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Price spiral threatens reforms
   While the reform measures such as the drive against corruption and tax evasion adopted by the caretaker government (CG) became extremely popular in the beginning, the continuous price spiral of essential commodities is threatening to put all the gains in jeopardy. The International Chamber of Commerce Bangladesh chapter (ICC,B) discussing the situation in details in its quarterly news bulletin says that in order to protect the interest of the people, the government should adopt a liberal import policy as a short-term measure for importing food grain to keep prices under control.
   The price rise of foodstuff and other essential items caused by a number of internal and external factors has defied all counter-measures taken by the government so far and created a havoc with the common people’s lives. The country is now passing through a difficult time and the rate of inflation that has exceeded 10 per cent mark this month is causing frustration and also influencing public opinion. For example, as the bulletin pointed out ‘almost cent per cent public acceptance of this government with full respect at the beginning is now perceived to be on the decline in the public mind mostly due to price spiraling even though the government has limited option to intervene in a free market economy except fiscal intervention and law and order situation…’
   Welcoming the government’s on-going reform measures the bulletin stated that the reforms would contribute immensely to form a strong base for the economy in future but would not yield any immediate result. Therefore, it says the challenge before the CG now is how to win the confidence of the people in general and the business community in particular. One of such measures is to allow the businessmen to manage their affairs with ease and make their own investment decisions. Based on faced realities or the perceived ones, it is not that businessmen want anti-corruption drive to stop, but they expect this to be done with due care and of course without creating a ‘panic’ situation and thereby adversely affecting the overall business activities in the country.
   Meanwhile, bankers and economists have corroborated with the ICCB’s evaluation and said that domestic credit growth during the first month of the current fiscal year has slowed down and net assets held by the commercial banks also declined. This assessment was based on the Bangladesh Bank’s latest monthly update (September), which says that domestic credit in July grew by only 0.76 per cent to Tk 1,556 crore, implying that businessmen were reluctant to seek bank loans. Besides, total bank deposits fell by over Tk 700 crore though demand deposit went up by Tk 95 crore to Tk 24,101 crore; but time deposit fell by Tk 800 crore to Tk 1,60,535 crore during the same period.
   This fall in time deposit has other ramifications. For example, it would normally have a negative impact on investment pattern for some commercial banks with inadequate liquidity that could feel shy of getting involved in long-term investment commitments. Industrial production index for medium and large-scale manufacturing sector rose by 10 per cent during FY2006-07. Banking sources say relatively high growth in the manufacturing sectors last year became possible because of impressive disbursement of term loans during the year.
   In addition, robust export growth, increased remittance inflow (about US$6 billion), huge improvement in the port management, bullish capital market and increasingly competitive telecom sector have all contributed to last year’s economic growth. This has also put the country’s balance of payment situation in a very good position. On the other hand, the stagnant agricultural production coupled with two successive floods in as many months this year is unlikely to recover and would also have a dampening effect on the economy.
   
   Confidence-building & investment
   There are good reasons for this discouraging trend in the private sector investment scene. Since the drive against corruption and tax evasion was intensified, prospective investors appeared less enthusiastic about obtaining bank loans to pursue their business ventures as they used to do before. In addition, the owners of almost all the major conglomerates are now either in jail or hiding on charges of corruption and tax evasion and this is having a major negative impact on the country’s private sector investment. Besides, this has also generated enormous negative chain reaction on the overall economic activities as the CG’s attempts to provide necessary facilities to those business groups deserted by their owners are not bearing much fruits. Smaller business houses that largely depend on supplying to the conglomerates are also paying the price.
   In an apparent bid to ensure that tax evaders and unorthodox businessmen are put under certain restrictions, banking sector was asked to be more vigilant by the central bank to prevent their doing business as usual. However, this prompted a section of bankers to become more vigilant than such instructions really called for because of their own questionable past is also adding unnecessary roadblocks and frustrations. All these boil down simply to suggest that the projected 7 per cent GDP growth rate for FY2007-08 is unlikely to be achieved.
