Bangabandhu Sheikh Mujibur Rahman's assassination in 1975 marked the rise of capitalism with the development of the private sector and state patronage, and the trend has since continued without any major changes, said Centre for Policy Dialogue (CPD) Chairman Professor Dr Rehman Sobhan at an online dialogue on Saturday.
He said a large part of the economy was under the government's control after independence and a capitalist class emerged after August 1975.
"Capitalism has since flourished under government patronage through the integration of the private sector with the banking sector, privatisation of government institutions, and different kinds of new additions."
But the economist thinks the development of the apparel sector has created a capitalist class outside the government-backed group.
Addressing the fourth part of a series of dialogues organised by the Power and Participation Research Centre (PPRC), Dr Sobhan said clothing entrepreneurs have expanded their business in the backward and forward linkage industries besides exports. He was the keynote speaker at the "Turning Points of the Economy" episode moderated by PPRC Chairman Dr Hossain Zillur Rahman.
"Like the government-backed bourgeoisie, self-made capitalists are reluctant to go beyond the control of the government. Besides business, they are joining politics to gain power. Under the influence of political power, they are disobeying the instructions of various regulatory bodies," said Dr Sobhan.
He said there was a very weak and underdeveloped business community before 1975, and a strong business community was formed after that to establish capitalism.
"As part of the process, the flow of money from state-owned financial institutions to the first generation entrepreneurs was unreasonably increased first with government backing, which continued till 1980. Although power was transferred from one army general to another in 1981, there was no fundamental change in the process other than it gaining speed," the CPD chairman remarked.
He said the private sector had been prioritised since 1982 by reducing the effectiveness of state-owned enterprises. As a result, a large portion of government resources went to the clutch of the first generation beneficiaries. The tendency to not repay loans began at the time.
Almost all the loans disbursed by the government's industrial bank and the industrial credit institution had to be rescheduled back then, he said, adding that loan recovery of the two institutions stood at 5-10% and the incremental amount of unpaid debt continued to rise.
Describing the gravity of the situation, Dr Sobhan said most of the banks had collapsed between 1980 and 1990. Some enthusiastic bankers took initiatives to file cases to recover loans but no response was received from the ineffective court system.
Identifying the development of the ready-made garment industry in early 1982 as a major turning point in the country's economy, the economist said the sector expanded without relying on the government.
He said after expanding business in backward and forward linkage sectors, clothing entrepreneurs branched out into various other sectors, including steel and shipbuilding.
"Before the second phase of democracy began in 1991, the capitalist class flourished with the help of state-owned financial institutions. Although the banking system was introduced in the private sector at the time, its benefits mainly went to big entrepreneurs.
"Banks borrowed from the less wealthy and lent to those who had more money. As a result, they played a key role in transferring wealth from the bottom to the top tier. The present capitalist business class does not favour an independent position as they want to ensure political gain," explained the economist.
He said at least 75% of the members of the current parliament are self-proclaimed businessmen. He also thinks many of the remaining 25% have already become involved in business.
Dr Sobhan said the business community tries to stay under the influence of government power and thus gets the opportunity to evade the directives of many regulatory bodies.
Former vice-chancellor of Bangladesh Agricultural University Professor Dr Sattar Mandal said agriculture contributed to a major structural change in the economy. Apart from conventional crops, high value sub-sectors, such as livestock, fisheries, and vegetables, are playing a key role in agriculture.
He said the privatisation trend that started around 1980 also affected agriculture. Commercial farming started from then on due to advanced technology and the open market system.
British economist Naila Kabir said Bangladesh had also achieved some milestones in the socio-economic sector.
"There was a time when women would give birth to seven to eleven children, which now has come down to two."
Describing girls' schooling as a major milestone, she said the country's progress in the socio-economic sector, including the fall in maternal and child mortality rates and universal immunisation, demands commendations.
Bangladesh Institute of Development Studies (BIDS) Research Director Dr Binayak Sen said there is a conflict between government-sponsored capitalism and self-established capitalism in the country.
"What is frustrating is that inequality is growing. The contribution of some sectors to GDP growth, including agriculture, microfinance, and readymade garment, is declining."
He said some risks over maintaining 7-8% growth over the next few years had arisen.
"Besides the pandemic, the pre-existing inequalities and institutional barriers have become intense. As a result, it has become difficult to achieve SDGs by 2030."
Professor Dr Sayema Haque Bidisha said women's participation in the labour market is not growing and their employment in the garment sector is declining due to various reasons, including automation.
"In this situation, new sectors need to be explored to empower women through employment. If that can be done, it will be a new milestone."
The economist said the infrastructure sector plays a big role in eliminating regional disparities and the Jamuna bridge is a milestone in this sector.
She said the bridge had increased economic opportunities for northern people, adding that the opening of the Padma bridge would be a new milestone, too.
Economist Akhtar Mahmud said though there had been some work on the business environment in Bangladesh, there is no interest in working on market management.
Giving an example, he said there is a big difference in the efficiency of the two new institutions of the Awami League government – Bangladesh Economic Zones Authority (Beza) and Bangladesh Competition Commission.
He said Beza is playing a good role in creating a business environment and there is dynamism in its work.
"On the other hand, the competition commission is supposed to work to improve market management, but the pace of its work is not so fast."