Financial reforms going in right direction: IFC

Initiatives to bring about reforms in the financial sector of Bangladesh have been moving in the right direction, according to Martin Holtmann, country manager of International Finance Corporation (IFC) for Bangladesh, Nepal and Bhutan. 

And while the reforms may take time, they are at least on the move, Holtmann said at a regular luncheon meeting of the American Chamber of Commerce (AmCham) in Bangladesh yesterday.

Bearing the topic "Role of IFC as a development partner in Bangladesh", the meeting at Sheraton Dhaka was participated by businesspeople from both Bangladesh and the US.

Citing the need to urgently bring about the reforms, Holtmann said they were a fundamental need as it was customers who ultimately suffered.

For example, customers are the ones that pay for bank inefficiencies as they lead to much higher interest rates than what is necessary, he said.

Holtmann then pointed out that Bangladesh's tax collection ratio, which stands at just 7 per cent of the country's GDP, is one of the lowest worldwide.

However, he lauded the private sector's involvement in developing domestic infrastructure, stating that it was praiseworthy for entrepreneurs to have invested in power generation as well.

The IFC country manager also said government initiatives to bring normalcy to the country's forex rate amid volatility stemming from the Russia-Ukraine war were also heading in the right direction.

Another advantage for Bangladesh is that workers in the country seemingly work harder and longer, he said.

Some countries do not have much national resource, but still they are performing well, and Bangladesh is such a country, he added.

Holtmann also said Bangladesh had a lot of entrepreneurs and that hospital and medical services was a sector awaiting massive investments from the private sector. Besides, Bangladesh has the opportunity to participate in the global food processing value chain as the country is trying for export diversification, he added.

AmCham President Syed Ershad Ahmed said while the local economy was eyeing double-digit growth and joining the journey of developing nations, the whole world was hit hard by Covid-19.

Global economic sanctions and war-induced disruptions to the supply chain quickly followed, leading to financial instability, inflationary pressure and lower forex reserves worldwide, he said.

"You may all agree that the significance of Bangladesh's private sector lies in its ability to drive economic growth, create employment opportunities, attract investment and foster innovation," Ahmed added.

This competitive advantage leads to increased foreign direct investment (FDI) by offering profitable business opportunities; and, in creating a favourable investment climate, putting the economy on a path to cross the $1 trillion mark by 2040, according to the World Bank and BCG Analysis.

In today's globalised world, the IFC as a member of the World Bank Group, focuses on promoting sustainable economic growth and poverty reduction through investments in the private sector, which plays a crucial role in supporting the development of countries on the path to progress.

Bangladesh is making its way to becoming a developing nation with an impressive steady annual GDP growth rate, unique geopolitical location, and solid and skilled workforce that is attracting global attention, labelling itself as an FDI-friendly country.

The "poster boy" of Bangladesh's economy, namely garments, and foreign remittance earnings shielded the country despite all these unforeseen challenges in the pre-coronavirus era, Ahmed said.