   The Asian Development Bank (ADB) has already apprehended that GDP growth for the current fiscal may fall to 6.5 per cent due to the impact of successive floods. And inflation and budget deficit is also likely to go up. The government, on the other hand, feels that the targeted GDP growth could be achieved if three important segments of the economy – agriculture, industry and services sectors – are able to make higher contribution to the economy. However, in view of what has been noted in the foregoing paragraphs, such optimism appears out of place. Without fresh and consistent efforts to regain the confidence of the business community and make them plunge vigorously into all types of economic activities, any resurgence is unlikely.
   
   Targets appear ambitious
   The commerce ministry, meanwhile, at a meeting held on Tuesday has set a new export target for the current fiscal year at US$14.5 billion – a target of over 19 per cent export growth actually achieved during FY2006-07. The export target for FY2006-07 was set at $12.5 billion but despite impressive growth achieved in different sectors during the year, the target could not be met and actual exports reached $12.17 billion. The increased new target for this year in the backdrop of falling exports of the buoyant readymade garment sector – the mainstay in the export earnings – appears really ambitious.
   According to a study conducted by the Bangladesh Institute of Development Studies (BIDS), exports grew in the first nine months of FY2006-07 by an estimated 22 per cent but it came down to about 16 per cent in the last three months of the year. This downward trend is still continuing. BGMEA president Anwar-Ul Alam Chowdhury (Parvez), who is a major exporter himself, said that while the target ‘is tough, but not impossible to achieve.’ However, other RMG moguls tend to be more optimistic and reportedly suggested that they could overcome the dampening weather in exports earnings and this year’s export target is ‘not unrealistic.’ One only hopes that they are right.
   However, other indications do not quite add up to such optimism. Inflow of foreign direct investment into Bangladesh during FY2006-07 was down by six per cent compared to the year before though the global FDI growth was impressive at 38 per cent. According to the World Investment Report 2007 of the Unctad, the fall of FDI inflow into Bangladesh was calculated at 9.6 per cent. Explaining the report, the Board of Investment (BoI) Executive Chairman Mohammad Mohsin said: ‘The country failed to attract adequate FDI due to political unrest during the second half of 2006, indecisions about big investment proposals and investors’ lack of confidence.’
   The fundamental of the country’s buoyant financial sector that has been attracting large sum of investment in the capital market appears to be heading for an uncertain future as well. The commercial banks and other non-banking financial institutions have been doing well for some time and have been regularly posting substantial growth in profits. As a result, this sector has become very attractive for both small and larger investors in the country’s stock markets. However, if bank statistics could be relied upon, the commercial banks are now sitting on a huge amount of surplus liquidity. According to reports, bank liquidity has reached a whooping amount of Tk 13,141 crore because of lack of interest of the prospective investors to seek funds for new projects.
   Reports also say that the Bangladesh Bank, the central bank, has been borrowing about Tk 950 crore from the banks per month on an average since July last, which could have provided some relief to the banks with excess liquidity. But this has not happened because the central bank has also been repaying about Tk 2,000 crore per month against matured government bonds. In other words, the central bank has actually been supplying more money into the banking system than withdrawing the same from them. With this burden of excess liquidity and lack of investment opportunity, the banking sector would surely suffer from major erosion in its profit during the current fiscal year. This is quite an ominous sign for small investors.

This week, from October 14 to 21, is being observed by millions of activists across the world as Global Action against Debt and IFIs (international financial institutions, such as, the World Bank and the IMF). One major thrust of the week of global action is the demand for immediate and unconditional cancellation of all ‘illegitimate debts’ across the globe that had been and is still channeled through corrupt and oppressive regimes for no or little benefit accruing to common people. At least 297 organisations from 60 countries are participating and are expected to raise issues around illegitimate debt cases in the week-long programme of actions.
