Bangla Thursday, August 13, 2020

Bangladesh: What will be the major news items this year?

2019 wasn’t a rough ride for Bangladesh but certainly unpredictable. In several sectors the situation was unexpected and sometimes worrying but the ruling cluster remains strong and united. No storm appears big enough to be able to shake it. Having said that, the structure of the state appears robust and weak at the same time. This sector has been best reflected in the economic area.

High GDP, high growth but...

Bangladesh has emerged as the top GDP performer with a growth rate well past all others in the region. They have been regularly posting the same for several years in a row now. However, two issues are going to bother Bangladesh in the next year and they relate to very inequitable distribution of the resources and income for one. Bangladesh has seen a hyper growth of the super rich, higher than even China where the “get rich quick” syndrome is a best seller.

This has created a situation where the relationships with other classes are becoming somewhat marginal in nature. The middle class in particular is not socio-politically significant and the ruling party is happy to ignore it. Interestingly, the middle class doesn’t seem to mind too much as long as the consumption culture is not too disturbed. Even then its economic anxieties have led to street disturbances.

Dissidence of any sort is not encouraged so a “society of agreement” is emerging The result is the rise of along queue of people who are willing to go along with the scene that be. This is not a party position but of the alliance that is in power comprising of the four elements who matter; the army, the bureaucracy, the business and the politicians.

Banks not healthy

 As Prime Minister Sheikh Hasina continues her third consecutive term in 2020, her government will need to keep an eye on what is one of the largest budget deficits in Asia. This is a worrying point which in the gust of growth euphoria is lost in the wind. That the economy has strong weak points is obvious and reflected in the decline of revenue collection and tremendous rise of bad debt loans of the banks.

In both cases the fingers point to informal management of the economic system based on connection and networks and corruption rather than strict regulations. This model does and can work for a while but the dangers that come with it are not small. Till date, the banking sector has become better known as conduits for money laundering and the Government’s call to reduce interest rate to a single digit didn’t get attention but now has been ordered.

Which is fine but that means the 8% interest given on its term deposits are affected, pushed down to 6%. Official saving instruments had been imposed with a 5% tax before disbursement which drastically affected investment from its traditional base, the middle class. Though it plans to go a little soft, the high access of big loans to the powerful and low investment opportunity for middle particularly for the seniors is an issue which can be ignored but is a marker of governance quality.

The dengue epidemic and now

The other crisis that ravaged Bangladesh in 2019 was the mosquito borne dengue epidemic, the worst in its history. The death tools would be in a few hundred but the affected was 100 times more. The level of insecurity was extreme among the public and the confidence in the public health system and the municipal corporations is very low if it at all exists. As this has been going on for long, the general consensus is that the capacity to handle this issue is beyond them.

Its here that that the crisis of internal governance has come to be located. Does the system have the capability to manage major problems and public interest issues like economics and public health? High GDP, Bangladesh has proven doesn’t come with high capacity to achieve high public goods achievement rate. There is a general feeling that this is how things are going to be and the chances of change are few. Given the weakness of the political structure, some anxiety is there about the post-leadership scenario as the political parties, in power or in the opposition don’t show capacity of nurturing a second line of politically savvy inheritors.

Myanmar and Assam

Two other issues have been triggered in the past year relating to refugees , current and future that will be issues in Bangladesh. Despite all the noise, the Rohingya refugees issue remains where they are and none seem to be interested to resolve it. Since the latest round of eviction has been produced by Myanmar’s internal problem, the chances of resolution externally is low. It will not increase in size as a problem but it doesn’t look like its going to disappear.

Finally comes India’s CAA and NRC. This is clearly impacting on India but how much it will on Bangladesh is not yet clear. India has shown surprisingly low level of preparation in what has become one of its worst internal crisis in decades. It no longer matters what it may mean, what matters is what the people are opposed to it mean. Why India need to alienate its 200 million Muslims is a 200 million dollar question as well.

Should refugees trickle in, there will be less problems in Bangladesh. IF many come in, the problem may well be bigger. How it will play out is anyone’s guess but Bangladesh has not goofed the way India has with the NRC that is branding it negatively. One assumes that it may be somewhat more ready but Bangladesh’s weakness of delivery capacity and efficiency may be its biggest worry than its intent.