Kazi Zahidul Hasan :
The prevailing stagnation in private investment is likely to affect Bangladesh’s growth performance during this fiscal (2016-17), hindering the government’s effort to ensure a sustainable economic development, according to analysts.
They said, the country needs to turn to its
domestic demand to spur the growth, but the current level of private investment is not caring, whereas investment is prerequisite to surge the economy strongly.
According to a report of Bangladesh Bureau of Statistics (BBS), private investment as a proportion of gross domestic product (GDP) stood at 21.78 per cent during the fiscal 2015-16, down by 0.29 per cent from fiscal 2014-15.
According to a report of the UN Conference on Trade and Development (UNCTAD), the country received $1.53 billion in foreign direct investment (FDI) in 2014 compared with $1.6 billion in 2013. It also said that the lion’s share of the FDI in 2014 came in the form of reinvestment of profits earned by the foreign enterprises.
“Both domestic and foreign Investment is a key determinant of economic growth and development. But investment is facing a pitiable situation in Bangladesh affecting the economic growth,” Dr AB Mirza Azizul Islam, a leading economist of the country, told The New Nation yesterday.
He said the country’s economic growth is falling short of expectations due to lack of necessary investment.
“Investment in Bangladesh remained stagnant over the last few years mainly due to poor infrastructure, unreliable energy supply, corruption, low labour productivity, high cost of doing business, complicated tax-system, bureaucracy, and political instability,” said the renowned economist.
He also pointed out that the country’s investment promotion agencies also failed to meet the requirements of the investors creating obstacle on attracting private and foreign investment.
“The country falls behind the required investment. The situation may not improve unless a sound business climate is created by removing all the barriers to investment and restoring political stability,” he noted.
Dr AB Mirza Azizul Islam further said apparently a calm situation prevails in the country’s political arena. But this falls short of bringing back investors’ confidence. They still remain shaky to invest here and some local investors are reportedly shifting their capital in various forms to abroad due to absence of a congenial political and business climate.
“The government agencies often claim that the overall investment scenario is improving with acceleration of private sector investment. But their claim did not reflect the real story when manufacturing growth remained sluggish with entrepreneurs refraining from undertaking new ventures,” Dr Zahid Hussain, lead economist, the World Bank’s Bangladesh office, told The New Nation yesterday.
He said both foreign and domestic investment is not flourishing in Bangladesh because it has failed to promote a competitive climate for investment.
“Many see political instability as the biggest obstacle to the country’s business environment. Insecurity in the minds of the people has endangered the investment climate. But we think beside political instability there are other factors and barriers that are discouraging foreign and local investors,” said Dr Zahid Hussain. According to him, poor infrastructure, derisory land, acute shortage of power and gas for new industries are the other factors that hindering free flow of investment,
“The GDP growth target has been projected at 7.2 per cent for the current fiscal year. Achievement of this target would largely depend on substantial improvement in private investment,” he said.
The prevailing stagnation in private investment is likely to affect Bangladesh’s growth performance during this fiscal (2016-17), hindering the government’s effort to ensure a sustainable economic development, according to analysts.
They said, the country needs to turn to its
domestic demand to spur the growth, but the current level of private investment is not caring, whereas investment is prerequisite to surge the economy strongly.
According to a report of Bangladesh Bureau of Statistics (BBS), private investment as a proportion of gross domestic product (GDP) stood at 21.78 per cent during the fiscal 2015-16, down by 0.29 per cent from fiscal 2014-15.
According to a report of the UN Conference on Trade and Development (UNCTAD), the country received $1.53 billion in foreign direct investment (FDI) in 2014 compared with $1.6 billion in 2013. It also said that the lion’s share of the FDI in 2014 came in the form of reinvestment of profits earned by the foreign enterprises.
“Both domestic and foreign Investment is a key determinant of economic growth and development. But investment is facing a pitiable situation in Bangladesh affecting the economic growth,” Dr AB Mirza Azizul Islam, a leading economist of the country, told The New Nation yesterday.
He said the country’s economic growth is falling short of expectations due to lack of necessary investment.
“Investment in Bangladesh remained stagnant over the last few years mainly due to poor infrastructure, unreliable energy supply, corruption, low labour productivity, high cost of doing business, complicated tax-system, bureaucracy, and political instability,” said the renowned economist.
He also pointed out that the country’s investment promotion agencies also failed to meet the requirements of the investors creating obstacle on attracting private and foreign investment.
“The country falls behind the required investment. The situation may not improve unless a sound business climate is created by removing all the barriers to investment and restoring political stability,” he noted.
Dr AB Mirza Azizul Islam further said apparently a calm situation prevails in the country’s political arena. But this falls short of bringing back investors’ confidence. They still remain shaky to invest here and some local investors are reportedly shifting their capital in various forms to abroad due to absence of a congenial political and business climate.
“The government agencies often claim that the overall investment scenario is improving with acceleration of private sector investment. But their claim did not reflect the real story when manufacturing growth remained sluggish with entrepreneurs refraining from undertaking new ventures,” Dr Zahid Hussain, lead economist, the World Bank’s Bangladesh office, told The New Nation yesterday.
He said both foreign and domestic investment is not flourishing in Bangladesh because it has failed to promote a competitive climate for investment.
“Many see political instability as the biggest obstacle to the country’s business environment. Insecurity in the minds of the people has endangered the investment climate. But we think beside political instability there are other factors and barriers that are discouraging foreign and local investors,” said Dr Zahid Hussain. According to him, poor infrastructure, derisory land, acute shortage of power and gas for new industries are the other factors that hindering free flow of investment,
“The GDP growth target has been projected at 7.2 per cent for the current fiscal year. Achievement of this target would largely depend on substantial improvement in private investment,” he said.