   Among the most important events that mark this week are:
   October 15: the 20th  death anniversary of Thomas Sankara, former president of Burkina Faso, who called for repudiation of debt
   October 16: World Food Day
   October 17: International Day to Eradicate Poverty; Stand Up and Speak Out Mobilisations
   October 20: World Youth Day
   October 19-21: IMF-WB annual meetings
   Some of the loan agreements signed in Bangladesh during the 1980s may be bracketed as odious and illegitimate. KAFCO is one such example. We have also observed many ‘development deals’ signed by our ‘democratic’ regimes in the 1990s and the 2000s, particularly in defence, transport, telecommunications and energy sectors, where large-scale payment of kickbacks is smelled. Some of the cases are now pending in the court. The billion-taka question is why the poor people would be forced to pay back for the crimes committed by the international lenders and the national thugs.
   Among the examples of illegitimate debt cases is the infamous Zhong Xing Telecommunication Equipment Corporation-National Broadband Network (ZTE-NBN) deal between the governments of the Philippines and the People’s Republic of China. The USD$ 329 million ZTE-NBN contract would have led to a new case of illegitimate debt. Philippines debt campaigners, legislators and the protesting public successfully forced the Arroyo administration to cancel the contract. Numerous issues were raised against the contract, amongst which are questionable process and lack of transparency; overpriced and grossly disadvantageous; clear violation of Philippines laws; lack of proper bidding and kickbacks received by government officials in the deal.
   The case of the Netherlands-Bangladesh computer deal may be mentioned in this respect. This is another example of unscrupulous deal between the ‘donor’ and the irresponsible managers of our state. Recently a Dutch court gave its verdict in favour of the Dutch company that was supposed to supply computers and accessories under the guise of a grant-cum-loan and now the people of Bangladesh have to pay ‘compensation’. It is time to demand that this ‘compensation’ be arranged by confiscating the assets of the persons in the government and the bureaucracy who signed the deal.
   Debt campaigners around the world are united in calling for the immediate cancellation of huge illegitimate debts –– the ‘dictatorship debts’ of Liberia amounting to US$1.47 billion multilateral debt and US$ 833.9 million bilateral debt. These debts were incurred by the dictatorial regimes during the West African nation’s years of civil strife. These debts should be unconditionally cancelled, and given the gravity of Liberia’s social and economic situation it should be cancelled immediately and without delay.
   The clamour for governments and international financial institutions to recognise the issue of illegitimate debts is starting to generate responses. In 2006, the government of Norway cancelled the debts (amounting to US$ 80 million) claimed from five developing countries, Ecuador, Egypt, Jamaica, Peru and Sierra Leone. The Norwegian government extended loans to 21 countries from 1976 to 1980, including the 5 countries, so that these countries will buy Norwegian vessels and shipping equipments. This was at a time when the Norwegian shipping industry was in a crisis. It turned out that the ships could not be used at least by the five of the 21 countries. The Norwegian government acknowledged that this was a bad policy and accepted part of the responsibility of the debts incurred. Thus, the Norwegian government cancelled the remaining repayments of these debts.
   Recently the World Bank (WB) and United Nations Conference on Trade and Development (UNCTAD) released draft versions of a paper on Odious Debt in response to the demand to study the issue of illegitimate debt. However, upon the initial review of the debt campaigners, these have been criticised as being lopsided.
   The Platform of the Global Week of Action has issued the following statement on the eve of the week:
   We demand from North and South governments and international financial institutions the following:
   1. Open, transparent and participatory parliamentary and/or governmental debt audits in both South and North countries; full cooperation with citizens’ groups for independent citizens debt audits, including the global citizens audit of the lending operations and related policies of the World Bank and IMF, regional development banks and export credit agencies.
   2. Immediate and 100% cancellation of multilateral debts and all illegitimate debts as part of the total cancellation of debt claimed from the South, without externally imposed conditionality; repudiation of unsustainable, unjust and illegitimate debt.
   3. Full transparency and accountability to citizens in the implementation of debt cancellation and debt repudiation; democratic decision-making and implementation to ensure that funds freed from debt cancellation and debt repudiation are used for genuine, equitable and sustainable development.
