Growing domestic demand new engine of growth

The central bank has identified surging domestic demand as a new engine of Bangladesh's economic growth.
"We're supporting both engines - export and domestic demand -for achieving maximum economic growth," Bangladesh Bank (BB) governor Dr Atiur Rahman said while replying to a query Thursday.
That engine is the domestic demand which fortunately can leverage our demographics, tech-savvy youth, market size, and population density, according to the BB governor.
He also said: "Then our growth will be even more robust, fuelled by two engines - export and domestic demand. To avoid any confusion, let me stress: it is not either or; it is and."
For these two engines, especially the domestic demand, to function properly, the financial system has to play a critical role: ensuring that national savings rise and are then channelled to their most productive and equitable usages, not to the privileged bidders, according to the BB governor.
"It is not only higher but also more productive investment that we are after. This will also require further deepening our financial system," Dr Rahman explained.
The central bank is strengthening financial inclusion initiatives gradually across the country aiming to increase domestic demand, SK Sur Chowdhury, deputy governor of BB, said.
"We're advising the banks and non-banking financial institutions (NBFIs) to invest more in the productive sectors including micro, small and medium enterprises for boosting domestic demand," Mr Sur Chowdhury explained.   
Besides, the central bank has adopted selective easing through judicious variations of interest rates.
"If taken together, the productive sectors are accessing low-cost financing and hence contributing substantially to the supply side capacity of the economy," the MPS said.
It also said the BB's attention to promoting inclusive, environmentally    sustainable financing is already paying off by upholding buoyancy of domestic demand and growth dynamism.
Regarding governance in the country's banking sector, the MPS said the BB has taken various steps to improve supervision so that financial frauds can be minimised.  
"Digital technology has been deployed to investigate big financial transactions and loans in order to stop the repetition of banking irregularities," it noted.
"We've already strengthened our both on-side and off-side supervision and monitoring to check irregularities along with frauds and forgery in the banking sector," Abu Hena Mohd. Razee Hassan, deputy governor of BB, said while replying to a query.
The central bank has already appointed observers to different banks as precautionary measures for ensuring good governance in the financial institutions, Mr Sur Chowdhury explained.
The central bank has so far appointed 15 observers to different commercial banks on similar grounds of aberrations-and even lending scams--to ensure good governance in the financial institutions.
Mr Razee Hassan also said Bangladesh is working to curb illicit financial flows by preventing creation of black money, addressing trade-based money laundering, and controlling domestic and cross-border tax evasion.
Rejecting the allegation over capital flight through capital machinery imports, the BB governor said higher investment by the manufactures pushed up capital machinery imports.
The BB and National Board of Revenue (NBR) are now working together to ensure realisation of export earnings, he added.  
Import of capital machinery or industrial equipment used for productions rose by 20.10 per cent to $1.38 billion during the July-November period of the FY 16 against $1.15 billion of the same period of FY 15.
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