Policy environment for private sector

Publish: 9:26 PM, October 22, 2020 | Update: 9:26 PM, October 22, 2020

The private sector has emerged as the main driver of economic growth in the country following the gradual unbundling of the state operated sectors, privatization and greater stimulus given to private entrepreneurs .

Thus, the private sector generates a lion’s shares of the country’s gross domestic product (GDP) and employment in the country today. With China and some other countries becoming less and less competitive in the production of basic goods like cheap textiles, footwear, bicycle, etc.the prospects of Bangladeshi entrepreneurs in these sectors are considered to have much improved.

With political stability established to some degrees on a relatively long lasting basis, there is no reason why our private sector entrepreneurs should not replace China and the others very quickly in these industries and create a second generation of successes in these like they have already achieved in the primary readymade garments (RMG) sector.

Undoubtedly, the economy will rise to a higher plane if the private sector is enabled to get a big boost from the exploitation of these prospects. But this boost will be crucially dependent on the government in playing its part truly and timely as the facilitator of the private sector. It must help in the creation and sustaining of an investment-friendly environment for the private sector to remain motivated in enterprising.

As it was, energy availability proved to be a stumbling block in the path of new investments. But thanks to the policies and their implementation carried out in the broad energy sector by the incumbent government, these handicaps have been largely overcome. The latest positions in respect of energy supply in the country should send out good signals to potential foreign investors in the near future. Only it has to be ensured by the government that they would continue policies in the energy sector with the same vigour like in the recent past.

The development of infrastructures is also very important. The functioning of the Chittagong port has improved but the same can be further improved and the improvements must be sustainable. The port should acquire more capacities and plans for new port development should get highest priority.
Projects taken up already such as the establishment of a special zone for making active ingredients for the pharmaceutical industry, these should be implemented on schedule. The coming into operation of the active ingredients park , for example, will likely trigger very fast growth of the highly prospective export-oriented pharmaceutical sector.

Then, transportation related costs of business will fall substantially from building of expressways between the vital Dhaka-Chittagong transportation corridor. All export oriented industries as well as other businesses will gain much competitiveness from the building of an expressway in this corridor and from similar transportation related improvements in other areas of the country.

Government’s fiscal and monetary policies and continuity of policies are very important in keeping the private sector interested. Frequent policy changes lead to loss of confidence of investors as they cannot be sure that their planned investments will not fail due to changes of conditions from the changing official policies. Thus, continuity of policies will count as very important for the unhampered success of the private sector in the coming years.

A policy environment that creates a level playing field for the private sector involves providing proper fiscal incentives and monetary incentives to this end. Therefore, the government will have to do even better in keeping the fiscal and monetary policies attractive for the private sector investors. The policies must be seen as not changing at short intervals but should remain unchanged over the long haul.