Expedite stimulus handouts to save exporters: CPD

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FE Report
The government should accelerate handing out cash subsidies to exporters as the global crisis has started biting the export sector, the head of Centre for Policy Dialogue (CPD) said Monday.
Prof Mustafizur Rahman, executive director of CPD, said exporters need the financial lifeline, given the negative impacts of the global recession and the proven evidence of fast recovery of China, a key rival of Bangladesh.
"Cash incentive pays off. I think it will bolster exporters' ability to join the economic recovery," Dr Rahman said while presenting the centre's flagship state of the economy report in the city.
Partly aided by bailout money, Dr Rahman said China has already emerged as the world's No 1 exporter dethroning Germany and its merchandise shipment clocked almost 18 per cent growth in December.
Some 70 per cent of Bangladesh's cash subsidy claims made under the first stimulus package has already been implemented, Dr Rahman, also a visiting fellow at Yale University, said and urged the government to settle the rest in "a speedy manner."
The present government, keeping the global financial crisis in view, unveiled the first stimulus worth Tk 34 billion (US$ 488 million) in April last year, followed by a proposed $714 million in 2010 financial year.
It has also announced additional stimulus to support export-oriented apparel sector, cash incentives for yarn, shipbuilding and leather sectors and also for small and medium enterprises.
Referring to the recent creation of the proposed public-private Contributory Fund with $42 million as government contribution, the CPD top executive said the private sector should reap benefits from the facility by way of technological upgradation, human resources development and training.
He said investment scenario must be significantly re-energised, if the country wants to achieve near and medium term GDP growth.
He forecast that the country might achieve a growth of 5.5 to 6.0 per cent this fiscal, if the government overcomes the immediate challenges facing the economy.
Investment has suffered from both lack of investor confidence in view of infrastructure including power and communications and domestic uncertainties and global volatilities, Mr Rahman added.
"Inadequate power supply has emerged as the 'Achilles heels' of our industrial development," he told reporters.
A recent CPD survey has found at least 100 factories are waiting for electricity and gas connections, which the government is holding back in order to meet the current demand for electricity.
Mr Rahman said investors do rate lack of power and gas as the single most important constraint to investment in Bangladesh.
He also expressed his dismay over the slow pace of public-private partnership (PPP) initiatives and said planned investment of Tk 70 billion under this move has not materialised.
The CPD chief warned that it would be difficult to attract significant inflows of foreign investment without improving the domestic investment situation.
Inflow of foreign investment in July-October of 2009 halved to $207 million, compared with the same period a year ago, figures available with the Board of Investment (BoI) say.
Even though investment in export zones posted a 38 per cent growth to reach $90 million in July-November 2009, it was mostly concentrated in four out of eight industrial parks.
Dr Rahman also underlined the need for internal job creation as he said placements for new entrants in the job market would emerge as an uphill task this year.