Hartal: An economic viewpoint

At school, it was taught that hartal is a Gujrati word but its popularity among political parties here virtually made it a native one. There are many ways by which people can protest against undesirable situations. In Bangladesh, hartal is the most favourite option for the political parties to fight the incumbent regimes. 

People here became familiar with hartals even before the emergence of this country as an independent entity. With the passage of time Bangladesh has grown economically and socially. Like most countries, trade, commerce and business constitute the backbone of its economy. Exports, especially, contributed immensely to the expansion of its economy over the last decades. However, the culture of hartals has considerably hindered this flow of economic growth. From a pure economic point of view, hartal is an act of outright insanity. It could be termed a self-destructive weapon and an occasion for destroying civilian property. Hartal compels every sphere of life to come to a standstill, makes the country unstable and brings in a hell of anarchy. The recent series of hartals obstructed business activities severely. It hampered every sector of the economy like export-import, transportation, banking, and caused havoc in the lives of the impoverished millions who have to earn their bread on a daily basis.

The upcoming national budget (2012-13) is expected to be of Tk 160 billion and export-import constitutes around 60 per cent of Bangladesh's present GDP of US$ 110 billion. Bangladesh captured nearly US$ 23 billion from exports in the fiscal 2010-2011. These are commendable indicators. Besides, because of the country's huge population and their dire need for survival, hundreds of thousands of crores of taka are circulated in the economy everyday through businesses. A hartal, needless to say, stalls all these activities, big or small, and more importantly, demoralises the drive of the people to go on. Because of the recent countrywide hartals and political turmoils, Moody's international has warned Bangladesh about the erosion of the county's image to potential and prospective foreign investors and a downgrading of credit rating. It mentioned in a report that political instability is detrimental to investor confidence, and is credit-negative. Attributing to the recent unrest it refers "if the political stability deters the foreign investment, or worsens the external payment position or the government's fiscal balance, the IMF credit may not be sufficient to buoy investor confidence."

    

Business today is an ever competitive phenomenon. A failure to retain international customers means that the customers are captured by the competitors. In RMG business our strongest competitor is China and it is very likely that our market could be occupied by them if the current situation persists for long time. The large business houses and industries might somehow cover up the losses caused by hartal but for new, small or medium enterprises it is deadly and many a time they cannot sustain the loss and may eventually get ruined.

Beyond crippling businesses, especially export-import and port operations, it is increasingly becoming a common activity of hartal at times to vandalise public property. Vandalism begins even from the previous evening of the hartal day. Setting public buses and private vehicles on fire is the most frequent of the scenes that people have to witness almost routinely. 

There are innumerable other hazards that one has to experience on a hartal day. During the recent hartalsm, the worst victims, among others, were the HSC examinees. It was indeed a horrendous task for the authorities to reschedule the dates for the examinations for a vast number of students throughout the country and also to coordinate with the examination centres. The awes of the students cannot be perceived by none other than themselves. 

Can we, under the circumstances, expect that good sense will prevail among our political parties to try to understand how dreadful a weapon this hartal is to the citizens, collectively as well as individually? It need not be reiterated that continuation of the hartal culture will give rise to anarchy in all spheres of society. Not that it has not already done so. 

This Article was published in The Financial Express, Editorial, (Monday, May 14, 2012)

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FTA with India may help reduce trade imbalance

A Free Trade Agreement (FTA) might offer a solution to the trade imbalance between Bangladesh and India. It can reduce the trade deficit of Bangladesh, can improve the living standards of Indians and can stop illegal trading writes Asif Reza Akash


From the caveman's era to the present day, men always traded among themselves for fulfilling their necessities. Before introducing the system of currency, man used 'barter trade' for exchanging necessary commodities and services. Nowadays, every country wants to lead its economy to a higher level to survive in this competitive world. From this point of view, bilateral trade is very significant. Bilateral trade receives more attention in the political arena. This is important because international relations pertain to relations among nations, so politicians and diplomats are naturally drawn to statistics measuring country to country economic transactions. In the recent time, trade deficit of Bangladesh with India is the most discussed issue. 

Both Bangladesh and India are important members of the SAARC and have long common historical and cultural bonds. As far as trade relation is concerned, India is the third-largest trading partner of Bangladesh just after the USA and Europe, while India's position is at the top for Bangladesh's imports from the world. Therefore, an analysis of current trade status between the two nations, obstacles and opportunities for mutual trade expansion is very critical for economic development of both the countries, especially of Bangladesh, as Bangladesh has been experiencing a large trade deficit with India since its Independence. The trade deficit has been increasing exponentially in the recent past. In the fiscal year (FY) 2010-2011, Bangladesh imported goods worth US $4570 million from India while its export to that country was just $512 million. 

