Kazi Zahidul Hasan :
The government will face daunting challenge to revive the current investment cycle, which remains subdued over the last few years amid rising cost of business and lack of investors’ confidence, according to analysts.
They said an investment revival is unlikely to happen soon unless the government takes bold reform measures to encourage the investors.
“Stagnation in investment remains a big concern. There is an urgent need to revive the investment cycle for a balance economic growth,” Dr AB Mirza Azizul Islam, a former Finance Adviser of the Caretaker Government, told The New Nation yesterday.
He said, the current investment scenario also poses a big challenge to scale up GDP growth to 8-9 per cent a year.
“The government should take bold reform measures for boosting investment. Zero tolerance on corruption and smooth functioning of key government agencies can act as a catalyst to revive the investment cycle,” he added.
Dr AB Mirza Azizul Islam further said that it should take further steps to speed up implementation of mega infrastructure projects, FDI reforms, quick approvals and clearances of investment proposals to push investment.
“Though investment to GDP ratio improved slightly last year, mostly due to net rise in public investment. But private sector investment is yet to pick up steam for lack of confidence, affecting job creation. It could even derail Bangladesh’s growth story,” he added.
Bangladesh economy remains the fastest growing economies in the developing world, which achieved the highest ever 7.86 per cent GDP growth in the last fiscal year (2017-18), driven by strong domestic demand.
“Overall investment remains stagnant as uncertainty relating to investment is yet to be over,” Dr Salehuddin Ahmed, former Bangladesh Bank governor told The New Nation.
He said sluggish progress of reform in financial, institutional and administrative sectors, high cost of doing business, political uncertainty, lack of necessary transport infrastructure and reliable energy supply have undermined the investment prospect.
“A looming banking crisis cased by rising non-performing loans has also affected private sector investment that reflected in the latest Bangladesh Bank data,” he added.
The private sector credit growth came down to 13.20 per cent in December 2018 on a year-on-year basis from 14.01 per cent a month ago, according to the Bangladesh Bank (BB)’s latest statistics released on Thursday.
This growth was 3.60 percentage points lower than the BB’s target of 16.8 per cent for the first half of the current fiscal year.
“In fact, the credit growth in recent months has been the lowest over a long period of time as the stressed assets of the banking sector rose significantly, crippling banks’ capacity to lend,” said Dr Salehuddin Ahmed.
He also said that lower demands for loans in an election year might also cause the slow credit growth.
“Sluggish investment has posed a big challenge for the government when it made lofty promise to improve livelihood of the people by eradicating poverty,” said Dr Salehuddin Ahmed, adding, ” To upheld its promise, the government needs to create more better jobs by boosting investment and ensuring good governance.”
He also said Bangladesh has made tremendous progress in various social and economic sectors in the last ten years.
“Lack of reform acts as a major deterrent in accelerating overall investment. Slow implementation of big infrastructure projects also stalled investment,” Dr Zahid Hussain, lead economist at World Bank’s Bangladesh office, told The New Nation.
He said the main challenge for the new government is boosting the private investment, which is the single most important driver to accelerate the growth.
He said banking sector and capital market played a supportive role in boosting investment. But the current banking crisis and share market woes affect the investment.
“The government needs to make doing business easier, complete its mega-projects on a fast track, improve financial sector governance and ensure a reliable supply of electricity to improve overall investment climate, particularly private investment,” said Dr Zahid Hussain
He said, “The need of the hour is increasing private investment in the economy to remain on a high growth trajectory.”
The government will face daunting challenge to revive the current investment cycle, which remains subdued over the last few years amid rising cost of business and lack of investors’ confidence, according to analysts.
They said an investment revival is unlikely to happen soon unless the government takes bold reform measures to encourage the investors.
“Stagnation in investment remains a big concern. There is an urgent need to revive the investment cycle for a balance economic growth,” Dr AB Mirza Azizul Islam, a former Finance Adviser of the Caretaker Government, told The New Nation yesterday.
He said, the current investment scenario also poses a big challenge to scale up GDP growth to 8-9 per cent a year.
“The government should take bold reform measures for boosting investment. Zero tolerance on corruption and smooth functioning of key government agencies can act as a catalyst to revive the investment cycle,” he added.
Dr AB Mirza Azizul Islam further said that it should take further steps to speed up implementation of mega infrastructure projects, FDI reforms, quick approvals and clearances of investment proposals to push investment.
“Though investment to GDP ratio improved slightly last year, mostly due to net rise in public investment. But private sector investment is yet to pick up steam for lack of confidence, affecting job creation. It could even derail Bangladesh’s growth story,” he added.
Bangladesh economy remains the fastest growing economies in the developing world, which achieved the highest ever 7.86 per cent GDP growth in the last fiscal year (2017-18), driven by strong domestic demand.
“Overall investment remains stagnant as uncertainty relating to investment is yet to be over,” Dr Salehuddin Ahmed, former Bangladesh Bank governor told The New Nation.
He said sluggish progress of reform in financial, institutional and administrative sectors, high cost of doing business, political uncertainty, lack of necessary transport infrastructure and reliable energy supply have undermined the investment prospect.
“A looming banking crisis cased by rising non-performing loans has also affected private sector investment that reflected in the latest Bangladesh Bank data,” he added.
The private sector credit growth came down to 13.20 per cent in December 2018 on a year-on-year basis from 14.01 per cent a month ago, according to the Bangladesh Bank (BB)’s latest statistics released on Thursday.
This growth was 3.60 percentage points lower than the BB’s target of 16.8 per cent for the first half of the current fiscal year.
“In fact, the credit growth in recent months has been the lowest over a long period of time as the stressed assets of the banking sector rose significantly, crippling banks’ capacity to lend,” said Dr Salehuddin Ahmed.
He also said that lower demands for loans in an election year might also cause the slow credit growth.
“Sluggish investment has posed a big challenge for the government when it made lofty promise to improve livelihood of the people by eradicating poverty,” said Dr Salehuddin Ahmed, adding, ” To upheld its promise, the government needs to create more better jobs by boosting investment and ensuring good governance.”
He also said Bangladesh has made tremendous progress in various social and economic sectors in the last ten years.
“Lack of reform acts as a major deterrent in accelerating overall investment. Slow implementation of big infrastructure projects also stalled investment,” Dr Zahid Hussain, lead economist at World Bank’s Bangladesh office, told The New Nation.
He said the main challenge for the new government is boosting the private investment, which is the single most important driver to accelerate the growth.
He said banking sector and capital market played a supportive role in boosting investment. But the current banking crisis and share market woes affect the investment.
“The government needs to make doing business easier, complete its mega-projects on a fast track, improve financial sector governance and ensure a reliable supply of electricity to improve overall investment climate, particularly private investment,” said Dr Zahid Hussain
He said, “The need of the hour is increasing private investment in the economy to remain on a high growth trajectory.”
