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Bangladesh Private Sector Forum Country Case Study: Bangladesh Bangladesh Private Sector Forum BACKGROUND AND STRATEGIES Mamdood Hossain Alamgir Director, Board of Investment Prime Minister’s Office, Bangladesh & Mamun Rashid CEO, Citibank N.A., Bangladesh 1 PARIS - FEB2006 Bangladesh Private Sector Forum Presentation Plan • • • • • • • • 2 Emergence of Private Sector The Context of BPSF Objectives of BPSF Structure and Participation Outreach Strategies Monitoring Mechanisms Projected Results Challenges Participation/QA PARIS - FEB2006 Bangladesh Private Sector Forum . Emergence of Private Sector 3 PARIS - FEB2006 Bangladesh Private Sector Forum Emergence of Private Sector Bangladesh has successfully moved forward to market economy despite its emergence as a socialistic economy during independence in 1971. Private Sector is becoming a vibrant force in the economy. For the first time, country’s GDP growth is expected to reach 6.5% this year, highest growth since 1972. For the 2nd time in the country’s history, manufacturing growth touched double digit in last quarter. 76% of the total investment is by the Private sector and represent 18.5% of GDP. FDI inflow significantly reached to US$ 0.8 billion in 2005. 4 PARIS - FEB2006 Bangladesh Private Sector Forum Emergence of Private Sector Lets see some figures … 5 PARIS - FEB2006 Bangladesh Private Sector Forum Bangladesh: Socio-Economic Indicators Consistent GDP Growth (%) 5.39% 5.23% 5.04% 4.92% 4.57% 6.50% 6.27% 5.94% 5.27% 5.26% 5.38% 4.87% 4.62% 4.42% 4.08% 199192 199293 199394 199495 199596 199697 199798 199899 19992000 200001 200102 200203 200304 200405 200506p Source: Bangladesh Economic Review 2004 and Bangladesh Bank 6 PARIS - FEB2006 Bangladesh Private Sector Forum Bangladesh: Socio-Economic Indicators Investment as % of GDP Total Investment 22.2 23.0 Public Private 23.4 17.2 17.5 18.5 6.1 5.9 15.5 15.6 15.8 6.7 7.4 7.2 6.4 6.2 2000-01 2001-02 2002-03 1999-00 24.4 23.1 16.8 1998-99 23.6 23.1 2003-04 2004-05 Source: Bangladesh Economic Review 2005 7 PARIS - FEB2006 Bangladesh Private Sector Forum Bangladesh : Socio-Economic Indicators Upward Industrial Trend (%) 8.60% 7.44% 6.17% 7.26% 7.60% 2002-2003 2003-2004 9.50% 6.53% 4.92% 1998-99 1999-2000 2000-01 2001-2002 2004-2005 2006-2006p Source: Bangladesh Economic Review 2005 and ADB 8 PARIS - FEB2006 Bangladesh Private Sector Forum Bangladesh : Socio-Economic Indicators Manufacturing Growth (%) 10.48 8.62 10.50 8.58 8.15 8.43 7.38 6.75 7.10 6.68 6.41 5.48 5.05 4.76 3.19 19911992 19921993 19931994 19941995 19951996 19961997 19971998 19981999 19992000 20002001 20012002 20022003 20032004 20042005 200506p Source: Bangladesh Economic Review 2005 9 PARIS - FEB2006 Bangladesh Private Sector Forum Bangladesh : Socio-Economic Indicators Export Growth (Million US$) 10,159 8,655 5,324 5,752 1998-1999 1999-2000 6,467 5,986 6,548 2000-2001 2001-2002 2002-2003 7,603 2003-2004 2004-2005 2005-2006t Source: Bangladesh Economic Review 2005 and EPB 2006 10 PARIS - FEB2006 Bangladesh Private Sector Forum Bangladesh : Socio-Economic Indicators Actual FDI Inflow (Million US$) In Million US$ 1,000 800 460 190 1998 268 280 180 79 1999 2000 2001 52 2002 2003 2004 2005p 2006t Source: World Investment Report 2005, Bangladesh Bank and BOI P= Projected, t=target 11 PARIS - FEB2006 Bangladesh Private Sector Forum . The Context of BPSF 12 PARIS - FEB2006 Bangladesh Private Sector Forum The Context of BPSF Private sector participation in the policy formulation process in Bangladesh began in ‘80s, but in an ad hoc basis. This includes consultation with the business chambers, sectoral industry associations, temporary policy fora, representation in various committees etc. However, the recent robust growth of the private sector demands a formal strategic framework to ensure its participation in the processes. 13 PARIS - FEB2006 Bangladesh Private Sector Forum The Context of BPSF In early 2005 the Government of Bangladesh formally embarked on a long-term program of private sector development through a combination of institutional and regulatory reform, a strengthened economic zone strategy and the creation of a special economic zone. At the centre of the process is the ongoing preparation of a large ($150-$200m) World Bank-led, multi-donor-funded PSD project which is scheduled for commencement in mid2006. A year-long “design phase” which includes a large number (around 30) of preparatory projects is underway and is being led by the IFC, FIAS and the SEDF. 14 PARIS - FEB2006 Bangladesh Private Sector Forum The Context of BPSF To assist in the preparation of the proposed Private Sector Development Support Project (PSDSP), the Government of Bangladesh has established several groups. Under the Prime Minister’s Office, the Government has formed the Private Sector Development Task Force whose membership is made up of permanent secretaries and agency heads. In addition to the PSD Task Force, the Government has also established the PSD Core Group, which consists of around 37 senior working-level civil servants. 