Bolshie Bangladesh
Stoking anticapitalism sentiment is a sure-fire way to stay poor.
By K. ANIS AHMED
As Chinese wages rise, other developing Asian nations have an opportunity to attract industries that are being priced out of the mainland. Vietnam and Indonesia are already benefitting from shifting investment, and Bangladesh should too. But the country is being held back by one critical shortcoming—hostility to the free market.
The Bangladeshi economy has plenty of other handicaps, to be sure. Some pin the blame for slow growth on political corruption and poor governance. Others cite power shortages and the lack of good roads and efficient ports. All this is true.
However, after decades of reform and tweaking policies, it's time we admitted that the problem with the business environment goes deeper. Socialist thinking pervades public-policy circles and the public debate.
This might surprise outsiders, as Bangladesh was never a communist state. But socialism was one of the country's four founding principles, and many industries were nationalized in the 1970s. Leftist intellectuals who pushed Bangladesh toward socialism four decades ago continue to have an outsized influence in their new incarnations as heads of nongovernmental organizations, think tanks and media outfits.
These thought leaders mean well, and they don't see themselves as opposing investment. Indeed, no one argues for outright socialism anymore; rather they agitate in the name of worthy goals such as "rights" or "social equity." The dialogue goes awry, however, because the intelligentsia don't recognize wealth creation as the ultimate solution to welfare.
The government often includes left-leaning civic leaders on committees to review laws, while excluding industry representatives. The resulting laws are hostile to investors. For example, new legislation in the higher education sector would impose harsh restrictions and penalties on the institutions. Private universities are forbidden from collateralizing any assets, even for the university's development, though the same law requires them to build expensive campuses.
In the housing sector, a new "Detailed Area Plan" has finally been published. Almost two decades in the making, it has been outpaced by a doubling population and unplanned sprawl. It no longer answers the housing needs of one of the world's most densely populated capitals. While the government is now trying to broaden the dialogue to find practicable solutions, a segment of the activists and media seem more interested in punishing developers.
More puzzling perhaps is a new telecommunications law that imposes astonishing fines and leaves little room for appeals. It also grants the ministry sweeping powers to change licensing terms. This sector has drawn millions in foreign investment in recent years. In all these cases, the regulators' need for control seems to override any concern about investor reaction.
All this has created a culture in which companies can be attacked with impunity, with certain NGOs and the media stoking workers' grievances. Last Friday, a mob of garment workers rioted in central Dhaka, smashing vehicles and attacking police. This despite the fact that the government just raised the minimum wage by 80%. A number of garment-industry owners have sold off their stakes in the industry citing violence by workers, even though their factories were compliant with local and international regulations.
The Bangladeshi people are naturally entrepreneurial. From the hundreds of garment factories to the innumerable workshops and tea-houses lining the roads and highways, the sheer irrepressible desire of the people to work is evident everywhere. Yet this urge is suppressed. It is almost as if the country is divided against itself.
Society puts the highest value on being an intellectual, so that the brightest students compete to get into the public universities. They then join a tiny elite, who imbibe the leftist ideology at school, enter the bureaucracy and NGOs, and keep promoting retrograde policies and ideas.
As long as most local intellectuals consider a capitalist identity or ideology a terrible stigma to avoid at almost all costs, there is little hope for a more pragmatic dialogue. No country that constantly disavows the principles of capitalism can become prosperous. The burden of anti-business laws affects millions of micro-decisions and actions that make up a day's commercial activity. Even a tiny hesitation at every turn can add up to a large difference between competing economies.
Bangladeshis wonder why their country can't attract even a fraction of the funds that flow to Vietnam. Fixing infrastructure and tackling corruption will help. But the country won't succeed until deeply rooted hostility toward business is repudiated.
Mr. Ahmed is vice president of the University of Liberal Arts Bangladesh Foundation.
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