Dr. Salehuddin Ahmed is a prominent economist and Finance Adviser to the interim government. He became an adviser to the Ministry of Finance and the Ministry of Planning on August 9, 2024. Later, he was appointed as Adviser to the Ministry of Commerce and the Ministry of Science and Technology. He started his career as a lecturer in the Department of Economics at Dhaka University in 1970. Dr. Ahmed then taught at BRAC University. He also worked as the Head of Research at the Integrated Rural Development Centre for Asia and the Pacific (CIRDAP). He served as the Director General of Bangladesh Academy for Rural Development (BARD). He also held various administrative positions in the government of Bangladesh. The Adviser spoke to Khaborer Kagoj on various economic issues, including various problems and prospects of the national economy, international trade, fiscal policy, human resource development, and comparative development experiences. The interview is conducted by Mostofa Kamal, editor of Khaborer Kagoj.
Khaborer Kagoj: The businessmen of the country expressed their disappointment due to the lack of a favorable environment. What is your opinion on this?
Dr. Salehuddin Ahmed: There is a big challenge for traders. First, big businessmen took money from banks. Adequate liquidity crisis in banks, due to which banks are unable to return money to depositors. Six to seven percent of traders are defaulters. If we say 16 percent, some banks say 40-50 percent. There are no more than 4 to 5 percent good banks. Businessmen are not getting loan facilities. This is a problem. Although we have already paid Tk 22 thousand crores to some banks. It is given to repay people's deposits. Here the check process goes through Bangladesh Bank.What we have given is not enough. Tk 22 thousand crores, not more. Thousands of crores of takas have been smuggled out of our country. Businessmen are not getting loans on time. Small and medium enterprises are the most affected. So they get less credit. It was not possible earlier. Secondly, businessmen in the country do not want to do anything out of fear. They see the traders fleeing before their eyes. They think that if I enter the business now, the bank will monitor me. It also happened that a man from Narsingdi took away Tk two and a half thousand crore. No one knows him. Now they are not possible. Businessmen also know that banks will give us loans, and then agencies will monitor us. NBR will take steps to recover the money. Earlier financial transactions were very opaque. Many things were closed for this reason. But we say there is no need to worry about these things.
Good traders always make good trades. It will take some time. They will also come in the LC process at some point. Many factories were destroyed during the student uprising in July-August. Still, business has improved somewhat. Imports increased slightly. Import of machinery was not good. But overall imports have improved somewhat. Traders should be assured in this regard.
Khaborer Kagoj: How is the current import-export situation in the country?
Dr. Salehuddin Ahmed: Although many have said exports are bad. But this is not true. It is in a very good position. In smaller places, they subcontract. There are many green factories in Bangladesh only in RMG. Bangladesh is more than other countries of the world. Foreign direct investment is a big challenge. The main issues are the business environment, the political situation of the country, and the policies of the regulatory agencies. Foreign investors observe these conditions before investing. There was some trouble with the airlines in the middle. They could not take money. If airlines make a profit, the Bangladesh Bank audit board releases it. Grameen The phone can't send money for a long time. The same is true of Sevron's money. Then there is MetLife. They are saying the same thing. But there are rules to be allowed or accepted, not prohibited. The government is working to ensure that foreign investors get a fair investment environment without facing any kind of problems. Regulatory bodies should be friendlier. There is also the matter of customs. Inaccurate information in income tax and duties wastes time, which traders do not like. The port had this problem before. Now it's fixed. Now consignments are being submitted to customs within one day or 48 hours. We have launched a national window. NBR will verify all the information after providing it online. It takes a long time to submit the invoice and give the copy. Doing this will save some time. This is a challenge for us. We are also trying from outside for the private sector. I spoke to the OPEC fund; they will give 100 million. They also decide which banks to give to the private sector. They have a few designated banks. Beyond that, they will not go. They have several issues in this regard. We talked to the World Bank; they will give a guarantee of one billion dollars. That too is a private bank. The bank will do the LC and guarantee it. Big industries will benefit from it.
Khaborer Kagoj: A large section of the young society has invested in the stock market. You know, a large part of the unemployed are doing business here. What is the way to eliminate the existing volatility in the stock market?
Dr. Salehuddin Ahmed: The biggest problem is that the stock market is now in a fragile situation. Most of the investors here want the resignation of the secretary commission chairman every day. The problem here is not the chairman of the secretary commission. The problem is that the capital market has cast a floor. There is a floor prize. If it comes down, maybe half will go away. And there is no AGM for Z category shares. There used to be a lot of sales; now there is no factory. Now after the arrival of the chairman, no one buys Z category shares and does not give returns. Not everyone buys shares. Not everyone buys shares of profitable companies. We are trying to improve the share market. Shakib was fined Tk 40 lakh. Did he know that there is trouble in the share market? Niaz Morshed also has crores of takas. They are also trying to catch him.
Kahborer Kagoj: How will this year's budget be?
