Small industries should get more incentives: economist
The small and medium industries that serve the domestic market should get more incentives in the seventh five-year plan to meet the needs of the consumers whose incomes are rising by the day, an economist said yesterday.
“The government has been giving incentives to the export-oriented sectors for many years now. It's time to give incentives to the industries involved in producing goods for the domestic market,” said Mustafizur Rahman, executive director of the Centre for Policy Dialogue.
The government should also prioritise the industries linked to agriculture as those could be good segments for the domestic and external markets, Rahman said.
The potato chips industry, for example, has been growing fast, serving the domestic market and earning foreign currencies through exports, he said.
The government should incentivise the chips industry along with other such agro-industries, he said.
“I do not support wholesale liberalisation of the trade policies, as we have to protect our growing industries as well. Rather, the government should adopt strategic trade policies.”
A strategic trade policy means bringing changes to a policy to serve a specific sector without liberalising all the policies.
Rahman spoke at a consultation meeting of the seventh five-year plan (2016-2020) at the National Economic Council in Dhaka. Shamsul Alam, a member of the Planning Commission, moderated the discussion.
The commission has been seeking opinions from exporters, economists, government representatives and other stakeholders to prepare the plan.
Rahman also suggested taking appropriate policies for the growing export-oriented leather and leather goods, footwear and ICT sectors, which could generate numerous jobs and earn a lot of foreign currencies.
He also stressed the need for boosting regional connectivity through trade pacts to establish a strong value chain.
The US-led proposed Trans-Pacific Partnership among 12 Asian and Pacific nations will be a challenge for Bangladesh, as Vietnam—a major garment producer—is a member of the treaty, he said.
Commerce Minister Tofail Ahmed said Bangladesh has limited scope to liberalise its trade policies as the country needs to safeguard its own industries.
Bangladesh has become sufficient in cold-rolled coil, paper and cement industries with the help of the protected trade policies, he said. Ahmed suggested giving incentives to the sectors, which add high value. “The services sector is very important for us.”
In the 1972-73 period, the contribution of agriculture to the GDP was 78 percent, which came down to 15 percent now, as the manufacturing and services sectors are contributing more to the national economy.
Mashiur Rahman, economic affairs adviser to the prime minister, suggested formulation of industrial policies in accordance with the World Trade Organisation.
He also suggested shifting the industries to the northern districts to make best use of the available lands.
In the plan, the Planning Commission cut the targeted contribution of agriculture to the GDP to 12.9 percent from 16.1 percent achieved in the sixth five-year plan in 2014.
For the industrial sector, the target has been set at 33 percent, up from 27.6 percent in the previous year while for manufacturing it increased to 21.5 percent from 17.4 percent.
The contribution of the services sector has been fixed at 54.1 percent from 56.3 percent in 2014, according to a document from the Planning Commission.