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Govt eyes investment-GDP ratio at 32.8pc

Focuses on capital market for long-term funding


FE Report | June 14, 2019 00:00:00


The government has set a target to expand the country's investment-GDP (Gross Domestic Product) ratio to 32.8 in the next fiscal year (FY), 2019-20.

In the outgoing FY 2018-19, the Bangladesh Bureau of Statistics (BBS) provisional data showed that the investment-GDP ratio was 31.6 per cent.

The government has targeted to raise the private investment-GDP ratio to 24.2 in FY 20 from 23.4 in FY 19.

Besides, the public sector investment-GDP ratio will be boosted to 8.6 in FY 20 from that of 8.2 in FY 19.

The investment-GDP ratio in Bangladesh has not been increasing significantly for the last few years compared to the country's economic growth.

Finance Minister A H M Mustafa Kamal in his budget speech on Thursday, said the main focus of the budget is to create an investment-friendly environment for the private sector, and expand export trade.

Besides, it will try to ensure business-friendly tax management, bring about required reforms in the financial sector, and increase the public sector investment to take the GDP growth to a higher trajectory.

"Investment is one of the determinants of economic growth. In FY 2005-06, our investment was 26 percent of GDP. In FY 2018-19, it rose to 31.5 percent of GDP. The private sector investment grew from US$ 14.8 billion to $ 70.8 billion."

Mr Kamal said One Stop Service (OSS) has been introduced, so that investors can get different kinds of investment-related services easily and quickly.

"Investment-related services will be gradually provided in all 64 districts through One Stop Service."

The finance minister also said: "Capital market is the ideal platform to collect fund for long-term industrial investment. However, there is a trend in Bangladesh to provide long-term bank loans from short-term deposits, which is not evident in other countries."

"It creates mismatch. Banks and loan recipients become the losers eventually. We will take effective measures to encourage investors to collect long-term finance from the capital market," he added.

The minister has proposed to allow investment of undisclosed money in the economic zones and high-tech parks without raising any question on the sources of invested fund by the income tax department.

In such case, the investors will have to pay 10 per cent income tax on the invested amount.

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