Former NBR chairman Muhammad Abdul Mazid emphasises human resources & support for SMEs for national prosperity
By Khawaza Main Uddin
Uncertainty in macro-stability and growth scenario, lack of political commitment to development goals and imbalance in living standards are some of the issues that are not properly addressed in the national pursuit to attain middle income status, the former secretary to the government has said. He has underlined the urgent need for what he called assurance and enabling atmosphere for the SME for creating more jobs apart from restoring confidence of investors in a number of sectors.
Dr Muhammad Abdul Mazid, ex-chairman of Board of Revenue and currently chairman of Chittagong Stock Exchange, regretted that there is serious lack of confidence of the investors in the stock market. In an interview with ICE Business Times, dwelling on taxation, he expressed his views that taxation policy formulation unit and the realisation unit could be separated.
What are the best possible ways to create resources and promote business in a country like Bangladesh when there are signs of stagnation in private investments?
There are many other avenues to gear it up. Foremost of them might be by creating an absolute enabling environment for small and medium scale industries to grow. SME could create job for and engage a lot of labour in this labour surplus economy. SME do not have requirement of neither huge capital nor heavy machineries nor costly technology. You should rather facilitate them with small capital and support them in marketing the goods produced by them. They must have an assurance of small fund, proper security of property and business, tiny technical education, nutritious food and health services to achieve sustainable productivity. With the scaling up of their production capacity and marketability the whole economy will be benefited as they should perform subcontracting the supplier of small parts and raw materials for the heavy industries. Financial institutions should design projects in support of SME loan at lower rate of interest.
Another area is the fitting development of human resource. There should be more vocational institutes to provide proper trade targeting training to create a pool of technical manpower. These skilled personnel could be exported overseas at a higher salary. Export of skilled manpower might be the best preference for a labour surplus country like Bangladesh. In this context, as an example, exporting of skilled nurses could be an effective approach for developing socio economic prosperity. Reportedly there are about 27,000 doctors in Bangladesh. If international standards are to be reached and maintained, this would demand 54,000 nurses. There are reportedly 19,000 registered nurses in the country of which 13,000 nurses are in the public sector, about 2,000 nurses have gone abroad and the rest are engaged in private clinics and/or awaiting government posts. The international standard for nurse-patient ratio is 1:4 for general care and 1:1 for intensive care whilst the international nurse-doctor ratio is generally reversed, at about 2:1. In the case of Bangladesh, the general nurse-patient and doctor-nurse ratio is 1: 13 and 1:0.6 respectively. As such fact remains that there is a growing demand of skilled nurses in Bangladesh. High skilled nurses are also in great demand in developed countries. Keeping this in view, nursing education programmes should better incorporate computer literacy, English language proficiency and any of the French, Japanese and Arabic languages in the nursing curriculum to make them suitable for developed countries in Europe, America, Middle East and Japan.
How can new, especially white-collar, jobs be created for many youths who are not getting good and adequate employment opportunities after graduation?
Both formal and informal service sector should grow to create more job opportunities for the graduated youths. Even the non-traditional support to transport sector could absorb a lot of manpower after graduation as it happened by ‘Bicalpa’ in the 1980s. The financial institutions which employ a lot of manpower should disclose at least 5 years plan of their employment. The institutions could locate brilliant students from the College and University for their job at different levels. In this context the quality of education is also an ensuring issue that should be looked into. Graduates must not only have mere degree they should be imparted with adequate knowledge skill and aptitude applicable to the job which they are looking for. A vast pool of graduates is not enough; they should not fall into a situation like – ‘water water everywhere, nor any drop to drink’. Supply of quality product is productive for a growing demand market.
Would you please point out a few missing issues that are not being addressed to attain the middle income status?
The missing issues that are not being addressed are the consistency in the macro-economic stability and attaining the growth scenario, political commitment to achieve development agenda, and improvement of living standard across the board. This means mere attaining of the nominal GDP growth and of per capita income is not virtually enough. The achievement of GDP must be embedded with real growth of living standard and sustainable improvement of social indicators. The overall improvement of quality of life, the achievement of MDG goals in real term is very much important for targeting a middle income status. The development of infrastructure only in physical number and appearance is not enough. It has to be found suitable, sustainable, useable and effective. The phenomenal development must gear up to physical development. Establishment of human rights, distributive justice and fundamental rights at all level without any favour or partionism is very much crucial for achievement of a just society at any middle income economy.