   4. Immediate end to the financing and enforcement of neoliberal policies and projects through debt related conditionality:
   • Stop the privatisation of public services and the use of public resources to support private profits;
   • Stop using debt and aid as leverage for unfair trade agreements;
   • Stop the promotion of environmentally destructive projects such as big dams and harmful mining of oil, gas coal and other dirty energy;
   • Stop the escalation of climate change.
   On October 15 the World Bank Campaign Europe organised a public hearing on the World Bank in co-operation with the Permanent People’s Tribunal in The Hague and organised a programme, the World versus Bank, one week before the annual meetings of the World Bank.
   During this week, labour movements, trade unions, and migrant workers’ groups in Asia/Pacific will hold simultaneous action programmes. For example, In Bangladesh, the Economic Justice Working Group (EJWG) will hold a programme on Food Sovereignty & IFIs on October 23.
   In Seoul, the students of the MA course on Inter-Asia NGO Studies (MAINS) at Sungkonghoe University will organise a People’s Tribunal on the Ecological Debt of TVI, a Canadian Mining Company, against the Subanen community in Zamboanga Del Norte in the Philippines. The Subanen is an indigenous community in the Zamboanga Peninsula in Mindanao affected by the mining activities of the said Canadian firm and the government is an accomplice to the ‘crime’. Besides, the Joint Action against Water Privatisation will hold a press conference in front of the City Hall of Seoul to condemn the city government’s recent declaration to corporatise its water and lay off 230 workers.
   In Manila, a workers-led rally dubbed as ‘Workers March against IFIs’ Privatisation Programme and Violations on Workers Rights’ will be held in front of the ADB (Asian Development Bank) main office. Jubilee South – Asia Pacific Movement on Debt and Development (JS-APMDD) and other groups will also be spearheading series of activities focusing mainly on the effects of privatisation on the public sector workers and consumers in general and the ‘must’ role of the government to provide these services. On Oct 21, the Asian Migrant Centre, along with its network of migrant organisations in Asia, will celebrate the ‘Indonesian Migrant Workers Union 8th anniversary’, a cultural event, which will also be a campaign activity against underpayment and excessive agency fees.
   Throughout Latin America and the Caribbean, the Week of Action will highlight on debt campaigners lending their support to the Continental Mobilisation of the Indigenous Peoples of Abya Yala, in support of their demands for respect and the defence of their cultures, territories, natural resources and for the recognition and payment of the historical debt which the nation-states, the Catholic church, and power centres in the North have been accumulating with them for last 515 years. In Nicaragua, campaigners will have a Permanent Peoples’ Tribunal on Union Fenosa jointly organised by Hemispheric Social Alliance-Central America Chapter, the Biregional Latin America – European Union Network, and the Nicaraguan Committee of the Permanent Peoples’ Tribunal (TPP).
   Across the world, the slogans of the activists in the debt movement are: ‘debt trap is death trap’; ‘we don’t owe, we won’t pay; ‘cancel all debts of the people of the South immediately and unconditionally’; and the North must pay back all historical and ecological debts to the people of the South’.
   Mohiuddin Ahmad is a writer and a researcher. He is the chairperson of the CDL (Bangladesh) and chairperson of the Jubilee South-Asia Pacific Movement on Debt and Development. Presently he is teaching at Sungkonghoe University, Seoul. He can be reached at mohi2005@gmail.com

A system has evolved in this country over a long period of time that there is a tendency to monopolise power. Since independence power has been concentrated on the President’s Secretariat or Prime Minister’s Office. Even for a minor decision the ministers send files to PMO for vetting the decision taken by them. This is the reason why the political parties or civil society members clamour for a balance of power between the prime minister and the president. We also witnessed how Badruddoza Chowdhury was ignominiously removed from Presidency and an old and sick man made the president.
