Policies in black and white remain useless due to a lack of interest in their implementation stage despite the government having a substantial number of well-written reform agendas to accelerate the growth required to meet the next level of development, experts and economists have said.
At an event on Thursday, they said a lack of reforms would make it difficult for the economy to achieve the status of an upper middle-income country by 2031 and higher income country by 2041.
The remarks came from a seminar arranged to publish the country economic memorandum for Bangladesh of the World Bank titled "Change of Fabric" by the Dhaka office of the global lender at a hotel in the capital.
Planning Minister MA Mannan acknowledged the complaint from the experts and the World Bank regarding the lack of reform initiatives and blamed some problems in the political economy for this. He also committed to taking proper initiatives to accelerate reforms further.
Zahid Hussain, lead economist consultant of the World Bank, and Nora Dihel, senior economist of the organisation, jointly presented a keynote following opening remarks by Country Director Dandan Chen.
Zahid Hussain said the economy needs 7.8% annual growth to achieve the status of upper-middle-income by 2031 and it requires a double-digit growth to achieve higher income status by 2041.
A lack of proper reforms will take a longer time to achieve two aspirational goals set by the government under the Perspective Plan, he added.
He also said the required growth mainly depends on labour force development, the rate of capital accumulation and technological progress.
Bangladesh has made remarkable economic and development progress in the past five decades, revealed the country's economic memorandum.
The report urged strong policy reforms in three areas critical to sustaining growth – stemming the erosion of trade competitiveness, addressing vulnerabilities in the financial sector, and ensuring an orderly urbanisation process.
At the event, Dandan Chen said Bangladesh has been among the top 10 fastest-growing economies over the past decade, but there is no room for complacency.
She said, new and emerging challenges demand new policy and institutional innovations to cater to the changing needs of a growing economy.
The report identified higher trade costs and inefficient border processes as major impediments to trade and mentioned the average tariff rate on intermediate goods in Bangladesh is 18.8%, which is about twice the rate in China, Thailand and Vietnam.
Deep and comprehensive trade agreements with the European Union and India covering tariff modernisation, increased trade facilitation, and services and investment reforms can respectively boost Bangladesh's GDP by 0.4% and 0.5% and exports by 1.4% and 3.9%, the report added.
The report urged on scaling up of private sector financing for sustaining growth and recommended actions to improve asset quality, increase the capitalisation of banks, and address non-performing loans to maintain financial stability.
Nora Dihel said Greater Dhaka generates one-fifth of the country's GDP and almost half of its formal employment. The already congested capital needs to be prepared to accommodate climate migrants.
She also said better urbanisation and connectivity will help the country absorb climate migrants and sustain fast productivity growth.
Professor Selim Raihan, executive director of the South Asian Network on Economic Modelling (Sanem), said the seventh five-year plan, eighth five-year plan and other policy documents of the government have recommended several reform initiatives which remain on paper only.
He further said, despite the economy achieving significant growth in the last 50 years, it spent very little on education, health and social protection. He proposed boosting allocations for human resources.
He said a lack of reforms in taxation pushed back Bangladesh as one of the lowest revenue mobilisers compared to the GDP, which leads to resource scarcity in priority sectors.
Policymakers are aware of what to do but unfortunately, they have very little interest in implementing the required reform agenda, he added.
MA Mannan accepted the allegation regarding fewer reforms and said, "We have some problems in the economy like dependency on a single item – RMG – for export. It is well known, there are weaknesses in the banking sector which should be reformed and we will take initiatives in this regard."
"I hope we can do good reform. We would do good reforms. We must do it," he said, adding that the mass people and voters want reforms.
"We will not be able to walk fast as you want, but the step will go forward," he said, identifying the challenges of the political economy behind the slowdown in progress.