Remembering M Saifur Rahman: A change driver

Some knew M Saifur Rahman much better than I did. Some sat across the cabinet table with him. Others learned from him at a respectful distance.

When I met Manmohan Singh in Delhi in 2003, he praised Saifur Rahman’s success with VAT. I remember thinking: Here was the finance minister of more than a billion people, architect of India’s 1991 liberalisation, praising Bangladesh’s finance minister. Today, I would make a larger claim: the reform playbook Saifur Rahman developed between 1991 and 2006 is, in 2026, more relevant than ever.

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When Saifur Rahman entered the finance ministry in 1991, Bangladesh remained a state-led, controlled and aid-dependent economy. Tax-to-GDP was low, the taka was managed, state-owned banks dominated lending, loss-making enterprises depended on subsidies, and industrial policy was burdened with permits.

The Industrial Policy of 1991 opened the door to 100 percent foreign ownership and unrestricted joint ventures, helping build a private-sector-oriented economy. VAT, introduced in 1991 and operationalised in 1992, strengthened fiscal capacity and remains a major revenue source.

Banking reform was another pillar. The Bank Company Act of 1991, Financial Institutions Act of 1993 and banking reforms helped create a more disciplined financial sector. I saw Bangladesh’s banking industry learn to finance its emerging export economy.

Trade liberalisation followed. Import quotas were abolished, tariffs rationalised, and export incentives gradually reduced as competitiveness improved. Saifur Rahman wanted Bangladesh to “come up the curve and face the world”. The 2003 move to a flexible exchange rate let the taka find its market level. Both VAT and the float faced resistance, but he pushed ahead.

His political courage was also evident in two decisions: no new commercial bank licenses were issued during the 2001–06 government, and defaulting borrowers’ names were publicly disclosed despite opposition from politicians and cabinet colleagues.

Today, Bangladesh again stands at an inflection point. The post-August 2024 government and the elected government that took office in 2026 inherited depleted reserves, high inflation and a banking sector burdened by weak governance and stressed assets.

Last year I served on the large-loan restructuring scrutiny committee established by Bangladesh Bank with the finance ministry and FBCCI. What I saw was sobering: some large borrowers did not maintain proper accounts, while in other cases loans had been diverted from their intended businesses.

The cure is hard, but the principles remain familiar: discipline, transparency, governance, capital and courage.

So how do we apply Saifur Rahman’s lessons today? Broaden direct taxation without burdening compliant taxpayers; integrate TIN with NID and pursue missing return-filers. Protect Bangladesh Bank’s operational independence. Restore credible market discipline to the exchange rate. Accelerate banking reform through effective resolution mechanisms, insolvency reform, asset management companies for NPL recovery and professional, non-political bank boards with clear accountability. Avoid new commercial bank licenses unless there is genuine economic need.

Finally, restore investor confidence through predictable policy. The private sector does not need cheerleaders. It needs a referee who knows the rules and applies them equally.

We can honour Khaleda Zia and Saifur Rahman by finishing what they began: strengthening tax capacity, cleaning the banking sector and allowing the private sector to lead Bangladesh’s next phase of growth.

The writer is an economist who has worked for global banks and professional firms for more than four decades.