   Every foreign donor complains that there is a lack of good governance in Bangladesh. We tend to believe it is not the question of good governance or bad governance; it is the total lack of governance in all tiers of the system. The government runs on its own dynamics (otherwise, how can we explain the job of 60 ministers of Khaleda Zia’s government are now conducted by 11 advisers?) without any efforts and so there is prevalence of corruption at high places which the public came to know after the promulgation of emergency and the caretaker government’s campaign against corruption.
   Bangladesh is a highly centralised state without decentralisation of the government or administration. If the style of governance remains the same, the governance would continue to remain in bad shape and maladministration would continue.
   Here comes the role of local government with which we were familiar since the period of the British Raj. Old people still talk of District Board’s activities. Given the system of colonialism, it was not expected that this local government could go far. But because of public support it had its inherent strength.
   The present interim government seems to believe that the decentralisation is the key to good governance. So it has paid attention to decentralisation in the public administration.
   It also appears that the regime is convinced that the local government institutions are sine qua non for devolution of power.
   So in the month of June this year a seven-member committee, headed by former Secretary AMM Shawkat Ali, has been formed to prepare and submit a report within three months (later it was extended up to November 30) with specific recommendations on how to strengthen the local government institutions. The other members of the committee are: Syed Giasuddin Ahmed, Professor of Public Administration in Dhaka University; Dr Badiul Alam Majumdar, Secretary of the NGO Sujon, Professor Dilara Chowdhury of Jahangirnagar University; Advocate Ajamal Ullah, president of Municipality Chairman Association, Mir Enayet Hossain, president of Bangladesh Union Parishad Chairman Association; Mizanur Rahman, joint secretary of the Local Government Ministry (he will also do the secretarial work of the committee). They are all competent people. According to various sources and newspaper reports it is gathered that the committee had interviewed more than 1000 cross-sections of people across the country. They have so far made the following recommendations to strengthen local government. These are:
   1. Abolition of Gram Sarkar (village government) and setting up ward committees.
   2. Total abolition of parliament member’s function and interference in the local government.
   3. To establish local government’s authority over the government officers and employees.
   4. To allow the participation of women in the local government’s the women representatives’ present role has to be restructured. Two alternatives are being discussed by the committee in this regard.
   5. There will be recommendations for ward committee. It will be an outfit where all sections of people will participate. The meeting of ward committee will be held in every two months or three months. This meeting will review the implementation of development activities in the area. The elected representatives will be accountable to the people of the ward.
   6. Under the existing rules, the chairman controls all affairs of the committee. Hence the reform committee is considering is to enhance the power of the members. It is also considering a different procedure of electing chairman.
   7. A recommendation will be made to set up a permanent Local Government Commission as a constitutional today. The terms of reference of this commission will be to regularly develop local government and to work for the promotion and enhancement of the system. The government will implement the recommendations of the commission in order to further strengthen the local government.
   8. The elected representatives will not participate directly to the implementation of projects in the area. This will be done by the government officials of the locality who will be under the control of local government. The elected representatives will supervise the officials’ work. If this is done the irregularities and corruption will stop, the committee believes.
   9. To stop the use of black money in the local government election, the committee will recommend measures to stop the miscreants, terrorists and criminals from participating in the election. For this the committee may prescribe the conditions for eligibility and ineligibility of candidates to participate in the election.
   10. The role of the central government in the affairs of local government will be curtailed to a great extent.
   11. The structure of local government will consist of three tiers such as Union Parishad, Upazila Parishad, Zilla Parishad (District Council). Along with these arrangements municipality and city corporation functioning will be protected, according to the recommendations.
   12. The interference of the members of parliament in the work of local government will not be allowed. The recommendations will be made to allow the MPs to act as advisers in the development work.
   13. The committee’s recommendations are in the final stage of completion. The local government institutions will get more administrative and financial powers.
   14. The committee has prepared some recommendations for reforms to ensure accountability of local government. The scope and role of the police in the running of Union Parishad, Upazila and Zila Parishad (district council) has been increased.
   15. The separate provisions for each of the six city corporations will be made into an integrated law. The municipality laws will also be modernised.
