Weak institutions stymie socioeconomic advances

Dhaka,  Fri,  22 September 2017
Published : 07 Aug 2017, 00:42:41
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Weak institutions stymie socioeconomic advances

Economists, businesses ruminate over SC views
Jasim Uddin Haroon


Tenuous state institutions -- both public and political -- as reflected in the latest observations of the Supreme Court, stymie Bangladesh's desired socioeconomic development, analysts said.   

According to economists and businesspeople, effective institutions are a prerequisite for ensuring good governance in society, as also for healthy growth in trade and economic activities in a country.

Some economists also view that institutions have a vital role to play in enhancing competitiveness, productivity and investment. These, they say, should be treated as priorities for an economy at any stage of its development.

According to them, all types of corrupt practice happen for a lack of strong institutions, including those having oversights function.

The Supreme Court (SC) in its recent observations in a crucial verdict regretted that even after 46 years of independence, 'we have not been able to institutionalise any public institutions'.

It also noted there are no checks and balances, no watchdog mechanisms at work. Thus, it said, people in position indulged 'in abuse of power and showing audacity of freehand exercise of power'.

In the full verdict of the 16th Amendment to the Constitution, the SC also focused on the state of the judiciary. Even in this endless challenge, the judiciary is the only relatively independent organ of the state which, even though sinking, is striving to keep its nose above the water.

"But judiciary too cannot survive long in this situation," it said

"Instead of strengthening the judiciary, the executive is now trying to cripple it, and if it happens, there could be disastrous consequences," the top court said on a note of caution.  

A number of economists viewed the institutions are a key to establishing long-term agenda, allowing for public-private collaboration in public interest, free from the vagaries of the legislative cycle.

Dr Ahsan H Mansur, executive director at the Policy Research Institute (PRI), told the FE that judicial institutions are very much important and that when they do not function properly, domestic and foreign direct investment will not grow.

"Suppose, one investor purchased a land for setting up a factory and when they face troubles in terms of possession of the land and building infrastructures, how the investment will take place."

Confidence among the people, especially who want to invest, matters, according to the economist involved with policy research.

He noted land management is poor and weak though it is very much important for confidence building among the people.

Dr Mansur attached importance to the financial institutions like the central bank, Bangladesh Securities and Exchange Commission (BSEC) and Insurance Development & Regulatory Authority (IDRA).

"Why we cannot take action against the loan defaulters -- this is absolutely because of lack of strong financial and political institutions," he said.

The policy researcher said political institutions help ensure accountability and transparency in any society.

He also pointed out that there had been no stern actions against those involved in creating bubbles on the stock market in 2010.

Citing advanced economies, Dr Mansur said for those countries at the upper end of the development spectrum, institutions play an important role in maintaining economic health and keeping public-private collaboration on track.

The fact is national institutional frameworks have had strong relationships with the economic development, he added.

Dr MA Taslim, a professor at the Department of Economics at the University of Dhaka, told the FE that institutions are most important organs for a state. "They are like the structures of a building, and if they are weak, there are risks."

He also said judicial institutions are very much important as those stand as a last resort.

Dr Taslim said the foreign investors investigate about the stat of institutions before investment.

"They (foreign investors) will explore whether the judicial system, bureaucracy and the red tape will block them or not," said the economics professor.

"The Foreign direct investment (FDI) which remained much low in the country will not shine until or unless they are sanguine about strong institutions existing in the country," he added.

Dr Mirza Azizul Islam, an adviser of caretaker government, told the FE that institutions and good governance are closely related and that without strong institutions any country cannot progress.

He sees the low ratings of the country in different international rankings as an outcome of poor institutions.

Poor institutions help raise the cost of doing business, and Bangladesh is one of the lowest-ranked countries in global rankings, he noted.

He also noted that the poor quality of public works is an example of poor institutions in the country.

"The poor institutions also breed cost-overrun and time-overrun in the public works …," the former finance adviser said.

Talking to the FE, president of the country's apex trade body -- the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) -- Shafiul Islam Mohiuddin said the key public institutions have to be deferential to one another for the sake of country's socioeconomic development.

"We can easily resolve many of our problems through amicable discussions," said the FBCCI leader in an oblique reference to the spats over the 16th amendment.   

Jasimharoon@yahoo.com
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