The term private sector refers to the segment of the economy owned, managed and controlled by individuals and organisations seeking to generate profit. Theoretically private sector companies are free from state ownership or control. But practically they are registered, monitored, regulated by the government rules, laws, policies to continue its business operations.
Therefore, the concept that the government will only regulate and the private sector will do the business is not true. Governments have a great role to play in making the private sector effective and functional in a country. Governments have to create and maintain a favourable environment for the proper growth of the private sector.
But why will the government do that? Governments will promote and protect the private sector because they provide around 90% of employment in the developing world (including formal and informal jobs), deliver critical goods and services and contribute to tax revenues and the efficient flow of capital.
The private sector will undertake the majority of future development in a country. It also has significant roles in infrastructure development, expansion of existing businesses, addressing inefficiencies in the local economy, promoting human capital development, helping vulnerable groups, especially to participate in the labour market.
Besides, encouraging community development by promoting community business and co-operatives, promoting cottage, micro, small, and medium enterprises (CMSME) and attracting investment and FDIs are significant roles of the private sector in poverty reduction and smooth governance of the country.
In Bangladesh, we have a long list of laws, acts, policies and strategies to address private sector development issues and facilitating private sector development. Our prime minister has emphasised on private sector development many times in her speech on different platforms in the last couple of years.
The government has focused on National Industrial Policy (2016), National Quality (Product and Services) Policy (2015), National Innovation and Intellectual Property Policy (2018), SME Policy (2019), Import Policy Order, Export Policy, Monetary Policy, SME Lending Policy etc.
Sectoral policies like MotorCycle Industry Development Policy (2018), Leather and Leather Goods Development Policy (2019), National Motorcycle Industry Development Policy (2017), National Salt Policy (2016), Bangladesh Handicrafts Policy (2014) etc are focused towards specific fields.
None of the policies specifically focused towards private sector development as a whole or from a holistic view.
For example, the National Industrial Policy 2016 focused on national goal, objectives and strategies for industrialisation, definition and classification of industries, investment incentives, development of CMSMEs, establishment of Economic Zone, industrial park, high-tech park, cluster-based industrialization, and establishment of public private partnership, governance and reforms of state-owned enterprises, productivity and product quality.
It also focused on safeguarding intellectual property, women entrepreneurship development, export oriented industrialisation and export linkage development, foreign investment, industrial technology, environment friendly industrialisation, skills development, implementation, monitoring and evaluation of industrial policy etc.
In one sense, all the above-mentioned chapters of national industrial policy 2016 are focused on manufacturing industries or manufacturing based industrial development. This is a traditional method of policy drafting focusing on the manufacturing bases in the primitive stage of industrialisation. But in this age of knowledge based digital economy much more attention is required towards the development and promotion of service and innovation industries.
In the early 1980s, many countries came up with industrial policies focused on import substitution, infant industry protection and direct intervention in the production process. In the 1990s, industrial policies further embraced open economy requirements: skills upgrading, acquisition of technological capacity, reduction of business and trade costs, and infrastructure development issues, which are still due in the industrial policy of Bangladesh.
Bangladesh needs industrial policy focusing on the concept of "industrial" extending beyond the manufacturing sector and evolving towards a model of greater strategic collaboration between the private sector and governments, characterised by the relatively large presence of public-private partnerships and programmes to boost research and development (R&D).
The focus should be towards the fourth industrial revolution (IR 4.0) and its consequences. For example, "digital transition plans" have to be designed in a context of profound industrial reorganisation and parallel to the emergence of ground-breaking digital technologies and advanced manufacturing supply chains.
Policies should have a clear direction about the occupations that are going to be obsolete due to the impact of IR 4.0 and mechanisation of production processes. Adequate resources have to be allocated to upskill or reskill the existing labours to cope with the technological changes.
Industrial policies should also have directions about certain policy tools and instruments to clearly define the issue of digital economy: data policies, R&D support applied to digital technologies, skill and knowledge diffusion; other policy instruments such as investment incentives and intellectual property rights regimes etc.
Industrialisation and private sector development needs clear policy support and guidance on a supportive international trade regime. There will be challenges due to digitisation of the economy, implication of Information Technology Agreement (ITA), Technical Barriers to Trade (TBT) Agreement, Government Procurement Agreement (GPA), Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), tackling challenges in ICT infrastructure, and supporting digital inclusion and the participation of micro, small and medium-sized enterprises (MSMEs) etc.
The above mentioned issues cannot be handled under the existing structure of any single policy of Bangladesh. Therefore, Bangladesh needs a comprehensive Private Sector Development Policy (PSDP) to address cross sectoral, inter-sectoral, national, and international emerging issues of private sector development. It will be a live document and should have super imposing power on other controversial policies of the government.
The existing Private Sector Development Policy Coordination Committee (PSDPCC) of the Prime Minister's Office could take necessary steps to enact the proposed Private Sector Development Policy (PSDP). PSDPCC has representation from all relevant ministries and agencies to frame this policy.
The private sector industry and investment adviser to the prime minister may chair this initiative along with the principal secretary as chief coordinator. A comprehensive PSDP could lead us to achieve the goals of SDG 2030 and Vision 2041 effectively.
Md Joynal Abdin, secretary, Dhaka Chamber of Commerce & Industry (DCCI)
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.