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MONDAY, MAY 19, 2025
Take a small step and follow through: Task force on economic reforms

Bangladesh

TBS Report
31 January, 2025, 12:10 pm
Last modified: 03 February, 2025, 07:22 pm

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Take a small step and follow through: Task force on economic reforms

The government task force suggests opening FDI in health sector, withdrawing duty on Internet among immediate steps

TBS Report
31 January, 2025, 12:10 pm
Last modified: 03 February, 2025, 07:22 pm

Infographic: TBS
Infographic: TBS

Instead of taking up five-year-long reform programmes and leaving those nowhere, the task force on economic strategies picks a slew of specific steps for the interim government to start with – take at least a rural school or a community clinic and reboot it first.

It recommends selecting a public hospital in Dhaka, Bangladesh Road Transport Authority (BRTA), an entire ministry on a pilot basis for comprehensive reforms. To save rivers from extinction, the Buriganga River can be chosen for urgent action.

In its 550-page final draft, the task force report on Re-strategising the Economy and Mobilising Resources for Equitable and Sustainable Development, suggests some immediate steps such as opening foreign investment in the health sector, waiver cash-out fee for remittance earners, recognising the internet as a "social good" and immediate withdrawal of 20% supplementary tax and 2% surcharge on the Internet as well as a waiver of 5.5% revenue sharing and 1% Social Obligation Fund (SOF) for internet revenue.  

Implementing automatic traffic signalling, transitioning to a single-operator bus franchise and implementing NID-based open data platforms – similar to India's Aadhar card – are among the immediate-term steps recommended by the task force in its final draft.

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"In particular, we have tried to suggest some 'low-hanging fruits' that can be harvested quickly, while others that are deemed to be high priority could at least be initiated within the tenure of the interim government," said economist KAS Murshid, chairman of the 13-member task force.

The draft report, spread over 18 broad chapters, covers a whole range of issues—from macroeconomic stability, to resource mobilisation, export diversification, attracting foreign direct investment (FDI), transformation of agriculture, development of SMEs and reaping benefit of demographic dividends.

Education and Planning Adviser Prof Wahiduddin Mahmud handed over the report of the task force to Chief Adviser Muhammad Yunus on Thursday.

The 12-member task force was formed on 10 September to reframe the development strategies, find out leakages in the financial system and restore discipline in project implementation.

Though reforms have prominently been in talks since the Yunus-led interim government took office, any major reform initiative is not visible yet. "We feel the window of opportunity, which has opened to us, should be utilised without further delay. That is why we put forward some steps which the interim government can take up immediately," KAS Murshid told The Business Standard today.

Bangladesh has no shortage of reform plans – what it lacks is action. Grand five-year strategies often fade into bureaucratic inertia, leaving little more than unfinished agendas.

The much-needed changes, which could not be made in the past due to vested interest, excessive political influence and implementation flaws, should start at the soonest.

"We had seen many such long-term reform schemes in the past which did not work. Now we can at least start with some pilot initiatives – a large public hospital in Dhaka, a community clinic or a school in villages," he said, explaining the reform strategy envisaged in the report.

The report suggests encouraging FDI in the health sector and technical education.

The recent closure of the Indian medical market has accentuated the urgent need for high-quality healthcare within Bangladesh. To address this demand effectively, liberalising FDI in the tertiary health sector is essential, the report suggests.

Allowing foreign investments will help check expensive medical tourism abroad and offer better healthcare services at home by fostering competition and facilitating skill transfers.

"It needs just an announcement to pave the way for FDI and skills in the healthcare market," the task force chief said, also stressing that technical and vocational education should also be opened up for FDI.

Polytechnics need to be allowed to offer a two-year BA (Tech) degree to equip students with the necessary competencies and remove the perception of an "inferior" academic degree, the task force suggests. "We need to train our workforce for the job market in countries such as Japan, Korea, and Germany which are looking for skills," said KAS Murshid, a former director general of Bangladesh Institute of Development Studies (BIDS) – a government think tank.

"We need to have a special focus on youths. They have energy, they want to do something. But they lack guidelines. Their role of activism needs to be engaged in productive areas," the economist added.

