Investment to lead to large-scale job creation, curing fallouts

Experts yesterday emphasised large-scale job creation with increased investment in the public and private sectors to overcome the Covid-19 fallouts on the economy.

They also stressed diversifying export markets while extending share in the existing destinations.

The suggestions came at a webinar titled "Impact of Covid-19 Pandemic on Bangladesh: Options for Building Resilience" organised by the Bangladesh Institute of International and Strategic Studies (BIISS).

Addressing as chief guest, Mashiur Rahman, economic affairs adviser to the prime minister, emphasised diversifying to increase export growth, enhancing domestic demand and production growth and expanding technical education.

Domestic investment needs to be enhanced for domestic production growth, he said.

He, however, believes that private sector investment would not see an increase anytime soon.

Terming the increase in remittance "good", he stressed on the need for expending it conservatively since the pandemic was not ending soon and uncertainties remained on sending more people to the global market. 

Prof Mostafizur Rahman, a distinguished fellow of the Centre of Policy Dialogue (CPD), said the economy's capacity to absorb shocks was evident when the Covid-19 set in.

How the government reacted and tried to address the situation was also visible, he said.

Poverty reduction and employment creation elasticities of Bangladesh's growth had already been slowed down, he said, adding that large-scale employment creation can only be sustained through diversification, if more investments can be made.

Both public investment and stimulation of private sector investment are very important, said Prof Rahman.

In this time of crisis, economic policies have to be pursued which create employment through investment. With regard to resilience, the important factor was how government investment did stimulate and incentivise private sector investment, he said.

He mentioned that microfinance played a very important role, particularly in stimulating SMEs which was very much an employment-intensive sector.

Prof Rahman said microfinance was also a very good way of offloading the delivery burden that the government has on non-state actors.

"We will have to diversify not only our exports but also our markets," said the economist.

"The 21st century will be Asian century and there will be demand. India imports $480 billion and China imports $2,200 billion and if we take even these two countries, we have a market of $3,000 billion."

Currently the government is taking several initiatives with India and China as special economic zones are being set up, he said. 

"But for resilient recovery, we will have to make the transport corridors into economic corridors where all the five forms of connectivity, including trade connectivity, investment connectivity, people to people connectivity, logistics connectivity and transport connectivity will come."

"If we can have a good coordination among these forms of connectivity, we can diversify our markets and exports."

Mentioning that goods trade and services trade are becoming entwined, he said digital platforms and e-commerce were becoming very important for retaining competitiveness and ensuring future employment.

Sayema Haque Bidisha, an economics professor at the University of Dhaka, referred to a recent research of the South Asian Network on Economic Modelling which stated of the poverty rate to have increased to as high as 39 to 40 per cent due to Covid-19.

There is fear that due to the fall in incomes, the long-term skill formation and education can be affected, school dropouts can be high and child marriages may increase, she said.

"We need a different sort of social safety net strategy, not a typical one, involving employment generation, skill formation and training plans for the new poor people who have gone back to villages but are not below the poverty line but their income has been highly compromised."

If a proper vaccination strategy can't be put in place, the poor might be left out of the system, she said.

BIISS Research Director Mahfuz Kabir said the service sector was affected heavily including transport and communication, community and social services, banking and financial services, tourism and wholesale and retail trade.

He made some recommendations, including regaining confidence of foreign investors, formulating finely tuned monetary and fiscal policies to boost investment and create jobs and introducing new social security programmes.

He also suggested reskilling migrant workers for the domestic and global markets and supporting people on the fringes including those affected by climate, in chars and haors and the hill tracts.