A World Bank report titled "India and Bangladesh: Bilateral trade, potential free trade agreement" revealed that in 2004, India's officially recorded exports to Bangladesh were about $1.7 billion, but its imports from Bangladesh were just $78 million. Indian exports to Bangladesh grew very rapidly during the 1990s, and have continued to grow since 2000. By contrast, Bangladesh's exports to India-- almost zero in the early 90s, have stagnated at very low levels at well below $100 million annually. Since 1996-97, Indian exports to Bangladesh have been growing at 9.1 per cent annually, just slightly above the general rate of growth of its total merchandise exports (8.4 per cent), but India's imports from Bangladesh over the same period have grown on average at only 3.0 per cent annually compared to the average growth of its total imports of 9.2 per cent. Consequently, Bangladesh's bilateral trade deficit with India has been increasing rapidly, on average at about 9.5 per cent annually. For India, trade with Bangladesh is a very small part of its total trade-just over 1.0 per cent since the mid-1990s, and currently about 3.0 per cent of its total exports and a miniscule share (0.01 per cent) of its total imports, according to the WB report. Bangladesh's exports as a percentage of India's total imports are next to nothing. On the contrary, Bangladesh's imports as percentage of India's total exports have increased steadily. 

Bangladesh enjoys trade surplus with her major trading partners of Western Europe and North America but is in big deficit with her neighbour, India. In FY 2010-2011 (July-March) from the USA, Bangladesh imported commodities worth $374 million while export was worth $3776 million. The data from the Ministry of Commerce and Industry of India shows that India exported goods to Bangladesh via formal channel worth $2.43 billion and imported goods worth $254.66 million in FY 2009-10. It is believed that the informal channels also witnessed similar transactions. According to the World Bank, illegal trade between the two countries amounts to three-fourth of regular trade. Therefore, bilateral trade with India is very important not only for making a trade surplus, but also for a vibrant economy through mutual development and fortunately India's large size (both population and GDP) makes it a large export market while geographical proximity, profuse natural resources and diversified production structure make India a cheaper and convenient source of supply. But India has handicapped the entry of Bangladeshi products in India by setting many restrictions like tariff and non-tariff barriers. According to Dr Abul Bayes, economist and former vice chancellor of Jahangirnagar University, if India gives us duty-free entry of our products our export will raise to $1.0 billion. Previously, 480 Bangladeshi products were on India's negative list although all products are supposed to get duty-free access by 2016 under the South Asian Free Trade Area (SAFTA) agreement. With the deal on duty-free access of 46 Bangladeshi textile items to India, the negative list came down to 434. India had also increased the duty-free access to 10 million pieces of readymade garments (RMG) from Bangladesh every year.

 However, Bangladeshi businessmen often complain about the non-tariff barriers imposed by Indian authorities especially in matters of testing the standard. About the significance of this deal, former FBCCI president Annisul Huq says, "It is difficult to assess the benefit that the garment industry will accrue from this because we've heard that the Indian manufacturers are standing against this deal. Then there are the non-tariff barriers like testing and others. Problem of connectivity is also a kind of non-tariff barrier. So, accruing the benefit from this deal will not be possible if the non-tariff barriers are not lifted by India and if infrastructure is not developed by Bangladesh." He, however, says that with this deal it has been proved that demand for our garment products is growing in India.

 "We've an expanding market in India. So, we needed a good gesture from India, which we have got. I believe trade imbalance will also be reduced to some extent for this. But the appraisal of the full benefit is a matter of time and at the same time depends on how India will play its non-tariff barriers." Why there is a big trade deficit with India while Bangladesh is enjoying a trade surplus with countries like the USA and Germany? Prof Ayubur Rahman Bhuyan of the economics department identified the causes as the overvalued exchange rate (BDT vis-à-vis Indian Rupee); tariff and para-tariff barriers like countervailing duties (CD), anti-dumping duty (ADD), supplementary duty (SD), additional customs duty, luxury tax, surcharge etc; non-tariff barriers such as health and quality standards, permits and licences, obtaining Indian Standard Institute (ISI) certificate, health certificate, technical standards, labelling and marking provision etc; and failure of South Asian Preferential Trade Arrangement (SAPTA) to enhance trade and weak production structure. There are also some unexpected harassment like filing cases for alleged violation of rules regarding health, weights and measures, refusal kto grant SAPTA concessions, rejecting consignments on false pretext and overall disinclination to allow entry of Bangladeshi products to Indian market. Recently, the inter-state deal of exporting 46 RMG products to India is facing a strong protest from Indian businessmen even before implementation. 

In this circumstance, a Free Trade Agreement (FTA) might offer a solution to reduce the trade imbalance between Bangladesh and India. It can reduce the trade deficit of Bangladesh, can improve the living standards of Indians and can stop illegal trading. A good bilateral trade relation is very necessary for mutual development. India is considered as the fastest growing economy and also a rising power. Despite some ups and downs, Bangladesh and India has had a good relation since Independence. Now, we are hoping for a more stable inter-state relationship between the two nations.

