Macroeconomy analysis of Bangladesh; Unemployment, Tax, and Inequality

1. THE CASE

6. Situation Analysis
Service Sector
Output Growth 6%
Job Growth 4%
Real GDP 6.6% New Job Growth 0.9%
Agriculture
Output Growth 3.2%
Job Growth -1.1%
Manufacturing
Output Growth 10.4%
Job Growth -1.6%
Male: Grew 0.17 Million
Female: Grew 0.92 Million
Female
Informal Sector Increased by 1.9 Million
Formal Sector Decreased by 0.1 Million
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

7. Youth Scenario
Rise of NEET in Youth Population
(age 15 to 29)
2013: 25.4%
2016-17: 29.8%
One-third of the
population is youth
Youth Unemployment Rate 8.1%
National Unemployment Rate 10.6%
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

8. Situation Analysis
Bangladesh Bureau of
Statistics found that the
income share of the richest
5% of the country rose by 57%
in 10 years, while the poorest
5% had their income reduced
by 59% in the same period
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

9. Economic Facts
The Most Commonly Shared
Development Objectives
Growth Inequality
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

10. Economic Facts
Growth, Inequality and Poverty
Alleviations are Inter-related
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

11. Gini Coefficients and Growth Rates
Name of the
Country
Year
Gini
Coefficient
Year
Gini
Coefficient
1990 – 2000 2000 – 2010
Bangladesh 1992 28.3 2010 32.1 4.8 5.9
China 1995 41.5 2009 42.1 10.6 10.8
India 1994 29.7 2010 33.9 5.9 8.0
Indonesia 1995 34.2 2010 35.6 4.2 5.3
Malaysia 1989 48.4 2009 46.2 7.0 5.0
Pakistan 1991 31.2 2005 31.2 3.8 5.1
Philippines 1994 42.9 2010 43.0 3.3 4.9
Sri Lanka 1990 30.1 2010 36.4 5.3 5.6
Thailand 1992 46.2 2010 39.4 4.2 4.5
Vietnam 1993 35.7 2006 37.8 7.9 7.5
Source: The World Bank, World Development Report and World Development Indicators, Various Issues
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

12. Growth Effect
Poor gets benefitted
from the “trickle down”
effects of growth
Public services and
lifestyle gets improved
Employment in the
growth sector
Growth boosts
Government income
Rise of labor income
Eventually pushes the
sectors that were
lagging behind
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

13. Jobless Growth
Why?
4 Major Reasons
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

14. Automation in
Manufacturing1

15. Increasing
Informal Jobs2

16. Private Sector is
Not Diversified3

17. Theoretical
Education Structure4

18. Jobless Growth - Reasons
Theoretical
Education Structure
Increasing
Informal Jobs
Automation in
Manufacturing
Private Sector is
Not Diversified
Core Issues
Lack of skilled workers + Lack of
investments in diverse sectors
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

19. Recommendations
Strategies
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

20. Recommendations
Location Based Skill
Learning Centers
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

21. Geographical Inequity
Unemployment Rate
varies from one region
to another
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

22. The Level of Inequality
Rangpur’s
unemployment rate is
7.28%
Dhaka’s
unemployment rate is
4.81%
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

23. Recommendations
Using the Strengths
of Different Regions
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

24. Unique Strengths
Dhaka
Administrations and
Management
Chittagong
Ports and Docks
Growing Tourism Industry
Sylhet
Tea Gardens and Tourism
Export Processing Zone
Rajshahi
Cheap Labor Force
Rail and Road Infrastructure
Khulna
Tourism and Jute Industry
Ship Building Yard
Barisal
Rice, Pulses and Hide Industry
Bakery and Pharmaceuticals
Rangpur
Rice, Pulses and Hide Industry
Bakery and Pharmaceuticals
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

25. Recommendations
Promoting
Polytechnic Institutes
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

26. Why people are not getting jobs?
33.3
22.2
29.6
14.8
0 5 10 15 20 25 30 35
Impractical Education System
Improper Skillsets
Not enough investment in diverse sector
Automation
Primary Research
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

27. Lack of Skilled Workers
Why?
Serious Skill Gap in Education System
6.6 million qualified people are deprived of jobs
Hardly Any Communicating Between
the Universities and Industries
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

28. Lack of Skilled Workers
But
Plenty of Opportunities in the
technical and vocational sectors
Not Adequate Graduates in this
current education system
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

29. Social and Cultural Stigma
For
Dropouts
Not for
Students of Merit
Low
Social Status
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

30. The Reality
+
Most Polytechnic graduates get jobs within
one or two years of their graduation
Many of the polytechnic graduates are
also entrepreneurs
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

31. Campaign for Perception Change
Aims at changing
the perception
regarding
polytechnic
institutes and
vocational studies
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

32. Successful Cases
12,300 Vocational
Colleges
2.7 Crore
Students
In 2014, China decided to transform
600 of its public universities into
polytechnic institutions
China’s Amazing Success
World’s Largest Vocational
Education System
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

33. Recommendations
Attract Foreign
Investors (FDI)
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

34. Progress So Far
1.83
2
2.45
2.58
2015 2016 2017 2018
Net FDI Inflow
in billions of $
FDI is
picking
up,
But slowly
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

35. Ease of Doing Business Index
Unavailability of Supply
Bangladesh is
ranked 176th out
of 190 countries
Corruption
Infrastructure Deficits
Political uncertainty
Security Concerns
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

36. Countries with Most FDI Inflows
50
58
60
60
66
68
85
144
311
0 50 100 150 200 250 300 350
France
Singapore
Brazil
Australia
Ireland
Netherlands
Hong Kong
China
United States
$, Billions
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

