New rich in Bangladesh
Dr. A J M Shafiul Alam Bhuiyan, Professor and Founder Chair, Dept. of Television, Film and Photography, University of Dhaka :
A New York-based business data company Wealth X in its 2018 report mentioned that the number of ultra-high wealthy people in Bangladesh grew at a higher rate, which is 17.3%, than any other countries. The countries which recorded a double-digit growth were China, Vietnam, Kenya, and India. We, here in Bangladesh, came across the findings of the report from our national media. After reading the news about the report, I was curious to know who these people are, how many of them are in the country, and how they amassed this much wealth. I tried to access the report by myself with no avail because it was not publicly available.
The growth rate of the number of ultra-high wealthy people in Bangladesh should require due attention. It needs to be thoroughly analyzed as a sign of a significant trend in our changing socio-economic life. The questions which need to be asked are: what does it mean to have a fast-growing number of rich people in an emerging economy? How are they becoming so rich? What facilitates this development? Given the lack of concrete information about these people and their ventures, we can only conjecture and surmise based on circumstantial evidence.
The growth rate indicates something alarming. It smells inequality. The common sense theory of an economic equilibrium suggests that when some people become filthy rich some other people are impoverished. In 2010, Bangladesh’s Gini index was 34.10 and it went up to 34.40 in 2016. The higher the index the higher the income inequality. In South Asia, income inequality in Bangladesh is lower than India but higher than Pakistan. The index indicates that income inequality is on the rise in Bangladesh which means some people are accumulating more wealth than other people.
After the assassination of the Father of the Nation Bangabandhu Sheikh Mujibur Rahman in 1975, the Bangladeshi state marched toward a market economy, discarding the socialist approaches. The march toward the market economy fully blossomed in the 1990s with the complete liberalization of the market. Marketization and liberalization with the state support have contributed to the creation of a new capitalist class whose primary source of capital is loans from the public banks. Weak regulation, complicity with bank officials, and political patronization helped many of them usurp the bank money and create a culture of default bank loans. Recent government strides for flourishing the garments sector, develop the infrastructure sector, telecommunication sector, and the energy sector through public-private partnership have further nourished this class.
The challenge for the incumbent government was to develop communication infrastructure throughout the country to connect every part with each other, ease traffic tailbacks in the major cities and highways, and produce electricity to meet up the country’s energy need. Responding to these challenges, the government adopted mega-projects like the Padma Bridge, multilane highways, metro-rail, elevated expressways, flyovers in Dhaka and other major cities, and power plants. Many infrastructure and electricity plants have been completed at high costs. Inexperience and inefficiency of the project officials and corruption delayed the implementation of the projects and raised costs. The media reported time and again that the average cost of our infrastructure projects and power plants are much higher than compared to that in many other countries.
When you pursue a capitalist mode of development you have to be ready to see the rich begets rich, and in a public-private partnership the private sector scoops up the profit while the public sector bears the brunt of the loss. But history suggests that the relentless parade of capital is bound to come to a halt unless the state makes some adjustments. It has to assess how much leverage it will lend to the capitalist class.
The Finance Minister has recently presented a list of the top bank loan defaulters at the parliament. Do they include the members of the new ultra-high wealthy people? Maybe. The legitimate questions which need to be asked are: Will the state take measures against loan defaulters and the people who are amassing wealth through illegal means?
Drastic measures against the usurpers will prevent the plundering of public money and bring discipline to the financial sector but they will not reduce inequality and deter the newly rich from accumulating new assets. Welfare state policies can ensure some balance by reaching the benefits of development to the poorest. Sheikh Hasina’s government has some welfare oriented programs known as social safety net programs including monthly stipends for the elderly, housing for the poor, and financial benefits for the widows. But the number and size of the benefits are negligible to have any impact on the growing inequality in the society. More such projects with adequate allocations and efficient management are required.
[The writer is a Professor and Founder Chair of the Department of Television, Film, and Photography at the University of Dhaka and Executive Director, Governance and Policy Research Foundation (GPRF), an independent think tank.]