Foreign Minister Dr AK Abdul Momen, who is also an economist and the proponent of economic diplomacy in Bangladesh, has suggested that the government focus on ‘job creation’ in the upcoming budget due to the coronavirus pandemic.
He also proposed structural reforms in the tax system to improve revenue collection during the time of global crisis.
The former teacher of economics and business in the United States was talking to Bangladesh Post in an exclusive interview ahead of the 2020-2021 national budgets to be placed in the parliament on June 11.
“Our emphasis should be on job creation for home and abroad,” he said, “because of the pandemic many of our 12.3 million expatriate labour force working abroad may be forced to return home.”
“More importantly each year we are able to send 600,000 young people for job which may be affected due to pandemic,” he said.
The pandemic triggers global crisis particularly in the job market as businesses have been shut down due to worldwide lockdown.
But Dr Momen, who was also the Ambassador and Permanent Representative of Bangladesh at the UN before his foray into politics through the last general election in 2018, sees opportunities also.
“My economic diplomacy is paying off,” he said, as new countries such as Chile, Peru, and Brazil are coming up with the orders to buy medicines.
The United States also bought PPE for the healthcare workers to face their domestic shortage.
Dr Momen personally wrote to foreign ministers of different countries highlighting the opportunities in Bangladesh and the talents of Bangladeshi workers in those countries such as their skills in agricultural sector.
He also created a COVID-19 management and response fund which will be used for the expatriates who become jobless and who need skilled training.
Turkey and Saudi Arabia also responded to his proposal and agreed to contribute to the fund.
“The pandemic gives us a chance to diversify our exports,” he said, despite the fact that all countries in the world are worried because of the crisis.
“If properly implemented,” he said, the $12.3 billion stimulus package announced by Prime Minister Sheikh Hasina will put Bangladesh’s economic growth on the right direction.
Dr Momen, who is also the younger brother of former Finance Minister Dr AMA Muhith, the first finance minister in Bangladesh history to present 10 consecutive national budgets until 2018, is worried about the fall of revenue collection due to shutdown and suggested two major reforms.
First, he suggested NID based tax collection and the second is to introduce home rent paying system through banks to get taxes from that.
He explained “All eligible people do not pay tax. Revenue collection is faulty. Only 3 million people pay taxes. I’ll take tax return against the NID card. All will pay their income and spending details against their NIDs, and only eligible will pay taxes.”
In the US, he said, all citizens have to pay taxes against their social security number. Even if the foreigners work there, they also pay taxes based on their social security number.
“We have to start it here,” he said, adding that there must have documentary evidence of the rent collection and for that “all rent collection should be through cheques”.
“If we can bring some innovative changes, then our revenue collection will go up despite this difficult situation,” he said, giving his ideas of how to bring more people under tax net.
On job focused budget, he said his priority is not in Bangladesh only. “I want to create jobs in abroad also.”
He said with his Covid recovery response fund, the foreign ministry will do three works.
“Those who work abroad – when they lose jobs they will get at least six months’ salary as loan so that they can maintain their normal living. Those who don’t have work, they will get loan from the fund to start something such as setting up a shop or anything.”
And the third is to give them skilled development programmes.
“We are looking at better services. In recent years we started one programme. We started as a model, as a test case. What we do, Bangladeshis expatriate labourers who work there we give them training in abroad. They are very serious in training abroad.
“We have our missions, we have enough spaces and after 5pm, our spaces remain empty. So after that we give them for skill development programme,” he said.
Local Bangladeshis are involved in that.
“The result is life changer,” he said. “A street cleaner who may get 500 dirham, once become driver he earns 4000 dirham which eight times increase. We call it life-changer. We have started it and in upcoming year we will do it more.”
“We are very lucky because of last few years meteoric rise of our economic power – rise of per capital income, GDP, self sufficiency in food, women empowerment makes us strong in the diplomacy.
“Now we can speak strongly. Our growth is strongly footed.
To advance this, economic diplomacy – all missions are committed to help increase FDI. It’s the first target, export wants to diversify.
He said due to the budget focus on poverty reduction, Bangladesh did very well in the last decade.
“We reduced poverty from 40 percent in 2006 to around 20.5 percent in 2019, more than doubled. This is not a joke. Extreme poverty has been reduced to 10.5 percent from 24 percent”.
“Our leader Sheikh Hasina’s objective was to ensure food and clothes to all. She did it. This year her focus is on ensuing housing to all,” he said.
Dr Momen also responded to the question of governance issue and said “unless we had good governance, how could we reduce poverty at such level and achieved spectacular GDP growth”.
After the pandemic, there is a fear that the way we are reducing poverty whether we can continue that.
“If we can implement the prime minister’s stimulus package correctly, then there will be no problem in our growth.
But naturally we have to be more serious about it, he said, adding that it’s difficult to say what will be the growth at this moment.
“If we can mage, implement it (stimulus package) then our growth prospect will be good.”
He also suggested focusing on health and agriculture.
“This pandemic shows that at the time of crisis our private sector is zero. All have to come to government. So, the government health sector needs more – not only manpower but also correct equipment.”
For agriculture sector, he said, if we want to avoid humanitarian disaster due to pandemic, the food should be supplied correctly.
“We have a great advantage which is technology. Using technology we could do many things. We could start digital Bangladesh very early,” he said, referring to Prime Minister Sheikh Hasina’s campaign since 2009.
“I believe that we have two special resources – one is water and the other is manpower. We are lucky that our manpower is very young and they are capable of achieving so many innovative things. They are very smart, quick learners. We have to utilize the two resources. If we can utilise them, they will be a miracle.”