37. Recommendations
Creating
Entrepreneurs
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

38. Entrepreneurship
The foundation on which
our country can diversify
its products
Create More Jobs
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

39. Start Ups of Bangladesh
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

40. Entrepreneurship & Gender
Among the total students in
university level 30.03% are females
The question is what are they
doing after graduating?
Unemployment among the
female graduates is very high
which is about 2.5 times higher
than that of the male graduates
Among the employed
population of 5.95 Crore
0.7% Females
are managers
5.6% are
professionals
(QLFS) 2015-16 LFS-Quarterly Labor Force Survey-2015-16
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

41. Entrepreneurship & Gender
Women
Imbalance in Jobs/Start Ups
Man
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

42. The Obstacles
Lack of safety and
security
Location
problem
Social and family
barriers
Balancing between
family and career
Sexual Harassment/
Unfriendly Work
Environment
Lack of education
and training
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

43. Compared to male, very few females are
in managerial position. Why?
14.8
37
14.8
22.2
11
0 5 10 15 20 25 30 35 40
Sexual Harassment
Safety Issues
Lack of Skills
Social Barriers
Others
Primary Research
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

44. Do you think women get less opportunities to make
themselves competitive in the job market?
14.8
40.7
18.5
22.2
3.7
0 5 10 15 20 25 30 35 40 45
Strongly Agree
Agree
Neutral
Disagree
Strongly Disagree
Primary Research
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

45. Ways to Move Forward
Entrepreneurship
Development Training
Govt. and NGO
partnerships to create
awareness
Ease of access
to Data
Ease of access
to Loans
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

46. Entrepreneurship & Gender
Women
Balance in Jobs/Start Ups
Man
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

47. Task

48. Tax to GDP Ratio
Tax Revenue as
Share of GDP (%)
Possible with Current
Trend of 11.6%
8.5 8.7 9.1
11.6
12.2
0
2
4
6
8
10
12
14
2015 2016 2017 2018 2019
Current Tax-to-GDP
9.1%
Target by 2021
16.1%
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

49. Tax to GDP Ratio
Possible with Current Trend of 11.6%
The Global Financial
Integrity (GFI) has
recently listed
Bangladesh among
the top 30 developing
countries in terms of
illicit financial outflow
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

50. Estimated Tax Gaps in Asia Pacific Economies
7.5
6.7
6.2
5.8
4.7
3
2.1
1.8
1.8
1.5
1.3
Bangladesh
Bhutan
Afganistan
Maldives
Indonesia
Cambodia
Azerbaijan
Pakistan
China
Philippines
Malaysia
Tax Gap in %
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

51. Tax to GDP Ratio
In 2015 alone, nearly USD 6 billion went out of the country, mainly through
misinvoicing – an illicit practice adopted by some Bangladeshi exporters
According to economist Debapriya Bhattacharya,
Bangladeshis laundered money three times the amount
of foreign aid it received in 2015
From 2005 to 2014, illicit flow from Bangladesh stood at
USD 61.63 billion, which was more than Bangladesh’s
2018 budget, the largest in history
Many did not feel it safe to keep their money in the country
due to the turbulent nature of politics
1
2
3
4Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

52. Current Scenario
Concentrated on limited sectors
Highly reliant on VAT and individual taxes
Lack of admin capacity and
weakness to widen the tax net
According to CPD Researcher Director
Khondokar Golam Moazzem
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

53. Possible Causes
No record of
individuals’ income
High reliability on VAT
and individual taxes
Lack of admin
capacity
Negative perception
about tax
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

54. Policy Theme
Use a NID
Account to track
and gather
income data
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

55. Implementation
Use a NID
Account to track
and gather
income data
Mandatory update of
bank data with the
tied-in NID account
Mandatory update of
wealth holding and
adjustment data with
the NID account
Update of asset
purchase data that
has value greater
than 5,00,000 BDT
1.1
1.2
1.3
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

56. Developed Database
A developed
Database is a
must for proper
policy
implementation
Needs to enlist
people in and out of
tax net
Data has to be
properly analyzed for
the policy to be
implemented
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

57. Online Payment
The Tax payment
should be
designed to be
carried out online
Ease of payment for
the people
Removes the middle-
man from the
process
Enables the data to
come clean without
any manipulation
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

58. Primary Research
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action
What are the reasons of not giving tax?
29.6
25.9
29.6
14.8
0 5 10 15 20 25 30 35
Strong lobbying by influencing
businessmen
Perception that Tax is engulfed by
corruption
No records for individual income
Not having proper policy and law

59. Campaign for Perception Change
Social Awareness
Campaign
regarding the
necessity of tax
payment
Continuous and
Rigorous process
TVC, RDC, Print Ads,
Posters, Banners,
Seminars, Group
Gatherings, Concerts
The adoption process
should be started and
internalized from an
early age (schools)
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

60. Data Analytics and Strategic Alliances
Government
partnering up with
NGOs and private
organizations for data
and research and to
carry out operations
Proper data and
research is a must for
planning actions
Data analytics and
predictive models
are the future
Can partner up with
Light Castle,
Intelligent Machines
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

61. The Bottom-Up Approach
Incorporates the Tools
Aims for Synergy
Large Overall Impact
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

62. Feasibility
Low Investment Items
Effective and Efficient
High Payoff
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

63. Overall Effect
Rising Tax-GDP Ratio
all over Bangladesh
Situation Analysis Reasons Recommendations Tax Situation Policy Recommendation Plan of Action

64. THANK YOU