Sensitising new entrepreneurs about business realities

A move by one of the country's leading chambers, as reported by the FE last Sunday, to sensitise new entrepreneurs about investment-related operations, is certainly welcome. This particular initiative is aimed at making the 2,000 new entrepreneurs properly educated on do's and don'ts in carrying on ethical businesses. Such a training programme, being arranged by the Dhaka Chamber of Industry (DCCI), has a great educative value because of able guidance by the successful entrepreneurs who have already weathered many storms before coming to their present positions.
There is, in fact, no alternative to investment in generating jobs in a country over-burdened with unemployment and also for producing goods for meeting needs at home and abroad. But enabling conditions will have to be created first for the businesses to thrive on. Otherwise, a large chunk of bank credits, given to them, would shortly turn bad with the new businessmen becoming sick with the hefty burden of bank loans and accrued amount of related interest payment obligations. Real demand for loans is otherwise dampened now amidst the fact that the amount of non-performing loans (NPLs) is rising at an accelerated pace. It surely shocks the banking sector. Though this is partly attributed to a number of large financial scams through which billions of takas were misappropriated from banks, it is also due to the inability of many genuine borrowers to service their loans, given the dull business conditions because of political turmoil.
There is no denying that the country's quest for higher economic growth could meet setbacks if it fails to attract both domestic and international investors. Bangladesh's investment to gross domestic product (GDP) ratio has remained stagnant at 24 per cent, much below the government's Sixth Five Year Plan target, for several years now. The biggest concern for the sustainability of the growth target is the substantial shortfall on the investment front. Unless the challenges pertaining to sluggish investment activities are tackled, there is a substantial risk that the growth targets will not be achievable. Furthermore, the growth target may be adversely impacted by unpromising export growth performance as much as low level of foreign direct investment (FDI). It is also not yet certain that the USA and the European Union (EU) - Bangladesh's two biggest export destinations-would come out of the current economic crisis soon.
Against this backdrop, it will be quite tough for the country to witness investments by domestic and foreign investors crossing 30 per cent of GDP. Though public investment has increased, private -- domestic and foreign -- investments continue to be depressingly low. Infrastructural bottlenecks, slow decision-making, corruption and low skills of human resources are some of the factors that discourage higher investment in the country. Fears about political stability, on real or perceived grounds, has compounded the problems further. Prospective investors are in a 'wait-and-see' mood. Banks are sitting with excess liquidity. Low levels of real investment activities mean low employment generation and low income, both of which have, in turn, implications about poverty reduction efforts.
Bangladesh needs more investment than it gets now in order to move out of its current least-developed-country (LDC) status. But deficiencies in power, gas and basic infrastructural facilities have emerged as the major supply-side bottlenecks for industrial growth in Bangladesh. To prevent irregular power and gas supplies from continuing to affect industrial production, investment in power and gas needs to be increased.