Experts recommended using remittance earnings judiciously to rebuild the pandemic-torn economy
The government should expand its cash transfer programmes and introduce new social security and employment schemes for people who have fallen into poverty due to Covid-19, experts have said.
They said there should be a special focus on urban poverty and those who have recently migrated to rural areas.
They recommended re-skilling migrant workers for domestic and global markets, regaining the confidence of foreign investors, and using remittance earnings judiciously to rebuild the pandemic-torn economy.
The recommendations were presented at a webinar entitled "Impact of Covid-19 Pandemic on Bangladesh: Options for Building Resilience" arranged by the Bangladesh Institute of International and Strategic Studies (BIISS) on Wednesday.
Expressing concerns that the stable inflow of foreign remittances will not be sustainable in the future due to the long-lasting impact of Covid-19 all over the world, the speakers also recommended converting remittances into investments by reducing consumption in order to ensure the wellbeing of the recipients.
Chief guest Dr Mashiur Rahman, economic affairs adviser to the prime minister, stressed the need for a strong policy to diversify exports and boost domestic growth. He asked for ensuring proper employment and poverty reduction utilising domestic growth and export earnings.
Employment elasticity of growth is decreasing in the country, he said, adding this indicates that more economic growth and investment are required now, than before, to create an equal unit of employment.
"Private investment is required to ensure further growth and employment but the private sector is now running short of money. Even the ready-made garment industry, the prime segment of the private sector in Bangladesh, is not capable of paying wages to its workers without support from the government," he said.
Boosting exports and its diversification will be difficult in the future, he said, adding that the domestic demand for goods is shrinking all over the world due to the impact of Covid-19. A lot of time is required to create demand for a product in a new destination, he argued.
Asserting that centralised decisions from the government cannot play a vital role in diversifying export markets, he said the government can create facilities but the private sector must utilise them.
Dr Mashiur advised the private sector to increase their competency by reducing dependency on government incentives, and suggested that they calculate their profit by excluding the incentives to measure their competency.
As the future inflow of remittances is uncertain and expatriates are currently sending money home from their savings, he asked for judicious spending of the remittance earnings.
Remittances have become an important source of earnings for the government at a time when export earnings and overseas job creation have slowed down, Mashiur said, adding, "The government should look into the possibility of distributing a portion of the profit of Prabashi Kalyan Bank to those whose money is deposited in the bank in the form of fees."
He identified the lack of access to finance as a major obstacle for small and medium-sized enterprises (SMEs) and said bankers are half-inclined to provide loans to the SMEs due to them being less familiar with entrepreneurs. Processing and supervision costs of SME loans are also higher compared to those of large loans, he said, recommending that the government find a way to provide proper access to finance for SMEs.
Dr Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), said only large-scale employment generation could reduce the poverty rate and ensure economic recovery through enhanced private sector investment.
The country's economy is primarily driven by domestic demand, he said, adding that both local and foreign direct investment should be given priority to tap the potential demand for goods on the global market.
Dr Sayema Haque Bidisha, professor of economics at Dhaka University, said the government should expand social security programmes focusing on the urban poor and operate decentralised employment generation activities for the people who have recently migrated to rural areas from urban centres and abroad.
She stressed the importance of skill development initiatives to meet domestic demand for manpower and ensure manpower supply to the world market.
Sayema Haque said the government should play a vital role in ensuring financing for rural youth to increase production and create links with the market to help youths sell their products.
Shameem Ahmed Chowdhury Noman, secretary-general of the Bangladesh Association of International Recruiting Agencies (Baira), highlighted the plight of expatriates.
A large number of expatriates and those aspiring to go abroad are facing difficulties in Bangladesh and in their destination countries, he said, adding that some 86,000 people who have visas have failed to fly to the Middle East due to Covid-19.
"Even though the Kingdom of Saudi Arabia has reopened its border, agencies are facing various problems in sending workers to the country due to the expiration of visas and the excessive prices of air tickets," he added.
Aspiring overseas workers will demand their money back if the agencies fail to send them to the destination countries, he continued.
Mentioning that the agencies have so far spent at least Tk1,500 crore on sending workers abroad, he sought government stimulus to provide soft loans to the sector.
He also proposed the formation of a coordination cell comprising representatives from ministries concerned and other stakeholders to look after the issue.
The government should also increase the incentives on remittances to encourage overseas workers to extend support to them amid the crisis and encourage them to send money through formal channels. "We should also care about people instead of thinking about remittances only," he said.
In his paper, BIISS Research Director Mohammad Mahfuz Kabir mentioned that the inflow of the foreign direct investment (FDI) to Bangladesh dropped by 49% in the first half of the current year compared to the same period a year ago, while it reduced by 75% in developing countries.
Bangladesh received $2.37 billion in FDI in the 2019-20 fiscal year, 39% lower than the previous fiscal year, he mentioned, adding the net inflow of FDI in the last fiscal was lowest since FY17.
Major General Md Emdad Ul Bari, director-general of BIISS, delivered the welcome address at the event. Ambassador M Fazlul Karim, chairman of the BIISS, presided over it.