Khaleda Zia’s reforms reshaped economy of Bangladesh

Business Report :

With the death of former Prime Minister Begum Khaleda Zia, Bangladesh bids farewell to a leader whose legacy will remain deeply interwoven with the nation’s turbulent political evolution and bold economic transitions. Her rise from a passive political figure to one of South Asia’s most influential women reshaped the country’s direction during a crucial period of democratic restoration.
After the mass uprising of 1990, which forced the resignation of military ruler Hussain Muhammad Ershad, Bangladesh stood at a political crossroads. Institutions were weak, and the economy was burdened by years of stagnation. When Khaleda Zia assumed office in 1991 as the country’s first elected female prime minister, she faced a nation eager for reform but unsure of the path forward.
Rebuilding the Nation After Authoritarian Rule
Khaleda Zia’s first term coincided with the global rise of economic liberalization. Bangladesh needed structural shifts to break free from overreliance on aid and outdated financial controls. Her finance minister, the late M Saifur Rahman, was given unusual autonomy to pursue reforms. This partnership is now regarded as one of the most consequential political alignments in Bangladesh’s economic development.
Rahman began sweeping changes that opened up trade, modernized taxation, and encouraged private enterprise. It was a period when major economies like India were embarking on similar reforms. Bangladesh, too, stepped into a new era under Rahman’s aggressive leadership, enabled by Khaleda Zia’s political mandate.
Industrial Policy That Paved the Way for Private Sector Growth
One of the first major initiatives was the Industrial Policy of 1991. It encouraged foreign investors to bring capital and technology into Bangladesh, while giving local entrepreneurs more freedom to operate. The private sector expanded quickly, especially in small and medium industries, laying the foundation for the modern manufacturing-based economy that later turned Bangladesh into one of the world’s leading apparel exporters.
This shift altered the economic landscape permanently. Where once the state had dominated key sectors, private enterprise now became the driving engine of growth. Nearly all subsequent governments preserved this direction.
Social Reforms and Human Investment
Khaleda Zia’s first tenure also oversaw significant advances in social development. The government introduced compulsory primary education to boost school enrollment and cut dropout rates. Nationwide programs like “Food for Education” encouraged children from low-income families to attend school, while secondary education for girls was made free to tackle
gender disparity in rural communities. Poverty reduction programs, including housing schemes for the landless, helped build welfare structures that still exist today.
Together, these initiatives strengthened human capital a crucial component of Bangladesh’s later development success.
Transformative Revenue Reform Through VAT
The introduction of the Value Added Tax (VAT) in 1991 stands out as one of the boldest and most impactful reforms of Khaleda Zia’s administration. It replaced a fragmented tax system with a modern structure that boosted national revenue and reduced dependence on external assistance. VAT rapidly became the backbone of government funding, financing development projects with domestic resources for the first time in the country’s history.
Economist Dr Debapriya Bhattacharya later wrote that Bangladesh’s progress toward economic self-reliance “began with this fiscal transformation,” crediting Khaleda Zia’s political backing of Saifur Rahman for enabling the change.
A Second Term Marked by Global Integration and Financial Discipline
During her second term (2001-2006), Bangladesh engaged more deeply with global markets. Trade barriers continued to fall, financial regulations strengthened, and export sectors grew more competitive. Perhaps the most unusual and courageous decision of the time was to resist the granting of new private bank licenses a move directly countering political pressure. The central bank argued that existing institutions needed strengthening, and the government supported that view.
This discipline in the financial sector helped stabilize banking operations in the early 2000s. International recognition soon followed. In 2005, Goldman Sachs named Bangladesh among the world’s top 11 emerging economies poised for rapid future growth, alongside globally rising powers.
Contributions Acknowledged Across the Spectrum
Economists say that many structural gains achieved after 2010 including export expansion and reduced aid dependency were rooted in reforms initiated under Khaleda Zia. They argue that without those changes, Bangladesh would not have achieved its current status as a competitive manufacturing nation.
Dr Muhammad Shadat Hossain, professor of Dhaka University,Economics department noted that Saifur Rahman’s liberalization measures introduced under Khaleda Zia were instrumental in deepening Bangladesh’s integration into the global economy, and that both BNP and Awami League governments benefited from the foundation laid during the 1990s.