Where do we go from here?

Talk is cheap and we have plenty of it here. Very few listen and even fewer care, but that hardly seems to matter. If one has the inclination, at least one seminar or talk show on socio-economic matters is available to attend daily in Dhaka alone. The speakers' common refrain will be poor governance, lax law and order, rampant corruption, bureaucratic apathy, and little else. The reaction from the floor, in turn, will be the usual "we are aware of this but why is little being done about it." And there the matter will rest.

For the sake of balance, mention will be also be made of Bangladesh's success stories in garments, micro-credit and mobile telecommunications, and the five per cent per year real growth in GDP over a sustained period. The fact that this growth began from an extremely small base, which continues to remain quite small, is glossed over as are the terrible working conditions in the garment sector, the high cost and stringent requirements for micro-credit and the exorbitant charges for cellular calls.

Please do not misread or misconstrue me. There is plenty in Bangladesh to be proud of and bullish about. One cannot but applaud the contribution of the dynamic informal sector, the overseas worker and the hard-working, under-paid factory and farm workers. These are, and will continue to be, the principal contributors to growth and development. It speaks volumes of their spirit and dedication that they have done this with little fiscal social and moral support. Sadly, garments, micro-credit and telecommunications get all the plaudits and there is little time and attention for them.

Two examples are germane here. In Bangladesh for reasons not quite clear, petrol remains relatively cheap while biriani, the urban office worker's quick bite, stays costly. We need to learn from India and Pakistan here, which, by contrast, seem to have got the equation between these two items just about right. At the time of writing, the price of a litre of premium petrol was the equivalent of 64 cents in Bangladesh, 94 cents in Pakistan and 110 cents in India while a single plate of biriani was priced at the equivalent of 75 cents in Bangladesh, 50 cents in Pakistan and 45 cents in India. In other words, in Bangladesh, biriani, the urban worker's lunch, is over-priced by about 55 per cent and premium petrol under-priced by around 35 per cent. Shouldn't this be the other way around?

The power sector is the other case in point. For some five years now, the government has been aware that a serious power shortfall was coming. Yet little or nothing was done to avert the situation. As a result, at the end of 2004, Bangladesh had a paltry installed capacity of 33 MW per million persons as against 120 MW for Pakistan, 105 MW for India, and 98 MW for South Asia in aggregate. Access to electricity was also poor with 35 per cent for Bangladesh as compared with 60 per cent each for Pakistan and India and 55 per cent for South Asia in aggregate. The position has, without doubt, got much worse since then as the many daily power outages will bear testimony.

Surely, there is immediate need to seriously address these two issues as well as the well-being of the garment sector and its some three million workers if Bangladesh is to maintain, if not improve upon, its historic GDP growth pattern and thereby move toward a better life for its 145 million people.

To pose the question where do we go from here is not to become cynical. It has more to do with looking ahead and thinking dispassionately about issues and seeking solutions to them. Looking back, of course, is fine and necessary, in as much as it allows one to examine ones strengths and weaknesses and to move on from there. In the final analysis, it is looking ahead that matters and truly counts. However, at this point we need to look back for just long enough to create and analyse the accompanying Table I:

Table I is a broad-spectrum overview of the 2005 situation in Bangladesh and, for purposes of comparison, Pakistan as well. It is clear that in infant and maternal care, secondary school enrollment and women empowerment as measured by the number of economically active women, Bangladesh is streets ahead of Pakistan (and India in some cases). For me this is, without doubt, an outstanding and a lasting legacy of Bangladesh to its people, well ahead of garments and telecommunications, but behind micro-credit.

Unfortunately, there is always a flip side to these things. While in Pakistan severe gender inequalities are a serious drag on development and growth and a blot on its social fabric, the proportionately higher number of economically active women in Bangladesh results in a lower wage base and exploitation. One statistic will bear this out. In Bangladesh, an employed labour force of 65 million persons generated a GDP of $65 billion in 2005. This is equivalent to $1000 per working person. By contrast, in Pakistan, with an employed labour force of 44 million and a GDP of $92 billion, the corresponding figure was $2090 for the same year. If distribution in incomes is factored, the disparity becomes even more glaring. Apparently, the working person here is destined to pay more for biriani and get less for labour. This fiscal distortion needs to be addressed.

Where Bangladesh is significantly lagging behind is in budgetary revenue generation and foreign exchange reserves. Revenues were around 9 per cent of GDP in 2005 as against 15 per cent for India and 17 per cent for Pakistan. As India and Pakistan spend much more on their respective militaries, a more meaningful indicator is revenue to GDP after accounting for military expenditure. In this case, the ratios are 7.7 percent for Bangladesh and 12.6 per cent each for India and Pakistan. The gap remains wide.

An inadequate revenue base and insufficient exchange reserves are the crux. Experience says that lowering tax rates and tariffs generates business activity, improves compliance and reduces corruption. The government could consider this possibility to enlarge its revenue base. There is need also to reduce labour exploitation, remove fiscal distortions, and seek FDI and FII more effectively and sincerely and, finally, to place greater faith upon those many educated and empowered women to build a better Bangladesh.

Joseph Michael Pereira is a freelance contributor.