The government's move to improve the investment-GDP ratio during the current fiscal may suffer a setback as investors are shying away in view of an unrelenting political unrest, economic analysts said.
A good number of entrepreneurs -- both local and foreign -- have already put on hold their decisions on fresh investment and expansion plans for the prevailing political standoff over election issue.
If the situation continues further, they fear, it will affect investment greatly and the economic growth might be lower than the government estimates.
According to economists, Bangladesh's economy now needs at least 34.31 per cent investment as a share of gross domestic product (GDP) to help the economy grow at a pace of 7.3 per cent, a target set in the country's annual budget for the current fiscal.
The investment situation actually remained almost stagnant over the past few years, standing at 28.7 per cent of the GDP in the last fiscal year.
A concern of leading TK Group has held back a US$40 million investment plan for manufacturing sanitary wares jointly with Japan.
Deshbandhu Group, a refined sugar-plastic-cement-garment player, said they put on hold their investment worth Tk 20 billion.
BSRM, country's largest steel maker, said their planned BMRE (balancing, modernisation, rehabilitation and expansion) will be in problem for the ceaseless political programme.
These are the few that the FE consulted to gauge their predicament. Sources said there are an enormous number of such plans now facing the same fate on the grounds of non-stop transport blockade, punctuated by hartal. The BNP-led 20-party alliance has been sponsoring the programmes of agitation to press for fresh polls under an interim regime.
A Japanese delegation set for the Matarbari power plant in Cox's Bazar also postponed their scheduled trip to Bangladesh in view of the situation on the ground.
Aameir Alihussain, a director at the BSRM business house, said they have plan for the BMRE for their steel plants in Chittagong, earmarked earlier. "But this type of political programmes are frustrating us", he said.
"Definitely, we'll do it. But for this we have to wait….," Mr Aameir said.
Golam Mustafa, managing director of Deshbandhu Group, said his company plans new investment and expansion involving Tk 20 billion in 2015.
"We've planned for expansion of our existing sugar refinery in Narsingdi and cement in Sirajganj and many others…"
"All of my plans now have been put on hold -- we are observing the political developments," Mr Mustafa said.
Hasnat Md Abu Obida, a director at the TK Group, a commodity conglomerate, said they had planned to set up a sanitary-ware plant jointly with a Japanese manufacturer.
"They were supposed to sign an agreement on the joint venture with us, but they have postponed their trip on the waning political situation," Mr Obida said.
As such, economists said, Bangladesh's targeted investment is unlikely to be in place as the environment is not supportive.
They noted although the import of capital machinery, one of the key indicators for investment, increased more than 21 per cent in July-November period, it would start to fall from January.
Central bank statistics on letters of credit in terms of opening showed a fall by 0.57 percentage point in December last over the same period in 2013.
Dr Zahid Hussain, lead economist at the Dhaka office of the World Bank (WB), said Bangladesh needs 4.7 ICOR (incremental capital output ratio) to turn the economy at 7.3 per cent this fiscal year.
ICOR is a matrix that assesses the marginal amount of investment capital necessary for an entity to generate the next unit of production.
However, many local and international organisations have also forecast that Bangladesh's slow investment will lead to less than the government-estimated level of growth.
The WB in its latest forecast on Bangladesh's economy said it would expand at 6.2 per cent in the current fiscal while Bangladesh Bank set it at 6.5 per cent.
jasimharoon@yahoo.com
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