Country Case Study: Bangladesh Bangladesh Private Sector Forum B A C K G R O U N D A N D S T R A T E G I E S

1. Country Case Study: BangladeshBangladesh Private Sector ForumB A C K G R O U N D A N D S T R A T E G I E S Mamdood Hossain Alamgir Director, Board of Investment Prime Minister’s Office, Bangladesh & Mamun Rashid CEO, Citibank N.A., Bangladesh

2. Presentation Plan • Emergence of Private Sector • The Context of BPSF • Objectives of BPSF • Structure and Participation • Outreach Strategies • Monitoring Mechanisms • Projected Results • Challenges • Participation/QA

3. . Emergence of Private Sector

4. Emergence of Private Sector • Bangladesh has successfully moved forward to market economy despite its emergence as a socialistic economy during independence in 1971. • Private Sector is becoming a vibrant force in the economy. • For the first time, country’s GDP growth is expected to reach 6.5% this year, highest growth since 1972. • For the 2nd time in the country’s history, manufacturing growth touched double digit in last quarter. • 76% of the total investment is by the Private sector and represent 18.5% of GDP. • FDI inflow significantly reached to US$ 0.8 billion in 2005.

5. Emergence of Private Sector Lets see some figures …

6. Bangladesh: Socio-Economic Indicators Consistent GDP Growth (%) Source: Bangladesh Economic Review 2004 and Bangladesh Bank

7. Bangladesh: Socio-Economic Indicators Investment as % of GDP Source: Bangladesh Economic Review 2005

8. Bangladesh : Socio-Economic Indicators Upward Industrial Trend (%) Source: Bangladesh Economic Review 2005 and ADB

9. Bangladesh : Socio-Economic Indicators Manufacturing Growth (%) Source: Bangladesh Economic Review 2005

10. Bangladesh : Socio-Economic Indicators Export Growth (Million US$) Source: Bangladesh Economic Review 2005 and EPB 2006

11. Bangladesh : Socio-Economic Indicators Actual FDI Inflow (Million US$) In Million US$ Source: World Investment Report 2005, Bangladesh Bank and BOI P= Projected, t=target

12. . The Context of BPSF

13. The Context of BPSF • Private sector participation in the policy formulation process in Bangladesh began in ‘80s, but in an ad hoc basis. • This includes consultation with the business chambers, sectoral industry associations, temporary policy fora, representation in various committees etc. • However, the recent robust growth of the private sector demands a formal strategic framework to ensure its participation in the processes.

14. The Context of BPSF • In early 2005 the Government of Bangladesh formally embarked on a long-term program of private sector development through a combination of institutional and regulatory reform, a strengthened economic zone strategy and the creation of a special economic zone. • At the centre of the process is the ongoing preparation of a large ($150-$200m) World Bank-led, multi-donor-funded PSD project which is scheduled for commencement in mid-2006. • A year-long “design phase” which includes a large number (around 30) of preparatory projects is underway and is being led by the IFC, FIAS and the SEDF.

15. The Context of BPSF • To assist in the preparation of the proposed Private Sector Development Support Project (PSDSP), the Government of Bangladesh has established several groups. • Under the Prime Minister’s Office, the Government has formed the Private Sector Development Task Force whose membership is made up of permanent secretaries and agency heads. • In addition to the PSD Task Force, the Government has also established the PSD Core Group, which consists of around 37 senior working-level civil servants.

16. The Context of BPSF • Complementing this is the Private Sector Consultative Group (PSCG), which is made up of approximately 25 leading private sector representatives. • The PSCG is continuing to supply private sector inputs to the reform process that has been initiated. • These various groups have collectively already started an ongoing series of public-private dialogue and are meeting jointly every one or two months, including in the form of dedicated working groups covering specific topics.

17. The Context of BPSF • Three Working Groups have been formed, focusing on Regulatory Reform, Special Economic Zones and Capacity Building. • The working groups are composed of members of the PSD Task Force, the PSCG and the PSD Core Group. • The Working Groups are chaired jointly by a member of the PSD Task Force and a member of the PSCG, in order to provide inputs from both groups of stakeholders. • The Working Groups have each produced a brief note on their thematic areas, and these papers have been instrumental in the design of the proposed PSDSP.

18. . Objectives of BPSF

19. Objectives of BPSF • The current mechanism for dialogue which has been established to help prepare the proposed PSDSP and to support the PSD reform agenda has proven to be an excellent platform for public-private discussions. • As a result of this extensive process, the Government has asked the Development Partners Support Group to consider establishing a more formalized and permanent mechanism for private sector-public sector dialogue.

20. . Structure and Participation

21. Structure and Participation • Possibly to be known as the Bangladesh Private Sector Forum (PSF), all of the PSD Task Force, PSD Core Group, PSCG and DPSG will be asked to play a role. • It is proposed that these groups come together to form the Private Sector Forum in the second quarter of 2006 after the bulk of the PSDSP preparation has taken place and ahead of project effectiveness. • These groups will need to be augmented by a permanent secretariat which will schedule meetings, set agendas, and follow-up on recommendations. The Prime Minister is expected to serve as patron.

22. . Outreach Strategies

23. Outreach Strategies • In order to ensure success, the PSF must incorporate the inputs of a wide and diverse range of private sector representatives. • The PSF must also ensure that it takes a national approach instead of a regional approach; therefore, private sector representatives need to be drawn from across the nation.

24. . Monitoring Mechanisms

25. Monitoring Mechanisms • The PSDSP itself will have a Monitoring and Evaluation Framework. • The PSF will be connected to the regulatory reform program of the proposed BICF and PSDSP. • Interactions of the PSF will be monitored by the members of the DPSG, through the proposed BICF. • International experts may also be brought in to the meetings of the PSF to facilitate discussions and design solutions, if requested by the Government.

26. . Projected Results

27. Projected Results • Through a process of continued, results-focused dialogue, the main targeted outcome of the PSF will be a growing Bangladeshi private sector achieved through an improved investment climate characterized by an ongoing process of regulatory reform. • The PSF will seek to develop a critical path for regulatory reform and growth based on inputs to, and recommendations from, the membership of the PSF. • The PSF will be closely aligned to the work of the proposed PSDSP and any additional technical assistance operations that may be formed to support that.

28. . Challenges

29. Challenges • Political will and commitment is a must for success. • The PSF must aim to take a nonpartisan approach, in order to ensure success amidst political change. • The recommendations of the PSF must be implemented as soon as possible, in order to ensure success. • The PSF must aim to benefit from the experiences and lessons of other countries presented at this workshop in order to be most effective.

30. P A R T I C I P A T I O N/Q&A

31. Thank You