Effective measures to revive the private sector can significantly contribute to Bangladesh’s economic recovery and long-term growth, according to experts.
An international research organization has recommended targeted stimulus packages and financial support to help revive the economy amid challenges such as high inflation, political uncertainty, and macroeconomic instability.
The organisation has proposed initiatives such as offering low-interest loans to the private sector to increase cash supply and boost investment growth.
It also recommended providing convenient repayment periods for loans. If long-term loans are rescheduled or restructured with low interest rates and minimal or no down payments, government projects and private companies will recover, leading to faster economic growth.
Furthermore, the research organisation emphasised the need to introduce international-standard liberal banking practices. Offering financial benefits with minimal collateral, reducing import restrictions and establishing a mid-market loan system would benefit the private and banking sectors.
To control inflation, the organisation suggested increasing market competition and reducing production costs, for which subsidies should be provided on essential goods, raw materials and fuel imports.
Grants in much-needed investment areas can attract investors and reduce import dependency, inflation, etc, the organisation recommended.
About fiscal incentives, it said temporary tax exemptions or holidays for key industries can reduce the financial burden on businesses and encourage investment. Lowering corporate tax rates for specific sectors, such as manufacturing and technology, can stimulate growth and attract foreign investment. To provide tax credits for capital investments and research and development can incentivise innovation and expansion.
Encouraging PPPs for infrastructure projects can improve the business environment and attract investment, it added.
Regarding this, Dr. M. Masrur Reaz, chairman of Policy Exchange Bangladesh, on Wednesday told Bangladesh Pratidin that, in addition to the mentioned issues, Bangladesh's monetary policy needs to be managed more strictly. He stressed the importance of gradually strengthening foreign reserves by maintaining a steady flow of export earnings and remittances. Import restrictions should be fully lifted to normalize the supply chain in the market.
He further stated that a strategy must be devised to refund depositors’ money from weak banks that are on the verge of collapse. Meanwhile, moderately stable banks should be merged or acquired through a market-based approach with stronger banks.
Additionally, the institutional and legal independence of Bangladesh Bank must be ensured so that it can independently supervise the banking and financial sectors.
It is to be noted that during the financial crisis of 1997-1998, several countries in East and Southeast Asia faced severe economic contraction, currency devaluation, and social and political upheaval.
At that time, implementing similar measures helped countries like Thailand, Indonesia, South Korea, Malaysia, and the Philippines recover.
Bd-pratidin English/FNC
