The "myth" of deteriorating business confidence in Bangladesh
If one looks at the ground realities and the context of the events, it makes sense to say that the CTG has so far failed or hesitated to destroy the confidence of the corrupt peoples who were primarily doing business in Bangladesh
If one looks at the everyday press of Bangladesh - be it print media or electronic media, it won't take long for someone to conclude that the businessmen are not showing good confidence in investing. The market scenario is bad since everyday items are skyrocketing. This increase are sometimes triggered by international fluctuations, but many others are locally created. Most importantly, the perception of future being good and robust is not strong yet - as it should have been by this time. News media is always trying to give an impression that business confidence is deteriorating.
The perception that business confidence is falling couldn't be more wrong! Media is trying to create this myth - with a bad intent possibly or may be it is a result of sheer incompetence and/or bad insight on the part of news editors.
What is the basis of our this claim? Aren't we asserting something here without any proof? - you may ask. We would like to add in a very clear term that no, there is a solid foundation of logic behind our claim that this is a actually a myth in the creation. Our hope that the literatare and competent elements within the system will do more to bust this myth. We would take you along that logic in a moment. Moreover, we also think that government has so far failed to realize market mechanism of corruption economics and how it acts side by side with regular economics. The traditional lessons of economic theories will help one to understand the dynamics of corruption economics, however applying those theoretical knowledge directly to manage a transition from corruption economics to regular economics will not work here. However, the current CTG and its many bright members (two of which are economics doctorates) are trying to do exactly that. There are better ways.
It is a very complex situation to manage - it is specifically challenging when someone wants to do it within limited time-frame. The nature of the current problem makes it particularly interesting. It would not be possible to go into the detail of possibilities here, however, we will give some general idea. Government policymakers should try to extend these ideas while planning ahead.
Let's think about a business firm that was doing business in pre 1/11 Bangladesh. This particular firm, say we call it FirmB, was doing very successful business. The different arms of this business were listed in the stock exachanges of the country and their prices were skyrocketing.
Now, we would request you to think about this same firm during post-2008 era. Will this firm FirmB still be doing good business in Bangladesh during post-2008? Or should we expect it to do that?
Hard to say. The answer could be YES and NO.
If you are the CEO of the FirmB, how would you make sure that the answer is YES instead of NO? In other words, how would the CEO ensure ongoing success of the FirmB during post-2008 period?
There are several scenarios for the CEO to consider. We would request you to set aside politics and emotion out of your mind while reading this discussion.
The success of a firm depends on several resources and capabilities that the firm has. What are the most important resources and capabilities that the FirmB needed for its success during the pre 1/11 era? Will these resources be still useful during the post-2008 era? A theoretician (our finance adviser seems to be one such person, but we might be wrong!) may think that looking from the books, the same resources would be useful. But if the current CTG becomes successful in doing what they pledged to do, the real situation will be exactly the opposite. The pre-1/11 and post-2008 resources and capabilities will certainly be different in many ways. And the business confidence as it is measured in conventional index (which are usually limited in their capacity to capture the transient situation), would be very low. A good policy makers job is to understand the intricacies of this transition period and help the system to transition from one to another situation with minimal stress to the population.
Coming back to the point of discussion, connections with other corrupt elements within the system was the main source of competence for doing business in Bangladesh - yes, that was the scenario prevalent in pre 1/11 Bangladesh.
So, what the CTG is trying to do - if they are successful - this should change.
In other words, if CTG is successful in doing what they want to do, the currently successful business houses should feel that they are losing grounds. These so-called successful companies (most of which have learned how to operate the corrupt machinery) - whose main source of competence was maintaining and bribing the corrupt elements within the system - should feel demoralized when they think of their future prospect. So, this apparent fall of confidence should be seen as a good sign - a sign of success. The confidence for using the previous success factors should fall - and out of those ashes, a new breed of success stories should be rise. What will be those resources and capabilities that will be needed in a post-2008 Bangladesh? That would not be corrupt networks - thats for sure. For details, you can check with any business students or professors of IBA or any other business schools.
However, our media does not see that. Why? It would a important question worth investigating.
The whole scenario can be seen from another perspective. We all focus on the lists published by different international organizations - for example Transparency International, World Bank, Human Rights Organizations or Reporters without Border, Doctors without Border, etc. Whenever a new list for the given year arrives, we give it a due focus and assess the relative improvement or fall. At the individual level analysis of this individual indexes, media might be doing good. But one thing that is missing is they all are trying to measure the characteristics of the same society or same country. The individual lists only look at one specific aspect of the society. However, what about the relationships among these different lists? Let us give an example.
Say, if the position in Corruption Perception Index improves (i.e. corruption reduces) for Bangladesh, what should the policymakers expect from the Business Confidence Index in the same year? Should it also improve or fall? In the long run, an ideal situation is that the corruption should be minimal and confidence should be as good as it can be. We all know that. But that is the scenario that will happen probably in year 2012. But we are talking about the specific context of Bangladesh in 2007. The country's position was the worst in CPI for couple of years. So, if Bangladesh starts improving its position in the CPI index from the worst position, it is expected and normal that the business confidence will fall. If the business confidence of the traditional business houses of Bangladesh doesn't fall, that would mean the readings in the CPI index is false.
Why is that?
To understand that one has to know the content and methodology of the individual indexes. More importantly, you have to know the limitations of these scales or indices. That discussion would be out of scope for an article written for general public. But the policy makers should take note. The experts in the media and the traditional columnists in the media should take note and increase awareness among the stakeholders.
Before we end this article, one thing that should be addressed is what the CTG should do to bust the myth? Thats a million dollar question. There is not a single way to solve this problem. But one could try several strategy depending on the current situation. Certainly we do not know the exact situation - do not have access to all the information that government has. But if you ask us to take a guess, we would say this: The basic logic tells us that the resources and capabilities for success will be different during pre-1/11 and post-election period. However, it does seem that the established business houses have bought into that idea yet. In other words, the business personalities and top managers do not beleive that the scenario will change in the long run. So, they are not making the moves and changes in policies to accomodate the perceived future reality in the business environment. The CTG has been so unsuccessful to convince the businessman that the realities will actually change. That is our reading of the situation. It might be wrong. If we are right, however, the CTG should really think their options to change the perception. If that can start moving that perception, everything will follow, we think.
If you thought some of the ideas are worth of your reading time, please forward it to others. If you have an ear to the members of the CTG, policy makers, economists, columinsts in regular traditional media, please forward it to them. If you have an ear to the journalists and news editors of the electronic media, discuss it with them. Hope they would look at the suggestions and give due diligence.
Thanks for your time,
Innovation Line
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Note: This is a freelance column, published mainly in different internet based forums. This column is open for contribution by the members of new generation, sometimes referred to as Gen 71. If you identify yourself as someone from that age-group and want to contribute to this column, please feel free to contact. Thanks to the group moderator for publishing the article.
We have not seen the Liberation War, but we know if we can free the country from corruption first, we will eventually get to other dreams soon. Because of corruption, we could not even get into information highway for years, let alone other dreams!
This is the kind of article for which we started this column. Because of ongoing mess, a gift from our older generation, we often get diverted. Now that it seems some sanity is returning in Bangladesh, we would try to go back to our original plan.
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