Wednesday, October 16, 2019

The secret to Bangladesh’s economic success? The Sheikh Hasina factor


  • Published: 2019-10-04 21:30:33 BdST

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Bangladesh has set a target of becoming a developed nation by 2041. Reuters

[This article, written by Salman Fazlur Rahman, the prime minister’s adviser for private industry and investment, was first published by the World Economic Forum as part of the India Economic Summit.]

 

Nobody disputes the economic credentials of Sheikh Hasina’s government - the Asian Development Bank (ADB) is the latest member of a growing list of international institutions attesting to Bangladesh’s economic success. The ADB ranked Bangladesh as the fastest-growing economy in the Asia-Pacific region, eclipsing China, Vietnam and India. At the same time, our improvements in many socio-economic indicators are another object of envy to our neighbours.

Propelled by a robust manufacturing sector and an enormous boom in infrastructure, Bangladesh has set a target of becoming a developed nation by 2041 to coincide with the platinum jubilee of its independence. Many commentators have called the goal ambitious, but even the government’s staunchest critics would think twice before questioning its plausibility. There has been a sea change in attitude from 2006 when our surpassing of Pakistan’s growth rate was dismissed as a fluke.

Ten years ago, if somebody had told me that Bangladesh would progress this far, I wouldn’t have believed it. Now, however, I am in a position to explain the phenomenon. While trying to decipher Bangladesh’s economic success, pundits cite several crucial factors, including fulfilling electricity demands, infrastructural development, political stability and food self-sufficiency. But none of these achievements has been easy. When Sheikh Hasina’s government tried to introduce and implement its policies, it often faced enormous political risks and implications.

Take the electricity crisis for example. When the Awami League re-assumed power a decade ago, the country was grappling with suffocating power outages. These days, however, we produce more electricity than we need at night and are close to eradicating any forms of power shortages once and for all.

When she returned to power in 2009, Sheikh Hasina knew that the energy shortage first needed to be mitigated to a tolerable extent, before embarking on long-term plans. As a temporary measure, she decided to allow private companies to build small-range power plants, known as quick-rental power plants. The decision received a barrage of criticism from many quarters — from opposition parties and economists to the press and think tanks — intimidating many in the bureaucracy.

But Sheikh Hasina refused to back down from what she thought was the right step forward. She defended her decision forcefully, making necessary amendments to clear any legal ambiguity, and focused on its implementation. Nearly 10 years on, no one doubts that the decision was instrumental in solving the persistent energy crisis.

Data from World Bank

Data from World Bank

In a way, this chapter also illustrates how much faith Sheikh Hasina puts in the private sector. She is aware of the country’s socialist legacy, which is extremely wary of private sector inroads in critical areas, but she also knows the virtues of the free market.

When she first came to power in 1996, she broke the monopoly in the telecommunications industry, paving the way for intense competition between companies. As an obvious consequence, we now enjoy one of the cheapest mobile data and lowest mobile phone usage costs in the world, which, among others, has helped our globally celebrated mobile financial services to flourish.

While in power, Sheikh Hasina has opened up many sectors traditionally reserved for the public sector to the private sector, including health, banking, higher education, TV and even export processing and economic zones. At the same time, her government has substantially widened and expanded welfare programmes to lift the poorest and most neglected section of the population and increased subsidies for other crucial elements of the economy such as agriculture. Her development philosophy is a blend of capitalistic and socialistic virtues.

 

For the greater part of our history, the world knew Bangladesh only for natural calamities, wrenching poverty, famine and political violence. While these events and aspects merited attention, they were certainly not a reflection of the aspiration of our nation. The bigger story should have been the resilience with which our people withstood countless natural disasters and crises.

Regretfully, downplaying this resilience was the approach adopted by successive governments to ensure the undisrupted flow of foreign aid. A former finance minister once infamously argued that self-sufficiency in food could take a back seat to incoming foreign support. As a person deeply familiar with Bangladesh’s state machinery, I know that such a mindset held back our economic progress for so long.

Indeed, the single most decisive factor behind Bangladesh’s startling success is that Sheikh Hasina has infused a sense of confidence in our national psyche. Oftentimes, she has done so while defying great odds. The Padma Bridge, which the government decided to self-fund after the World Bank’s withdrawal is, perhaps, a perfect example of this.

Observers may have overlooked the Prime Minister’s tenacious, bold, fearless and pragmatic approach, but no explanation of Bangladesh’s success would be complete or comprehensive without taking into account the Sheikh Hasina factor.