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Investment most pressing challenge for economy: CPD

Time is up for announcing specific poll date as investors require political, economic stability


FE REPORT | May 28, 2025 00:00:00


Weak investment remains the most pressing challenge facing the economy, according to the Centre for Policy Dialogue (CPD), which expects that some uncertainties might ease after the upcoming general election.

"We have not been able to stimulate investment, and this is the biggest challenge for the economy," says Dr. Mustafizur Rahman, a distinguished fellow at the CPD, a private think tank.

He made the remarks while responding to questions at a media briefing titled 'State of the Bangladesh Economy in FY24-25 (Third Reading)', organised under the CPD's flagship programme, the Independent Review of Bangladesh Development (IRBD), in the city on Tuesday.

Dr. Rahman noted that while the investment promotion agency BIDA (Bangladesh Investment Development Authority) has convened a major conference in Dhaka, such initiatives are a "necessary but not sufficient" condition to boost investment.

"There is a growing uncertainty in the economy," he said.

"Facilities that should have been offered to potential investors-such as land, infrastructure, and a functional one-stop service-have not been provided."

He said that the prolonged high rate of inflation has squeezed people's purchasing power, and that investment should be key to generating employment and boosting incomes.

Reforms must focus on strengthening institutional capacity, he said. "This has not been achieved."

However, he expressed the hope that some of the prevailing uncertainty might ease after the next general elections.

Commenting on the issue of whitening black money, Dr. Rahman said that while such provisions may continue in the upcoming budget, they are "neither economically beneficial, nor morally acceptable, and are politically problematic."

He mentioned that unreported wealth arises from both illegal activities and legally earned but undeclared income often due to policy gaps, particularly in real estate pricing.

While revising land valuation methods may help reduce unreported income, broader policy loopholes remain. Allowing money whitening, he warned, risks discouraging genuine and honest taxpayers.

Dr. Fahmida Khatun, executive director of the CPD, delivered the keynote presentation on behalf of the IRBD team, highlighting the urgent need to announce a specific date for the next general election. She added that such a broad timeframe (between December 2025 and June 2026) is no longer appropriate.

"Both domestic and foreign investors require political and economic stability to make long-term investment decisions," she said.

On public finance, Dr. Khatun called for innovative revenue mobilisation strategies, including taxing the growing digital economy and cracking down on tax evasion and illicit financial flows.

To tackle persistent inflation, she urged the government to strengthen market oversight and revise competition laws to break up monopolies and cartels.

Expanding social safety nets is also crucial to shield the vulnerable group of people from rising costs, she said.

Addressing the banking sector, she emphasised the importance of strict governance, improved loan-loss provisioning, and ending political interference in the bank management and board appointments.

Regarding capital markets, Dr. Khatun recommended greater transparency, faster reforms around Initial Public Offerings (IPOs), and stronger regulatory bodies to restore investor confidence.

Dr. Khatun also called for tighter enforcement in the banking sector, including improved loan sanctioning procedures, ensuring single borrower exposure limits, stopping repeated loan rescheduling, and strengthening internal controls at troubled banks.

She stressed the urgency of accelerating decisions by the Bangladesh Securities and Exchange Commission (BSEC) and ensuring timely implementation of recommendations from the upcoming capital market reform taskforce.

She identified five key challenges in the capital market: low-quality IPOs, irregularities in financial reporting, lack of transparency in Beneficiary Owner (BO) accounts, questionable behaviour by institutional investors, and manipulation in the secondary market.

jasimharoon@yashoo.com


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