As you were with the government, would you now identify the regulatory barriers that hinder business growth? How to overcome them? Any change in the role of the government in promoting business?
The role of regulator should be of a facilitator rather than of a controller. A regulator has to ensure a fair play ground, for all renouncing manipulative practices, safe guarding the right and privileges of the business. It must have a regulated limit for interferer in the internal affairs of the business. It has to promote the growth of self-confidence, self-supportiveness and ensure empowerment of respective group. Regulator should not be party to the business itself. Regulator should neither regulate the day to day affairs of the business nor create any hindrance to the rightful development of the business. The regulator must always pursue pro-business, pro-investment stand in spirit and in action. Regulator should review its position on a regular basis; review the rules and procedures to reform for its being implementable. Greater coordination among the regulators is also important part to play. The Ministry, the Bangladesh Bank (BB) and the BSEC individually or collectively should consult and review ideas before initiating any directives, rules and regulations to avoid any kind of misunderstanding.
Corporate governance and corporate social responsibility are two widely discussed issues? What are you own futuristic views of them in Bangladesh context?
Corporate governance is a collective approach in diversity among all sectors, agencies and institutions in pursuing the overall growth of the economy. Governance must be meaningful of good governess. There should be transparency in all respect and all the way. Good governance agency must have both short and long term perspectives, it is essential not only for the present but also for ensuring a better future. Good governance can lead a corporate government for creating enabling environment, confidence, self assertiveness and above all the strength of the governance itself. On the other hand corporate social responsibility is taking care of social burden by the non public sector, who are making money out of the use of social and moral capital as well. In the area of education and health, corporate social responsibility is very much indicative to develop a just society where the society will bloom, will maintain good health where the social productivity will grow. Since all social responsibility cannot be borne by public sector alone with its paucity of fund.
How do you see the role of taxation, especially under the National Board of Revenue? Do you think we need two separate entities to formulate taxation policy, enforce laws relating to revenue earning, and thus support healthy business practices?
The role of taxation particularly under NBR is of very significant to play and it realises the result out of fiscal measure. Fiscal measures as pursued by NBR’s four objectives (popularly known as 4R). The first one is to realise Revenue, albeit for the government, to do development works. Second objective is to Regulate the price of commodities through taxation. Third objective is the Redistribution of wealth. Meaning that NBR should ensure that the rich people should pay tax for redistribution (through public spending) to all mass including poor, ensuring redistribution of wealth. Fourth objective is to ensure proper Representation in the public fund management, so that tax can be collected in appropriate manner, in absolute term and in a responsible atmosphere. The rules and procedure for collection of tax needs to be transparent finally, be user friendly and fiscal measures must be implementable.
Yes, the taxation policy formulation unit and the realisation unit could be separated. Policymaker should not necessarily be its enforcer or implementer. A reform procedure has been in place to put the tax policy wing under a separate establishment away from the NBR.
Is there any difference in your understanding of the stock market after you joined the Chittagong Stock Exchange? Would you please shed some light on how stock market should look at a country like ours?
My association and understanding about stock market is neither new nor it is maiden for me. So joining Chittagong Stock Exchange, I do not find any difference. As a regulator and additional secretary at banking in the finance division I was involved with stock market affairs. As member of the Planning Commission and Chairman of NBR, I was touched upon by the affairs involved within the stock market.
Stock market in a country like ours must be given an opportunity to grow as we have dearth of effective capital. The stock market must be given a venue or platform to be a cash collecting depot to help the economy. The prevailing major crisis includes lack of investors’ confidence, coupled with tiny or almost zeros investment by the banks. There is an urgent need to address this type of limitations — ensuring corporate good governance inside the management as well as inside the board of directors to ensure pro-active regulatory compliance and enforcement for the sake of transparency and accountability in a demutualised stock exchange. Securities regulator and both the exchange houses should work closely with ministry of commerce and ministry of finance as well to offload government shares in stock market.The regulator may enact some regulation making it mandatory to come to public for multinational companies after doing business in Bangladesh for 10 years. More relaxed regulations are required by the central bank for the foreign investors. At the same time central bank should be watchful so that foreign investors only invest for midterm and long term and not for the short term gain.