The task force feels the need for the creation of some new institutions such as a Centre of Global Excellence to position Bangladesh as a regional hub for advanced research and study. "By learning from successful models such as the Indian Institutes of Technology (IITs) and other renowned institutions worldwide, we can develop a framework that prioritises innovation, research, and quality education," it says.

"Higher education, especially in STEM (Science, Technology, Engineering, and Mathematics), Artificial Intelligence, in Bangladesh has been completely neglected," Murshid said, emphasising why a postgraduate teaching and research centre on STEM and AI needs to be set up in the next five years.

Given the half a century's failure of Bangladesh Biman to meet modern aviation standards as a national airline, the task force proposes the creation of an entirely new airline, tentatively named Bangladesh Airways – utilising half of Biman's existing assets, but managed by an independent, world-class management company.

"This is time to demonstrate that we can deliver on reform promises. If the interim government cannot show even one or two instances, then people will get frustrated," said the task force chairman. If the interim government can at least start the reform process, it will create pressure on the future political government to carry on, he added.

Highlighting the urgency of overhauling tax and customs systems that cause immense suffering to the private sector, the task force chief said the National Board of Revenue (NBR) must expedite its automation process and there should be an independent high-powered oversight body to push for the changes.

"A fully automated tax return submission and VAT return submission should be implemented immediately," says the report, suggesting abolishing the tax zoning system, abolishing or minimising tax exemptions, phasing out supplementary and regulatory duties to meet LDC graduation requirements, rationalising land and flat valuation for tax purposes, introducing high fees for high-capacity and expensive motor cars for personal use.

"Policy innovations from NBR (like back-to-back LC and the bonded warehouse system) transformed the RMG industry. Such innovations need to be continuously encouraged, instead of just focusing on revenue collection," reads the report.

The task force suggests the creation of a Regulatory Reform Commission (RRC) to address the pervasive issue of over-regulation and bureaucratic red tape that hinder business growth and foreign investment. "This body will be tasked with continuously monitoring, evaluating, and streamlining the rules and regulations affecting all aspects of economic governance, including business operations, taxation, and trade," it says, hoping that the initiative has the potential to dramatically enhance the ease of doing business in Bangladesh, making it an attractive destination for both domestic and foreign investors.

To advance export diversification, the task force, drawing evidence from East Asian countries, suggests "cherry-picking" high-potential firms and providing them with essential policy, financial, and technical support. "We advocate for this approach by identifying the most promising non-RMG (Ready-Made Garment) export performers among almost 1,500 entities currently exporting a minimum of $1 million annually," it adds.

The task force calls for revitalising Special Economic Zones (SEZs) and enhancing the One Stop Service (OSS) System to facilitate investments – both foreign and local and promote exports.

The upcoming critical phase involves selecting a handful of SEZs and ensuring they deliver, while OSS must make approvals of investment proposals faster.

One-stop service must be ensured for micro, small, and medium enterprises (MSMEs) as well, it stresses. A targeted approach will ensure that all SMEs, regardless of size, receive the necessary assistance to thrive.

Asked about the recommendations, the executive chairman of Bangladesh Investment Development Authority (Bida) and the Bangladesh Economic Zones Authority (Beza) Chowdhury Ashik Mahmud Bin Harun said they agree with the task force's observations.

"It seems like we have taken the key step already here. We announced earlier this month that we will focus on only five economic zones and review five more for now. It's good to get validation that the work we have undertaken is aligned with their recommendation,'' he told TBS today.

The actions and recommendations presented serve as an initial roadmap for economic reform, embodying a vision for a transformed Bangladesh that is responsive to its people's needs. By prioritising impactful projects in healthcare, education, and governance, the interim government can restore trust in public institutions and create momentum for sustained progress.

Pilot projects will provide valuable insights, enabling iterative improvements and broader implementation in future reforms. The use of digital and AI technologies, along with the establishment of institutions promoting excellence and regulatory reform, will enhance Bangladesh's competitive position globally.

Ultimately, these recommendations call for a shared responsibility between government officials and citizens to build a better future. With strong leadership and strategic planning, Bangladesh can turn challenges into opportunities, fostering a prosperous, equitable, and resilient nation for current and future generations.

Top News

Task force / Wahiduddin Mahmud / Chief Adviser Prof Muhammad Yunus / growth / reform / Task Force Report on Economy and Mobilising Resources

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