15 PARIS - FEB2006 Bangladesh Private Sector Forum The Context of BPSF Complementing this is the Private Sector Consultative Group (PSCG), which is made up of approximately 25 leading private sector representatives. The PSCG is continuing to supply private sector inputs to the reform process that has been initiated. These various groups have collectively already started an ongoing series of public-private dialogue and are meeting jointly every one or two months, including in the form of dedicated working groups covering specific topics. 16 PARIS - FEB2006 Bangladesh Private Sector Forum The Context of BPSF Three Working Groups have been formed, focusing on Regulatory Reform, Special Economic Zones and Capacity Building. The working groups are composed of members of the PSD Task Force, the PSCG and the PSD Core Group. The Working Groups are chaired jointly by a member of the PSD Task Force and a member of the PSCG, in order to provide inputs from both groups of stakeholders. The Working Groups have each produced a brief note on their thematic areas, and these papers have been instrumental in the design of the proposed PSDSP. 17 PARIS - FEB2006 Bangladesh Private Sector Forum . Objectives of BPSF 18 PARIS - FEB2006 Bangladesh Private Sector Forum Objectives of BPSF The current mechanism for dialogue which has been established to help prepare the proposed PSDSP and to support the PSD reform agenda has proven to be an excellent platform for public-private discussions. As a result of this extensive process, the Government has asked the Development Partners Support Group to consider establishing a more formalized and permanent mechanism for private sector-public sector dialogue. 19 PARIS - FEB2006 Bangladesh Private Sector Forum . Structure and Participation 20 PARIS - FEB2006 Bangladesh Private Sector Forum Structure and Participation Possibly to be known as the Bangladesh Private Sector Forum (PSF), all of the PSD Task Force, PSD Core Group, PSCG and DPSG will be asked to play a role. It is proposed that these groups come together to form the Private Sector Forum in the second quarter of 2006 after the bulk of the PSDSP preparation has taken place and ahead of project effectiveness. These groups will need to be augmented by a permanent secretariat which will schedule meetings, set agendas, and follow-up on recommendations. The Prime Minister is expected to serve as patron. 21 PARIS - FEB2006 Bangladesh Private Sector Forum . Outreach Strategies 22 PARIS - FEB2006 Bangladesh Private Sector Forum Outreach Strategies In order to ensure success, the PSF must incorporate the inputs of a wide and diverse range of private sector representatives. The PSF must also ensure that it takes a national approach instead of a regional approach; therefore, private sector representatives need to be drawn from across the nation. 23 PARIS - FEB2006 Bangladesh Private Sector Forum . Monitoring Mechanisms 24 PARIS - FEB2006 Bangladesh Private Sector Forum Monitoring Mechanisms The PSDSP itself will have a Monitoring and Evaluation Framework. The PSF will be connected to the regulatory reform program of the proposed BICF and PSDSP. Interactions of the PSF will be monitored by the members of the DPSG, through the proposed BICF. International experts may also be brought in to the meetings of the PSF to facilitate discussions and design solutions, if requested by the Government. 25 PARIS - FEB2006 Bangladesh Private Sector Forum . Projected Results 26 PARIS - FEB2006 Bangladesh Private Sector Forum Projected Results Through a process of continued, results-focused dialogue, the main targeted outcome of the PSF will be a growing Bangladeshi private sector achieved through an improved investment climate characterized by an ongoing process of regulatory reform. The PSF will seek to develop a critical path for regulatory reform and growth based on inputs to, and recommendations from, the membership of the PSF. The PSF will be closely aligned to the work of the proposed PSDSP and any additional technical assistance operations that may be formed to support that. 27 PARIS - FEB2006 Bangladesh Private Sector Forum . Challenges 28 PARIS - FEB2006 Bangladesh Private Sector Forum Challenges Political will and commitment is a must for success. The PSF must aim to take a nonpartisan approach, in order to ensure success amidst political change. The recommendations of the PSF must be implemented as soon as possible, in order to ensure success. The PSF must aim to benefit from the experiences and lessons of other countries presented at this workshop in order to be most effective. 29 PARIS - FEB2006 Bangladesh Private Sector Forum P A R T I C I P A T I O N/Q&A 30 PARIS - FEB2006 Bangladesh Private Sector Forum Thank You 31 PARIS - FEB2006