Dr. Salehuddin Ahmed: This time we are making a revised budget. I will try to diversify exports to increase foreign exchange. Now readymade garments are being exported. Don't rely on it. The biggest challenge is fuel incentives. In this case, a lot of subsidy has to be given. This time 40 thousand crores have to be paid. Petrol and agricultural fertilizers are subsidized. The price at which the fertilizer is purchased is not paid by the farmer. Much less than that. The budget will not be too big. There will be some austerity. However, operating expenses cannot be reduced. We pay salaries; loans have interest. They cannot be reduced. That's why I will reduce the budget a bit. There will be no big mega projects.In this case, money from domestic and international donor groups is needed. The biggest challenge is that we don't have resources in our budget. GDP tax is 7.7 percent, while 12% in Bhutan, 21 to 22% in Japan, and 50% in Finland. Its benefits are social benefits. In developed countries, they are given a lot of benefits with tax money. For example, medicine and hospitals, i.e., free health care, are provided in old age. Although the taxes in their country are high. It will take time to reach this stage in our country. Because the areas of revenue collection in our country are not yet wide. The exact figures of how much tax has been collected do not come up.
Many people find it difficult to understand tax matters online. Due to this, the time has to be increased. In this case, the bank statement has to be accepted even after the time. Traders say the time needed to complete the entire process is increased. According to tax lawyers, there is not much they can do yet. Already 1.2 lakh people have submitted returns online. Much more this time than last time. It is likely to increase slightly. 12 lakhs is not bad. We have not yet made online filing of returns mandatory for companies. Companies have to provide a lot of information. They have to issue different licenses; otherwise, tax names cannot be determined. So, it is a big mobilization. Can't cut costs too quickly. Besides, ADB and the World Bank have agreed to continue major projects. Now we are trying to raise the net in our budget. Another thing, the budget should be realistic. Some major projects are required. Infrastructure development and the power sector must be spent on them. Again, electrical lines and some pipelines are old; they need to be replaced. The biggest problem is employment. If there is no income in employment, then inflation will be higher. In the last year, Malaysia, Dubai, Abu Dhabi, Qatar, and Oman have not been taking people. Only Saudi Arabia is taking people. And some are going to Italy. That is not legal either. More are going illegally by boat and swimming. Italy has a large number of workers. Our revenue pressure is increasing.That's why austerity should be done. But these are not possible in the social sector. This is what the donors are saying. Education, health, and social issues cannot be reduced. If I reduce the health sector by 25 thousand crores, then there is no problem in the budget. But many hospitals and many medical centers will be closed down. Similarly, there are problems in education. Then there is the problem with IT. All the money that was spent by the government earlier and for the people.
Khaborer Kagoj: What is your plan to increase employment?
Dr. Salehuddin Ahmed: The young people are doing voluntary work in our country. They are suffering a lot. IT is a subject in which youngsters are easily attracted. Technology business is not like tilling the ground or selling products in shops. In fact, it has to be outsourced. There is a lot of outsourcing going on in India. Indian people respond when I buy tickets to go out of the country. Young people in foreign countries are showing considerable skill in outsourcing. They are selling tickets for air and railway online. Indian youth are far ahead in this regard. But in our country, such facilities are very few. It is very difficult to get this service in rural areas. However, children in urban areas can easily do this work through the use of broadband, internet, and WiFi. No such strong situation was created in the village. Yet the government is spending a lot of money on bandwidth in rural areas. However, not much capacity has been achieved yet. This is our problem. In the case of outsourced employment, we can send skilled workers. Sri Lanka, Pakistan, India, and Indonesia also have skilled manpower.
Small and medium industries are best for employment. You will run a small textile mill. It will cost Tk 200 crore. We can't employ more than 100 people here. Because everyone runs automatically. Small-scale industries also use the technique. They don't have any big machines here. Small firms will do well if they can be facilitated. Along with that, employment will also increase. We import biscuits from China. Now it has decreased a lot.Production here will increase foreign exchange. It will save a lot. There is another issue of employment, that is, the big projects that were taken earlier; there was no employment. There was highly skilled manpower. People working in elevators are very understaffed. We want to take up some labor-intensive local projects. For example, the development of local infrastructure, the establishment of local industries, etc. That is why it is necessary to add small projects to ADP. This will create local employment opportunities. Small does not mean Tk one to two crore. It means Tk 300 to 400 crore projects. Tk 40 to 50 thousand crores is not so much. In this case, if you go to buy our land here, you will see that it has been sold to 5 other people. You can't buy. Land cases go to court for years. These things will not happen if they do not improve. It will be more if there is a political government. What will any minister come and say? What will any minister come and change? Here again the Prime Minister will do as he wishes. Foreigners don't like this. They observe everything. We have many weaknesses in these matters.
The most outward inflow is foreign issues. If they had realized the corruption going on, the 5-year project going into 10 years, then everything would have been stopped. They are still paying money. The World Bank came; they said, We will also give money. So, we are bringing it to one place. It is almost at a stage now. The rate of the dollar fluctuates; today it is 120, and tomorrow it will be 117. Our situation is still bad. This is due to many reasons. We are trying to restore trust. If this was not the case, the customer would not have been able to cash a check of Tk 1 lakh. Because many banks do not have money. Meanwhile, we settled with some money. As long as we are in charge, we will do something for the country's economy. Can't change the law. Changing banking laws takes time. Capital markets will take time. We will make some reforms. For example, to fix the bank, to change the boards, and to improve the customs duty. It will continue. Small laws will be needed for this. We will do it. There will be an election. We want to leave a footprint before this election so that those who come to power in the future can continue or take it forward.
Khaborer Kagoj: Thank you very much for your time.
Dr. Salehuddin Ahmed: Thank you too.
