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Other countries take particular interest in a country when it moves up the economic ladder with its evolving dynamics. They monitor the different facets of development and try to understand where, how and at which point they can have an inter-active engagement in that functional matrix. Think-tanks from other countries also contribute to this process.
Such monitoring is presently taking place with regard to Bangladesh. The Washington-based think-tank Heritage Foundation in their 2019 Index of Economic Freedom has remarked that the Bangladesh ranking on economic freedom has moved up seven notches to 121st from 128th. They have also made some other important and constructive observations. They have pointed out that government regulatory reforms have improved the freedom of doing business in the country but the comparatively slow implementation of these reforms is undermining economic development potential in some cases.
This survey has ranked Bangladesh 27th among 43 countries within the Asia-Pacific region. It has also observed that Bangladesh can do better if in regional terms, coordinated action is undertaken by the relevant authorities to tackle the problem of relatively poor connectivity within Bangladesh's infrastructure. They have also drawn attention to endemic corruption, fragile rule of law, insufficient power supply and relatively poorer labour productivity growth.
One should look at these observations from a positive point of view where the glass is being termed half-full. It would also be worthwhile in this regard to mention that according to some of the monitoring agencies - these drawbacks are affecting investment potential and implementation in the different Export Processing Zones being created by the government in different parts of the country. Comparative lack of guaranteed institutional support as available in Vietnam, Thailand, Malaysia or Singapore is casting its own shadow.
Within Bangladesh, RMG manufacturers have been analysing the difficulties that are gradually coming to the surface because of Brexit. Facts revealed recently have noted that Bangladesh's export growth to the United Kingdom in the first half of the current fiscal year has posted only a 3.16 per cent increase, compared to 14.42 per cent overall export growth for the country. There is fear according to IH.Ovi that the growth prospect in the third largest market for Bangladesh's goods could weaken further because of the uncertainty created by the No-Deal prospect within the Brexit horizon. It may be mentioned here that Bangladesh's export to the United Kingdom was US$ 2.04 billion during July-December period of the 2018-19 fiscal year. This figure was US$ 1.98 billion in the same period a year ago. Bangladesh's overall export earnings from the United Kingdom saw an 11.76 per cent growth to US$ 3.99 billion during 2017-18, compared to US$ 3.57 billion in the previous fiscal year.
According to some non-governmental organisations (NGOs), the government has been able to make some progress in implementing surveillance in the market -- through "proactive interference and separate governance guidelines, but the capital market was still short of any notable performance". This was evident from the fact that most of the IPOs offered in 2018 were not from well recognised organisations but were from the lower end of the capital market. This affected public interest in the market. Such a situation was due to uncertainties of exchange rate as well as the interest rate volatility of the taka. This, in all probability, induced an outflow of money from the country which in turn generated more pressure on the deposit base of the banks.
Such a scenario prevailed in banks -- being forced to gradually raise their deposit rate in order to improve the liquidity situation. This was at the cost of the capital market where potential investors took greater interest in converting their comparatively low earning equity stakes into cash, and then depositing that money in banks or financial institutions where there was greater hope of earning higher returns from higher deposit rates. At the same time, fluctuations in the exchange rate, particularly in terms of the US$ is also influencing most institutional investors to remit their profit to their own coffers. This has eventually led some of the foreign investors in our capital market to sell off their holdings.
There is general consensus that corporate governance had improved over the second half of 2018 but the market did not benefit as much, as it was driven by small investors instead of corporate institutions and asset management companies-a scenario common to some developed countries or countries like in Sri Lanka, India, Singapore or Malaysia.
We need to understand that we have to overcome this absence of corporate interest in order to move forward. For this to take place, hopefully, our newly elected government will be able to enforce as promised, an improved fiscal governance format within our financial sector, particularly within our banking sector. As underlined by the Prime Minister there has to be zero tolerance with regard to corruption. Archaic laws and regulations will also need to be addressed and updated as we have entered the age of e-commerce.
One has to admit that the new government is trying to address many unresolved issues that have affected our branding as a country. This has been reflected in several significant steps in different sectors. In the education sector we have noted the serious efforts that have already been made to tackle the matter of question leaks ahead of the SSC Examination. This has been tainting our record in the eyes of educational institutions abroad. We need to regain faith in our system.
We have also seen how the Bangladesh Inland Water Transport Authority (BIWTA), with the help of law enforcement authorities, has been able to demolish more than 2,710 illegal structures on the shores of the Buriganga and the Turag rivers during their eviction drive over the last 52 days to free river banks from encroachment. Similarly, the Anti-Corruption Commission (ACC) after careful investigation and inquiry into the health sector has identified 11 areas of corruption and prepared a set of 25 constructive recommendations to stop them. These have been handed over to the Health and Family Welfare Minister. These include following e-government procurement tender process regarding purchase and conducting inquiry before giving approval for setting up diagnostic centres and private hospitals. These need to be done in an open and transparent manner to ensure accountability and removing corrupt practices.
In the context of enlarging and diversifying our energy profile, the new government has decided correctly to intensify efforts in this regard. The Executive Committee of the National Economic Council (ECNEC) has approved a significant project aimed at providing electricity to 10 million additional citizens across the country. This "Extension of Rural Electrification Project" under the Power Division will be implemented and completed by June 2020. Two million new connections will be installed and will assist in creating improved conditions in the non-urban sections of the country.
We need to remember that as in the case of Sri Lanka, Thailand, Vietnam and Singapore, if we can improve our skilled workforce, we will open doors that could be availed of by those willing to be part of our expatriate work force. This will also encourage foreign direct investment in Bangladesh with investors being aware that we possess enhanced digitisation, greater availability of energy and also a skilled workforce. Our growth rate will then naturally evolve upwards and along with that the ability to absorb our growing educated workforce.
We have created over the past decade greater expectations and are now looking forward to enhanced achievements. Poverty has been decreasing steadily and our nutritional status improving. The inflation rate has slowed down and our balance of payments has also improved. Unemployment has remained low and the RMG sector has been performing strongly.
Our GDP growth rate is expected to hit 8.13 per cent at the end of this fiscal. Our per capita income is also expected to rise to US$ 1,909. These signs are now generating optimism and creating confidence.
Muhammad Zamir, a former Ambassador, is an analyst specialised in foreign affairs, right to information
and good governance.