Bangladesh's investment might face a setback in the current fiscal as capital- machinery and raw-material imports have plunged remarkably in recent months, analysts said.
After a stirring import figure until early last fiscal year (FY), 2022-23, the import of capital goods started dipping drawing a grim picture of Bangladesh's investment perspective, they added.
Bangladesh targets to uplift its investment to 34.94 per cent of gross domestic product (GDP) in the current FY2024 and 36.59 per cent in the next FY2025.
However, the investment-GDP ratio was recorded at much lower at 31.25 per cent in FY2023 against the 34-per cent target, according to the Bangladesh Bureau of Statistics (BBS).
But Bangladesh Bank (BB) data showed capital machinery import in the first two months (July-August) of FY2024 plunged by 13.4 per cent to $746.4 million against $861.9 million in the same period in FY2023.
At the same time, the import of intermediate goods, including RMG-related raw materials, also plunged during the period in question.
According to the BB data, businessmen imported intermediate goods worth $6.21 billion during the period, which was a 28.8-per cent fall from $8.72 billion worth of imports in FY2023.
Businesses and analysts say tight import policy, dollar crisis and domestic political tension have affected the import of capital machinery, a key input for boosting investment.
In FY2022 and FY2023, the country's capital machinery imports were stirring, which suddenly started to fall in the first quarter of FY2024.
According to the BB, the capital machinery imports were worth $4.85 billion in FY2023 and $4.89 billion in FY2022.
Two years ago, machinery imports were recorded at $3.71 billion in FY2020 and $3.03 billion in FY2021, revealed the central bank statistics.
Meanwhile, government statistics showed private investment declined massively in FY2023 compared to the previous fiscals.
In FY2023, provisional data of the BBS showed that the private investment-GDP ratio had dipped to 23.64 per cent from that of 24.52 per cent in FY2022.
A BB official said the import of capital machinery in quantity has not declined much, rather in value.
"We're checking every LC seriously. So, the import of almost all types of products in value had declined. But we think import in quantity has not fallen," he added.
Economists Dr Zahid Hussain said dollar crisis, tight import policy and political uncertainty surrounding the next general election are dominant reasons for a fall in the import of capital machinery and raw materials.
"I think the local and foreign direct investment in the current FY2024 will plunge further," he added.
Mohammad Hatem, managing director of MB Knit Fashion Ltd and also executive president of BKMEA, said businessmen were trying to survive with their establishments amid global and local economic fallouts.
"Let us give some time to survive. Then we will think about the expansion of our factories or about fresh investments," he told the FE.
Mr Hatem further said that they had the potential to fetch more export orders from the global market, but global economic crisis affected their business as well as expansion.
Therefore, he said, they were not thinking about the import of capital machinery now.
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