Slow industrialisation taking toll on national economy: UO

Country's recent slow rate of transition to a sustainable and inclusive industrialisation is causing the economy not to grow at expected level, according to Unnayan Onneshan (UO), a multidisciplinary think-tank.
The UO reveals this in its September issue of Bangladesh Economic Update-2014, said a press release Saturday.
"The process of industrialisation has been taking place in the country with a dawdling rate of transition to a sustainable and inclusive industrialisation, thereby causing the economy not to grow at expected level as well as the growth potentials not to be translated into actual," observes the UO.
In order to get rid of the current bottlenecks prevailing in the industrial sector, the research organisation called for a strategy that generates increment in the productive capacity and provides avenues for industrial growth through the farsighted adoption and effective implementation of macroeconomic policies.
Pointing to the recent decelerated rate of growth in manufacturing, it shows that contribution of manufacturing to gross domestic product (GDP) was calculated at 17.75 per cent, 18.28 per cent, 19.0 per cent and 19.45 per cent in the fiscal year (FY) 2010-11, FY 2011-12, FY 2012-13 and FY 2013-14 respectively, whereas the rate of growth was calculated at 8.68 per cent, 10.31 per cent, 9.96 per cent and 10.01 per cent in the FY 2013-14, FY 2012-13, FY 2011-12 and FY 2010-11 respectively.
In addition to the country's large dependence on agriculture for employment, low labour absorption in the industry, lack of innovation and technological advancement, and shortage of capital deepening, lack of export diversification, myopic adoption of macroeconomic policies and poor infrastructure cause the sluggishness in the industrial development, the UO says.
Referring to the increased contribution of industry sector to the country's GDP, it further says that contribution of agriculture, industry and service sectors to GDP was 33.7 per cent, 17.31 per cent and 49.62 per cent respectively in FY 1980-81, while the share stood at 16.33 per cent, 29.61 per cent and 54.05 per cent respectively in FY 2013-14.
Citing the recent decline in the rate of growth in mining and quarrying, the UO says that the sector grew by 5.22 per cent in FY 2013-14, whereas the rate was 9.35 per cent, 6.93 per cent and 3.62 per cent in FY 2012-13, FY 2011-12 and FY 2010-11 respectively.
About the electricity, gas and water that play a crucial role in industrialisation, the UO says that they were growing at a declining rate of late and the growth rate stood at 13.56 per cent, 10.58 per cent, 8.99 per cent and 7.40 per cent in FY 2010-11, FY 2011-12, FY 2012-13 and FY 2013-14 respectively.
The think-tank cautions that current political uncertainties may depress the investment situation causing the rate of growth in this sector to further decline.
Following the highest increase of 2.5 percentage points between FY 1990-91 and FY 1997-98, the rate of growth in construction was in some declining trend, the body finds. The growth rate in the sector stood at 7.21 per cent, 6.95 per cent, 8.42 per cent, 8.04 per cent and 8.56 per cent in FY 2009-10, FY 2010-11, FY 2011-12, FY 1012-13 and FY 2013-14 respectively.
The Quantum Index of Production (QIP), which is used for measuring the production performance of the manufacturing industries, shows that for medium to large-scale industries, the QIP increased to 228.43 in FY 2000-01 from 141.80 in FY 1992-93, whereas the index stood at 157.89 in FY 2010-11 and then reached 205.45 in FY 2013-14.
According to the labour force survey in 2010, the UO says the number of formal labour in manufacture is 1975, whereas the number of informal labour is 4517 which is 2.29 times bigger than that of formal labour in the sector.
Referring to decreased disbursement of industrial term-loan, the UO further shows that such disbursement stood at Tk 92.84 billion in the January-March quarter of the FY 2013-14, which is the lowest amount during the last five quarters, whereas it was Tk 105.13 billion and Tk 126.85 billion in July-September and October-December quarters of the FY 2013-14 respectively.
As a result, the growth rate in the industrial term loan disbursement stood negative at 8.94 per cent in the January-March quarter of the FY 2013-14 compared to the positive growth rate of 6.88 per cent in the October-December quarter of the same FY, it continues.  
The think-tank evinces that the total SME (small and medium enterprise) loan decreased by Tk 13.01 billion between the period of December 2013 and March 2014 and was calculated at Tk 1145.83 billion in March 2014. Consequently, the rate of growth in SME loan decreased from 6.71 per cent in December 2013 to negative 1.12 per cent in March 2014.
Indicating little addition of value by trade to the economy, the UO shows that the average import price index was 26.4 and 29.7 higher than the average export price index during 1980-85 and 2000-05 respectively. The gap between import and export price index further reached 69.9 in 2008 and then increased to 102.7 in 2013 resulting in a 46.92 increase in the gap implying trade's little addition of value to the economy.