   16. It may be mentioned here by changing the laws of the British period, Union Parishad Act, 1983, Municipality Act of 1977 and Upazila Parishad Act of 1984 will be changed as there are many lapses in these laws.
   17. According to a member of the committee, the purpose of reform is to decentralise the democratic system.
   18. There will be no block allocation in the budget for the members of parliament from the central government.
   19. The governments close to the people should be strengthened.
   Local government adviser Anwarul Iqbal has said, ‘We have regular contacts with the reform committee. They have made remarkable progress in their work.’ The chief adviser had also exchanged opinions with them. The government will take adequate measures to build up independent and autonomous local government system on the basis of recommendations of the reform committee.
   In a discussion meeting Swiss ambassador in Bangladesh said, ‘Local government is an important unit of democratic system. There is no alternative to consolidate democracy without strengthening local government. The local government has to be people-oriented. If the Bangladesh government sincerely takes steps, the Switzerland government will provide technical support. In our country, because of strong local government, the pressure on federal government is much reduced. If the local government is strengthened, peace and justice will be ensured. The people can have trust on the value system. The local government can play a significant role at the grassroots level by furthering unity, solidarity and fellow feeling.’
   Meanwhile, about the city corporation polls, the chief election commissioner said the commission expected that voter registration to all the city corporations would be completed by January enabling the commission to go for polls to all the city corporations simultaneously by April, 2008.
   A newspaper on October 11 in its lead story wrote: The Election Commission is planning to propose imposing restrictions on elected local government representatives holding party posts to free the local government institutions from the grip of partisan politics. If the proposal is made a law, incumbent mayors, chairmen, ward commissioners will not be allowed to hold posts of any political party, EC sources said.
   When the political parties are considering participating in the local body elections on party basis, this proposal came as a bolt from the blue. Whose idea is this? It amounts to subverting the election. In West Bengal the three-tier village panchayet system is a huge success and it is held on party line. Local body elections also throw up elected national leaders. Subash Bose was the mayor of Calcutta Corporation. Later he became the president of the Congress. Britain is a unitary state like us. There also local elections are successfully held on party line.
   The Election Commission should not to create further controversy in the local election process. Politics has already jumbled up in Bangladesh. It should not be further confounded.

RMG and non-payment of allowances

Half of the RMG workers were not paid festival allowance. But why? Such allowance is a rightful claim of the workers as per the law of the land. Besides, the government asked the owners to pay bonus before Eid. The BGMEA and other owners’ associations also agreed in principle to pay the workers their legitimate pay and allowances and requested their members to try to clear pay of workers so that they can enjoy their greatest religious festival with their families.
   It is time to look into the issue. Is it a fact that the owners could not afford to pay them or did not want to or the both? What can be done to solve this problem?
   Shakil Monzur
   On e-mail
   

The DMP commissioner is reportedly seeking UNDP assistance for procurement of sophisticated surveillance equipments and that too through a letter directly to the UNDP. Under the government’s Rules of Business, it is the External Relations Division (ERD), Ministry of Finance who are authorised to conduct aid and assistance negotiations with all foreign agencies and we are not aware of any change in this essential procedure,
   Such a trend, if allowed, will go against state interests in more than one ways.
   A concerned citizen
   Dhaka

Every one wants to celebrate Eid with family and friends. Unfortunately, this did not take place in the case for the Bangladeshi abducted in Afghanistan. My deepest sympathy to him and his family. Hope he will be released soon.
   Saif
   Dhak

Next on Quick Comments

a. Storms, rains kill 16 across country: Rough weather leaves Eid holidaymakers stranded (New Age, October 17) b. Surplus liquidity set to cause profit erosion of banks: Depositors, investors may be the ultimate sufferers: experts (New Age, October 17) c. Eid in dhaka jail: Inmates get drugs mixed with food despite strict checks (New Age, October 17) d. Moeen dismisses speculation about his becoming president (New Age, October 17)