Good governance and economic progress

Such open criticism was not the usual norm a few years ago. Natural disasters created world sympathy and an image problem but some degree of pride and admiration were also won in the international arena through successes in agriculture, water management and flood control, micro-financing, wider spread of primary education and international peace keeping.

Why is this happening now?

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On the one hand we have the United Nations' Economic and Social Commission for Asia and the Pacific lauding 'macroeconomic stabilisation' in Bangladesh and predicting 5.5 per cent growth. We also have the Governor of the Bangladesh Bank expressing optimism about economic buoyancy. On the other hand we have warnings that we are living in a country that is a 'political experiment'. It is difficult for many to dovetail these contrary views given the battering that our image is receiving in the international press.

There is a simple answer. Poor governance. It is reflected in feelings of personal insecurity, absence of law and order, nexus between criminals and politicians, lack of accountability, prevalence of widespread corruption and abuse of human rights. These are the factors that are giving us a bad name.

'Governance' in general and 'good governance' in particular are metaphors that have become household buzz words. For well over a decade, the notion of good governance has served as a general guiding principle for donor agencies to demand that recipient governments adhere to proper administrative processes in the handling of development assistance and put in place effective policy instruments towards that end. The concept of good governance, according to Martin Doornbos, appears to have become prominent in international circles around 1990 and became a favourite part of the vocabulary of political scientists immediately afterwards. Over time, this concept has grown to include evaluative questions about proper procedures, transparency and the quality and process of decision-making.

From a global policy-making perspective, in its scope and potential coverage, the notion of governance has had an a priori attractiveness not only for donors but also for the international media. Administration and management in developing countries in particular have consequently been observed through its lens and assessments made accordingly. The scope of vagueness in the term has enabled critics, at times, to come down heavily on their country of choice.

Such ambiguity has however not been the case with Bangladesh. At different times, various institutions have come forward and critically viewed our political processes and clinically commented on the implications of bad governance in our country. In this context, they have also highlighted the absence of accountability and transparency that are supposed to co-exist in a democratic ambience.

The question that arises is whether good governance is relevant for economic and social growth of a country. Any answer other than yes would be difficult to accept. Malaysia and Singapore are both examples in this regard.

I believe that good governance is the first step in becoming more competitive in a world market where attracting direct investment greatly rests on certain perceived conditions. The concept of governance or state management, if not carried out properly, can lead to additional costs for each transaction that is undertaken either by an individual, a company or the state in terms of time or expense.

In the last two months there have been several workshops, seminars and published reports dealing with just this problem. Most of them have outlined how indirect costs have increased the cost of doing business in Bangladesh and affected our chances of receiving foreign direct investment.

In this context they have referred to the improprieties related to securing adequate infrastructure, unofficial payments in obtaining the necessary licences and permits, dealing with government bureaucracy, importing or exporting goods, ensuring security of property and personnel and time required to complete transactions. The disappointing conclusion in most of these surveys was the consensus that bad governance was directly responsible for hidden costs becoming an integral part of doing business in Bangladesh. It was also evident that the business sectors generally agree that time lost makes otherwise sound investment uneconomical.

As we move forward in the path of economic progress, the government has to be seen as effective and efficient. We are witnessing today many failures that need not happen. Better management and streamlining of the existing mechanism can greatly reduce these undesirable factors. If we can do so, it will enhance our image. That is more important than the repeated sermons doled out to the journalists by the Establishment.

I will now try to identify some of the significant difficulties that are met in Bangladesh in different sectors Law Enforcement, the Judicial System, Board of Investment (BOI), Power, Gas, Telecommunications, Customs and Taxation and Ports and Shipping and also suggest possible reforms.

The complaints with regard to the Judicial System and Law Enforcement appear to be inordinate delay in the disposal of cases by lower courts and the indifference or incapacity of the police in enforcing law and order. It is alleged that businessmen in particular have to make unscheduled and unspecified payments to ensure that work gets done. This format is undertaken to avoid prohibitive opportunity costs. This is an avoidable situation. The problem can be overcome through the capacity building of the judiciary which will enable them to process cases more efficiently, setting up of courts at the lowest administrative levels armed with means of alternative dispute resolution, through better training and salaries for the judges and law and order personnel, by making the judiciary independent of the executive and simplifying the rules and procedures so that the general population can understand and comply with the law.

The second area that comes in for serious criticism is the utility sector. It encompasses the providing of Gas, Power and Telecommunications. There are certain general points that appear to be common for all of them. There is consensus that it is difficult and expensive to obtain any utility connection. There are also allegations that even after the consumer has obtained any such connection, he is harassed by billing irregularities and requests for personal payments to maintain the connection. Such an irregular scenario is only possible because it is a demand driven market where the current infrastructure is insufficient to meet demand. High systems losses or system inefficiency have also led to a combination of a deteriorating infrastructure, unofficial utility connections and theft.

There is no reason for this to continue. The Administration has to take full blame for this. What is required is seriousness in tackling corruption in this sector. The first step should be to improve billing and revenue collection systems, primarily through computerisation. Private investment should also be encouraged in this sector through inter-active government policy and an independent regulatory agency. In addition, as has been done in several Asian countries, meter reading, bill preparation and distribution may be contracted out to the private sector on an area basis, to ensure competition. Such private sector involvement should also avoid any nexus with favoured political links. There has to be transparency and accountability with the process of tendering for such involvement being in open web pages online. If Singapore can do it, we can try to do the same.

Another area which requires re-organisation is the BOI. It has been explained by the Executive Chairman of this Institution that several bottle-necks exist and that efforts are underway to remove them. Unfortunately, time is money and opportunity and neither waits for anyone. One does not understand why more intensive coordinated measures have not been taken in the last two years of this Administration to give sufficient power to BOI to cut through bureaucracy and deliver quicker services to investors. There is need to do so if it is to be a truly effective one-stop service center. In most cases it is still unable to issue required licences and certificates for Trade, such as, Import/Export Registration Certificate, VAT Registration, etc. Narrow parochial political interests have also hampered the establishment of industrial parks throughout the country under the authority of the BOI in association with private sector entrepreneurs. Butter governance demands more coordination, less red tape and greater facilitation.

The other difficult area relates to Customs, Taxation, Ports and Shipping. There have been some effort to streamline these sectors, but it appears to have been more for the gallery than the actual stake-holders. Procedures continue to be time consuming and cumbersome and consequently create the scope for bureaucratic discretion. In other words, corruption is encouraged. There is no reason why operations in these sectors cannot be made more transparent and efficient by reducing levels of paperwork. In addition, as is done in other Asian Countries, computerisation should be introduced to ensure faster processing and turn around of required action. This will also reduce the scope of corruption, ensure better documentation, preservation of records and simplify procedures.

In addition, human resources management and the compensation practices in the public sector has be modernised. Performance of public officials should similarly be evaluated not on political preference but on merit, transparency, efficiency and accountability. This will restore confidence and bring forth responsible decision-making.

Any Administration which is unable to assure these elements has no right to expect that it will get a good press. It is the Government's failure that creates the conditions for negative reports. No amount of lobbying by our diplomatic Missions abroad can create a favourable image, in a situation, where real news can be accessed to easily and instantly through web pages. Economic diplomacy demands that we get our act together instead of trying to find scapegoats.

Muhammad Zamir is a former Secretary and Ambassador.