Political uncertainty is still lingering in the country's industrial sector. Entrepreneurs are not forthcoming in this sector. As investment trend is not positive, bank loans are contracting. According to a World Bank study, private sector investment declined by 1.2 per cent in the outgoing year. Therefore, according to the study, 7.2 per cent growth will not be achieved by the end of financial year. According to Board of Investment (BoI), investment situation improved a little in last January but went down by Tk 30 billion in February.
The indication given by the 19-party Alliance, led by the Bangladesh Nationalist Party (BNP) to go for movement and agitation after the upazila polls has adversely affected the investment environment. Normally, investors go for registration of their proposals despite many uncertainties because this helps them in getting gas and electricity permission and long-term loans. Last year, this kind of interest was not found among the investors. A BIDS (Bangladesh Institute of Development Studies) researcher recently commented that investment environment has not become fully normal. Uncertainty has not yet ended. Entrepreneurs are still suffering from indecision. Gas/power connection has not yet been up to expectation.
President of the county's apex Chamber (FBCCI) has, however, assured saying that during the last few months positive developments have taken place on the economic front, including the industrial sector. According to him, it is the responsibility of the government to give protection to the industrial sector. But business people have not yet received such assurance. Industrial establishments were shut down during the past political turmoil.
Entrepreneurs feel that although at the moment, there is no violent political programmes in the country, stability in true sense of the term has not yet returned. Businessmen are not coming forward for investment and the desired momentum is far from forthcoming. State owned commercial banks are keeping away from giving loans. These banks have negative rates of loan distribution. According to the central bank, growth in lending in the current year is 13 per cent while it was 25 per cent last year.
According to the Bangladesh Employers' Federation, about 1.0 million people have lost jobs during the last six months. Ready-made garments and transport sectors were badly affected. It has been learnt that about two hundred business delegates were supposed to visit Bangladesh prior to the last general elections but their trips were cancelled due to political unrest.
A private sector research study has shown that 6/7 years back plenty of foreign direct investment was almost in the pipeline, awaiting to be clicked depending on congenial atmosphere and suitable negotiations. But because of inappropriate policy of the government, these did not mature. At the moment, investment situation is so stagnant that Tk 900 billion is lying idle in the banks. It is suggested that the next budget should address this issue
According to the BoI, proposals for registration of investment have declined. Investment needs long term peaceful atmosphere. But this is not visible. Violence took place during upazila polls. One large political alliance has called for movement after the upazila polls. Therefore, it can not be said that atmosphere has been created for investment.
BoI sources say that there were 1758 project proposals in 2007/08. In 2012-13 the numbers have come down to 1307. In terms of percentage, investment declined by 25.65 per cent during the period. In 2007/08, proposed employment was 410,0744. In 2012/13 employment target was 250483. Fall in employment was 39.1 per cent. In October, November and December last year, foreign investment was to the tune of $100 million. In the same period of the preceding year, it was around $1150 million.
Last year, Bangladesh Bank fixed a target of 18 per cent growth in bank lending in private sector industries but utilisation was less than half. Apart from political uncertainty, power and gas crisis was also responsible for declining investment. In ten sectors including agriculture, food, textile tannery and pharmaceuticals project proposals stood at 1,096 till November last year. In the previous year, the figure was 1,655. In 2012, employment stood at 364,930. Last year it was 191,941.
Private sector is gradually losing steam. Garment industry is threatened by conspiracy. Unrest in this sector is suspected to be planned. According to Export Promotion Bureau, growth in export is slowing. Bangladesh may be losing in garment export to India, Pakistan, Sri Lanka, Vietnam, Cambodia and China.
According to a local Bengali daily, although the atmosphere is relatively violence-free, there is the fear of uncertainty. The two political alliances must work together to bring peace and stability in the country in the interest of encouraging the much needed local and foreign investment. The ruling alliance alone can not do it.
jamaluddinsyed23@yahoo.com.au
Decline in industrial investment
Syed Jamaluddin | Published: March 31, 2014 00:00:00 | Updated: November 30, 2024 06:01:00
Share if you like