Falling investment trend 'challenging' for economy

---

FHM Humayan Kabir
The country's falling investment share to the gross domestic product (GDP) poses new challenge to economy to achieve double digit growth by 2017, economists said Saturday.
The overall investment share of GDP has dropped to 24.35 per cent in the outgoing fiscal 2009-10 due to shrinking public sector investment and static private sector investments, government's annual economic survey said.
According to Bangladesh Economic Review 2010, although the private sector investment-GDP ratio has boosted slightly by 0.07 percentage points, the share of public sector investment has fallen to 4.62 per cent in FY2010 from 4.70 per cent in the previous FY2009.
Economists termed the falling investment trend "challenging" for the economy as the government has targeted an increased 6.7 per cent growth in the upcoming FY2011 and 8.0 per cent by FY2014.
The Bangladesh Bureau of Statistics has reported that Bangladesh has achieved downward 5.54 per cent GDP growth in the outgoing fiscal, instead of initial target of 6.0 per cent growth.
According to government's Medium Term Macroeconomic Framework (MTMF), the investment-GDP ratio will have to be raised to 31.6 per cent to achieve eight per cent economic growth by 2013-14 fiscal.
Mustafizur Rahman, executive director of the Centre for Policy Dialogue, told the FE, adequate supply of energy and strengthening of institutional capacity of the public funds spenders are the major tasks for attracting more investment.
"If the government could not ensure energy supply and quality implementation of the public funds for developing country's ailing infrastructure, it would be very difficult to achieve the targeted growth," he said.
Mr Rahman said the government has to ensure more investment to improve the infrastructure to encourage the public investment, main engine of the country's economic growth.
He said: "I am hopeful for achieving the growth. If the government can spend the development budget in the priority sectors, power and energy development, and the investment the economic growth will pick up."
As per MTMF, the government has to boost the investment-GDP ratio to 26.5 per cent in the next fiscal 2010-11to achieve 6.7 per cent economic growth and 31.6 per cent in FY2014 for attaining 8.0 per cent growth.
Chairman of the Policy Research Institute Zaidi Sattar told the FE that the government's eight per cent economic growth target by FY2014 would be very difficult to achieve if it could not raise the public and private sector investments.
He said: "The government has set the target of attaining 8.0 per cent GDP growth by FY2014. But how it would be possible is not elaborated in the budget."
"I have doubt about the target. If smooth energy supply is not ensured and ailing infrastructure is not developed it would be difficult to achieve the growth target," Mr Sattar said.
He said that the government has to ensure 3.0 to 4.0 per cent incremental capital-output ratio every year for attaining double digit economic growth by FY2017.