Private policy think tank CPD Saturday said a relative political calm prevailing over the past one year couldn't convince the investors to make new investment decisions.
As a result, the investment-GDP (gross domestic product) ratio is unlikely to reach its desired level of 33.8 per cent in the current fiscal year 2015 to post the targeted 7.3 per cent economic growth.
The Centre for Policy Dialogue (CPD) made the observations in a report on the state-of- the economy, presented Saturday at a press meet at the CIRDAP conference room in the city.
Speaking at the function, CPD Executive Director Professor Dr Mustafizur Rahman observed there had been a peaceful environment in terms of political situation after the January 5 polls, but the uncertainty still haunts investors' minds when it comes to taking decision about new investment.
He said traditionally the post-poll years had witnessed an upswing in both private and public investment.
"But available data and information do not support the prospect of regaining momentum significantly in fiscal year 2015," Professor Rahman said, portraying a bleak scenario on the economic front.
He said for stimulating private investment and regaining growth momentum, a political environment conducive to generating investors' confidence is an imperative of the day.
"Inclusive politics ensures predictabilities and business-friendly environment," said the policy exponent in this context.
Speaking at the meet, CPD distinguished fellow Dr. Debapriya Bhattacharya said the economy remained stuck at 6.0 per cent over the past few years mainly for a lack of acceleration in the rate of private investment.
The economist dubbed the 6.0 per cent reversionary real GDP growth 'Bangla Growth' and stressed necessary steps for a breakthrough.
Bangladesh now needs 'Super Bangla Growth' like 8.0 to 10 per cent, and that presupposes acceleration of private investment, Dr Debapriya said.
Dr Bhattacharya thinks attaining even the Bangladesh Bank-estimated 6.5 per cent growth in the current fiscal year would be a daunting task for the government.
He identified three reasons behind the low private investment in the country in recent years.
First comes lack of land, infrastructure, and utilities--power and gas
The second hurdle, according to him, is lack reforms needed to modernise its services to facilitate the private investment.
He said the government took many reform initiatives in 2009-10, but it now remained far away from doing so.
And the third hurdle facing private investment is "nothing but uncertainty on the political front".
The economist, on the other hand, was critical of the rising capital flight that surged threefold in 2012 to $1.8 billion.
In this regard, the CPD cited the gimmicks of over-invoicing.
The CPD report stated that the declared prices of imported items such as base metal and articles of metal, electrical equipment parts, vehicles, aircraft, vessels and associated transport equipment are much higher than their actual value.
The situation is "graver" for import of base metal and articles of base metal that saw a growth of 595 per cent in July-November 2014 compared to the same period a year earlier, according to the CPD.
During the period, import of electrical appliances rose 134.89 per cent and vehicles, aircraft, vessels and associated transport equipment increased 44.38 per cent.
Analysing NBR (National Board of Revenue) data on the import of capital machinery reveal "suspicious growth" in imports during the July-November period, said CPD executive director Professor Rahman.
"Higher growth of industrial term loans and high imports of capital machinery and intermediate inputs do not fully correspond real investment on the ground," he told the function.
He said the imports for a large number of items are exceptionally high, and do not tally with off-take of term loans.
Dr Bhattacharya shed light on the riddle: many again bring back the siphoned-off money to show it as foreign direct investment (FDI).
He said the reliability of many economic data is on the fast decrease.
Raising his eyebrow on some data, he said the government data produced on the industrial term loan and the classified loan do not reflect the true picture.
The CPD fellow further said, "Political uncertainty still looms large in the new year, and the freedom of expression is shrinking day by day."
Professor Rahman, on the other hand, said Bangladesh thinks only of the remittance inflow, but it is not aware about remittance outflow.
"Bangladesh is the fifth-highest remittance source of India according to an Indian study," Professor Rahman pointed out.
The CPD report was critical of the growing non-performing loan in the banking sector and deceleration in the readymade garment export.
Professor Rahman said: "We've been observing weak governance in the banking sector."
The CPD said concern has been raised as regards quality of initial public offerings (IPO) and oversight of Bangladesh Securities and Exchange Commission (BSEC).
jasimharoon@yahoo.com
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