Govt policy creates anti-export bias for non-RMG sectors
The government policy of promoting heavily readymade garment export has created an anti-export bias for other sectors and hindered the competition and product diversification in the non-RMG sectors, said an Asian Development Bank report launched on Thursday. The report titled ‘Country Diagnostic Study: Consolidating Export-led Growth’ recommended that the government identify the barriers to the other productive sectors and eliminate anti-export bias against non-RMG export for ensuring economic diversification. The ADB report recommended withdrawing some of the RMG sector supports which have outlived their useful lives. ‘As a general principle, incentives for infant industries need to be time-bound, and these [the RMG sector incentives] were not. Special incentives, such as corporate income tax exemption or tax holidays for imported machinery, need to be removed,’ the report said. The ADB said that the leather processing and pharmaceuticals sectors in Bangladesh were facing challenges in expanding their business though the government pitched both sectors as promising. There are huge potentials for the sectors to grow in the international market but environmental challenges in the leather sector will have to be resolved and in the pharmaceuticals sector, more foreign direct investment and certifications are needed that may help the sector to create international alliances to move up the pharmaceutical production chain, the report observed. The study found insufficient net supply of reliable and environmentally-sustainable energy, insufficient security about property ownership and policies that stunt new self-discovery on industry and economic activities as the most critical constraints to private investment. ‘If policies are designed to tackle these constraints urgently, Bangladesh will be free to harness its full potential for inclusive and sustainable growth,’ the report said. The ADB on Thursday launched another report at the event at the Radisson Blu Water Garden Dhaka Hotel in the city. At the event, Metropolitan Chamber of Commerce and Industry president Syed Nasim Manjur said that the government’s wrong policy discouraged the non-RMG sectors to grow. He said that the government provided zero-tariff facility in importing fire safety equipments for the RMG sector but imposed up to 65 per cent duty on the items for the non-RMG sectors.‘Are the lives of people working in the non-RMG sectors are less important?’ he questioned.Nasim said the RMG sector enjoys various tax benefits including incentive but other sectors are not entitled for the benefits that lead an entrepreneur shutting his/her non-RMG units. He demanded a long-term sustainable support for the non-RMG sectors. The other report titled ‘Employment Diagnostic Study: Looking Beyond Garments’ said that the share of employment in Bangladesh’s manufacturing sector increased from 11 per cent in 2005–2006 to 16 per cent in 2013 while the rate of open unemployment in Bangladesh, which has remained around 4.5 per cent, did not accurately capture the labour market challenges. The majority of workers are employed in the informal sector where they suffer from high underemployment, low earnings, and poor working conditions and gender disparities persist despite a rise in women’s labour force participation, the report said. The ADB said the growth of manufacturing sectors should be focused on employment generation as Bangladesh has surplus workforce. According to the study, the economy should grow at over 8 per cent a year to create enough productive jobs and reduce surplus labour. Bangladesh has done well in maintaining a steady outflow of migrant workers but the high cost of international migration from Bangladesh was a major issue, the report said. The report observed that real wages in the manufacturing sector had not yet increased on a sustained basis, showing that the modern sector was still able to hire workers without having to raise real wages substantially. Low level of education and lower productivity were the common problems of the young entrants to the labour force, the ADB report said. The report ‘Country Diagnostic Study: Consolidating Export-led Growth’ was presented by Valery Mercer Blackman, senior economist of the ADB, and the report ‘Employment Diagnostic Study: Looking Beyond Garments’ by Rizwanul Islam, lead consultant of the Bangladesh Employment Diagnostic Study. Both the study said that improved infrastructure and a more diversified economy could help Bangladesh increase economic growth, create meaningful jobs and enhance country’s transformation as a thriving middle-income country. Srinivas Reddy, country director of the International Labour Organisation, emphasised generating more productive and decent employment in Bangladesh.He said that support should be continued to the RMG sector to grow export $50 billion by 2020 but the government should provide necessary support to the non-RMG sectors. Reddy urged the government to ensure a non-discriminatory policy for the manufacturing sectors.He, however, said worker rights are important for inclusive economic growth.Shamsul Alam, member of General Economic Division of the Bangladesh Planning Commission, Begum Shamsun Nahar, secretary of expatriates’ welfare and overseas employment ministry, and Kazuhiko Higuchi, country director of the ADB, attended the programme.
