Bangladesh will have to address a few core policy challenges to achieve the upper-middle income country status by 2031, economists said.
The challenges include ensuring equitable tax system, capital market vibrancy, and export diversification.
Currently, the country remains mostly concentrated on the readymade garment exports, which are likely to come under threat after its graduation.
The views came in the fourth conference of the Bangladesh Economists' Forum themed 'Strategies and polices for an upper-middle income Bangladesh,' held at a city hotel on Saturday.
In the first session on 'Macroeconomic strategies and policies," planning minister MA Mannan was the chief guest while former finance adviser to the caretaker government Dr A. B. Mirza Azizul Islam was in the chair.
Vice chairman of the Policy Research Institute (PRI) Dr Sadiq Ahmed presented a paper on 'Tax policy management for an upper middle income country (UMIC)', executive director of the InM Dr Mustafa K Mujeri on the role of financial sector management, PRI executive director Dr Ahsan H Mansur on addressing the balance of payment concerns and PRI chairman Dr Zaidi Sattar on facilitating export diversification for the UMIC.
Distinguished fellow of the Centre for Policy Dialogue (CPD) professor Mustafizur Rahman, executive director of the SANEM professor Selim Raihan and associate professor of Dhaka University Dr Sayema Haque Bidisha were discussants on the papers.
While presenting the paper, Dr Ahmed of PRI said the country's tax-GDP ratio has to be jacked up from the present 9.0 per cent to 17 per cent to be a UMIC.
He suggested fiscal decentralisation, separation of tax policy wing from the collection, and the selection of a professional chairman for the National Board of Revenue with fixed tenure.
He also stressed the need for addressing the issue of non-performing loans in banks, raising substantially the property tax rate, bringing the increased number of rich people under tax net and reducing harassment of taxpayers.
He said the interest burden on the people is increasing due to costlier instruments like savings certificates.
Dr Ahmed, a former World Bank senior executive, said higher dependence on revenue from trade sources distort the export performance of the country.
Currently, up to 30 per cent of the taxes is coming from trade sources.
He said the existing tax system has to be reexamined to address those issues.
Dr Mujeri expressed the fear Bangladesh would face an increased economic and financial vulnerability after its graduation.
He said strong and coordinated medium-term macro-economic framework is needed to face the challenge.
"An economic crisis that includes the banking trouble has a more severe and prolonged impact on real sector," he said.
He listed four challenges in developing the capital market: macroeconomic stability, banking sector development, institutional quality and protection of the shareholders.
He said the country's share market is 'immature' and 'illiquid.'
Dr Ahsan H Mansur underlined the need for tracking what he called "missing elements" in the economy: foreigners' repatriated money, overseas medical treatment, etc.
He said the country's losses in the European Union export market will be higher after its graduation.
The tax for apparels in the US market is 15 per cent against its global average of 2.0 per cent from other countries, he added.
He stressed the need for developing the negotiations skills capacity for boosting the bilateral trade while diversifying export basket.
Dr Zaidi Sattar said high tariff protection in the import-substitute industries works as anti-export bias in the country.
He said incentives for the local market are higher than those of the export market, which is affecting export diversification away from garment.
CPD distinguished fellow Professor Mustafizur Rahman said Bangladesh will lose preferential and other facilitates in the world market after its graduation.
He said the country will have to identify the sectors where it should give strategic support.
"We have to look at the global regime how democratic they are," he added.
Not only tariff regime but transport connectivity and other infrastructure issues are also important to stay competitive in the global market.
He said the journey towards graduation will not be possible without equitable distribution of wealth.
It should be determined what type of political economy the country needs, he added.
Dr Selim Raihan said the tax-GDP ratio remains poor despite increasing the GDP base, though the scenario is opposite in other countries.
He said the large infrastructure projects involved higher cost and often time overrun.
There is a lack of appetite for carrying out reforms, he added.
Dr Bidisha said the US-China trade war, Brexit issue, and non-tariff barriers to trade have to be taken into consideration while transitioning into the upcoming status.
She said skilled labour, automation of industries are needed as the country's demographic dividend will not sustain for a long.
Former finance minister M Syeduzzaman took a swipe at the family oligopoly and the extension of board of directors' tenure to nine years from six years in the banking sector.
He also said the leather sector has the potential to take off if it is provided with necessary policy support.
Dr Mirza Aziz said the government has taken too many projects with insufficient allocation. Still, the allocated money is not spent properly, he added.
He suggested privatising all of the state-owned enterprises as those are incurring losses, running with inefficiency and indulging in corruption over the years.
He suggested better coordination between central bank and the securities regulator to resolve the conflicting signals like Grameenphone issue.
MA Mannan said all projects are on track now except the Padma bridge.
About privatising state firms, he said he "personally favours this but not as minister."