Bangladesh needs private sector reforms to boost growth, says report

BANGLADESH needs a set of new reforms to strengthen and modernise its private sector and boost economic growth, according to a recent report.

The new reforms should aim at achieving export-led growth along with job creation, said the Bangladesh Country Private Sector Diagnostic (CPSD) report, prepared by the International Finance Corporation (IFC) and the World Bank.

The country has been one of the biggest development success stories in recent decades.

It should now focus on transforming into an upper middle-income country over the next decade, the report said.

“Bangladesh had a positive GDP (gross domestic product) growth rate last year despite the adverse impact of the Covid-19 pandemic and it was the only country in South Asia which did not experience a recession,” the Dhaka Tribune quoted Salman F Rahman, Private Sector Industry and Investment adviser to the prime minister.

“The CPSD recommendations are well aligned with the priorities of the government’s Eighth Five Year plan for setting a trajectory towards a prosperous Bangladesh by 2041,” he said.

As the country is recovering from the Covid-19 pandemic, finding new sources of income and growth will be an urgent priority, said IFC vice president for Asia and Pacific, Alfonso Garcia Mora.

“The private sector, which already accounts for more than 70 per cent of all investment in Bangladesh, supported by a strong financial sector, will need to play an important role in spurring the recovery so the country can grow, export and create quality jobs,” Garcia said.

Successful development of the ready-made garment (RMG) sector, strong inflow of remittances and prudent government policy choices contributed to Bangladesh’s economic growth even during the pandemic, the CPSD report stated.

The RMG sector alone created more than 4 million jobs in the country, it said.

Key areas for the country’s reform agenda include creation of a favorable trade and investment environment for investors and expansion of the financial sector, it added.

Transport and logistics, energy, financial services, light manufacturing, agribusiness, healthcare and pharmaceuticals sectors have the strongest potential for private investment that could play a vital role in boosting economic growth, the report said.