Five-Year Plan, Muhith said the employment generation target of 18.7 million over the next half a decade is very ambitious as the unemployment rate is high.
“It's not the GDP growth but job creation that is the number one challenge. It will be difficult for us to achieve the target as there is no consistency in gainful employment generation.”
Private sector investment is another challenge, he said: it has to be raised to 26.6 percent of GDP by fiscal 2019-20 from the current 22.07 percent.
“I am not sure what strategies we should follow to improve the sluggish private sector -- we have to think about it.”
Muhith called upon the development partners present at the meeting to help raise the country's foreign direct investment.
The country received only $1.57 billion in FDI last year, which is way below the $9.6 billion that the government is targeting for the final year of the seventh Five-Year Plan.
“This is one of the areas where the development partners can make some contribution.”
Muhith went on to label Bangladesh as one of best examples of “social protection” in the world. “But the income inequality is still high -- we should give special focus to address the issue.”
Commenting on urbanisation, he said the government is planning to bring about a population drive to outside Dhaka with the help of public-private partnership initiatives.
The government will create a satellite town about 38 kilometres outside Dhaka based on the proposed expressway from airport to Zero Point, he said.
Once the project is realised, he is hopeful that a part of Dhaka's population drive would choose to move there.
The finance minister also highlighted some of the areas where special attention must be given during implementation of the seventh Five-Year Plan. They include education, health, agriculture and skill development.
Shamsul Alam, member of General Economic Division, presented a keynote paper on the plan at the meeting.
By the terminal year of the plan in fiscal 2019-20, the government plans to raise the GDP growth to 8 percent, contain inflation to 5.5 percent and jack up gross domestic investment to 34.4 percent of GDP, as per the presentation.
It also aims to raise private investment to 26.6 percent of GDP and public investment to 7.8 percent, and increase national savings to 32.1 percent of GDP.