This article was published in The Financial Express (October 15, 2011)

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Liveability of Dhaka

If Dhaka doesn’t receive proper attention now, after 20 or 30 years it will lose the quality to be even considered in the ranking. Many specialists of urban and regional planning expressed their concern that if the current situation of Dhaka continues for ten years, it will turn into an abandoned city, writes Asif Reza Akash

THE capital city of Bangladesh, Dhaka has a long history, dating back to 1606. It was first the capital of a province under the Mughal regime till 1717. It then became the capital of East Bengal and Assam in 1905, of East Pakistan in 1947, and finally of Bangladesh in 1971. The metropolitan area of Dhaka is 1,500 square kilometres and the area of Dhaka City Corporation is 360 square kilometres. The Bangladeshi capital, Dhaka, is thought to be the world’s fastest growing city. A BBC report in 2010 showed that it already has a population of 15 million, and an extra 400,000 people move there every year.

According to the latest global liveability survey from the Economist Intelligence Unit (August, 2011), Dhaka stands in the 139th place out of 140 cities. Australia’s second largest city, Melbourne, has been rated the best city in the world to live in, edging ahead of Canada’s Vancouver, and Harare of Zimbabwe is considered as the worst liveable city in the world. According to EIU, every city is assigned a rating of relative comfort for over 30 qualitative and quantitative factors across five broad categories: stability, healthcare, culture and environment, education, and infrastructure. Each factor in a city is rated as acceptable, tolerable, uncomfortable, undesirable or intolerable. For qualitative indicators, a rating is awarded based on the judgment of in-house analysts and in-city contributors. For quantitative indicators, a rating is calculated based on the relative performance of a number of external data points. The scores are then compiled and weighted to provide a score of 1-100, where 1 is considered intolerable and 100 is considered ideal. The liveability rating is provided both as an overall score and as a score for each category.

Under the category of stability the factors considered were prevalence of petty crime, prevalence of violent crime, threat of terror, threat of military conflict and threat of civil unrest or conflict. In case of healthcare the factors were availability of private healthcare, quality of private healthcare, availability of public healthcare, quality of public healthcare, availability of over-the-counter drugs, general healthcare indicators (adapted from World Bank). The influential factors under culture and environment were humidity/temperature rating (adapted from average weather conditions), discomfort of climate to travellers, level of corruption (adapted from transparency international), social or religious restrictions, level of censorship, sporting availability, cultural availability, food and drink, consumer goods and services. In case of education the indicators were availability of private education, quality of private education, public education indicators (adapted from World Bank). The indicators of infrastructure were quality of road network, quality of public transport, quality of international links, availability of good quality housing, quality of energy provision, quality of water provision, quality of telecommunications.

By considering those factors, the position of Dhaka in ranking is clear to everyone. Now it is high time to think about Dhaka. If Dhaka doesn’t receive proper attention now, after 20 or 30 years it will lose the quality to be even considered in the ranking. Many specialists of urban and regional planning expressed their concern that if the current situation of Dhaka continues for ten years, it will turn into an abandoned city. Now it is the time to list the problems of Dhaka, find out the roots of those problems through fish-bone analysis and solve those as early as possible.

Why was Dhaka placed in 139th position out of 140 cities? Most likely the first answer is an uncontrolled and huge population. This is the mother of all problems in Dhaka as well as in Bangladesh. This huge population creates a huge pressure in every sphere of life in Dhaka. High population density always makes a crisis in hospitals, education sectors, transportation systems and other aspects of life. PricewaterhouseCoopers UK Economic Outlook November 2009 revealed in a research that Dhaka is in the 9th position with a 13.5 million people in 2007 out of top 30 urban agglomerations by population and their projected ranking for Dhaka in 2025 is 4th place with a 22 million population.

The second problem might be centralisation in Dhaka. Most of the main offices of government and non government organisations are here. Best hospitals and educational institutions are also here. So, people are compelled to come to Dhaka to take the better opportunities and fulfil their needs and usually when they settle here once, they are reluctant to move out. Unplanned infrastructure and town planning has added a new extent to this problem. The poor road and transportation system has lowered the liveability in Dhaka. The city dwellers are plagued with time consuming and monotonous traffic jams.

Public safety and political stability is also very low. Hartal and other strikes are burning examples. The law and order situation is not stable. Every day murder, suicide, hijacking, carjacking and various crimes are happening. The condition of healthcare is sometimes indescribable. Public hospitals are always filled up and service is awful. The costs of private hospitals are often so expensive that average citizens can’t afford. Recent scandals regarding some private hospitals have questioned their services. Water scarcity and mismanagement, load shedding and energy deficit, land grabbing, river grabbing, disposal of waste have worsened the condition of Dhaka.

It is the appropriate time for taking necessary steps to make Dhaka liveable. The population should be controlled or it will slower the development. The main challenge for the government is decentralisation and to develop the roads, highways and overall transportation systems. The education and public health sectors should be decentralised properly and effectively. Utility services should be improved. Proper urban planning must be recognised. If the government and citizens show strict concern and seriousness about these issues then we might hope for a better Dhaka, a better tomorrow and a better ranking, indeed.

This article was published in The New age, Op-Ed (10/9/2011). 

Link: Livability of Dhaka by Asif Reza Akash