To achieve World Bank's projected growth of 6.7 per cent in the current fiscal 2015-2016 Bangladesh faces the major challenge of accelerating investment, especially in the private sector. Political stability remains another challenge for maintaining macro-economic stability that is vital for achieving higher growth rate. Presently, the investment is much below the target of 35 per cent of Gross Domestic Product (GDP) that is required for achieving 7.0Â per cent growth as is expected.
To increase competitiveness and spur growth, political stability should be ensured and cost of doing business must be brought down substantially. The local and foreign investors usually consider two things before going for investment in any country. Firstly, there must be political stability and secondly, adequate availability of reasonably priced utilities and infrastructural facilities available. The cost of fund should be less than what it is now due to higher interest rate. The businesses want adequate infrastructural facilities in addition to single digit interest on bank loans to cut cost of business.
The supply of gas and electricity remain vital for investment - both domestic and foreign. The latest information suggests that about 2000 factories are waiting to get the electricity connection. The energy ministry cannot give the definite time for gas and electricity connection. The cost of credit is rising due to delay in making the factories operational. Consequently, the banks are facing problem of bad loans as the investors cannot start business due to non-availability of electricity. The banks are sitting with idle surplus liquidity as the demand for credit for investment is shrinking; though the demand for bank credit for trading purposes has been rising. Â
The import of capital machinery is stated to be higher at 30 per cent. But in reality the machinery that is scheduled to arrive in the country is not coming. Part of the money is laundered out of the country through over invoicing. Such corruption and corruption in other areas should be eradicated to enhance investment.
However, export has been showing steady growth and the trend is quite encouraging. The foreign exchange reserve is about US$27 billion and the inflation is within manageable limit. The remittance earning is also satisfactory.
But remittance earning could be more if we could send skilled and trained workers abroad. The overseas employment ministry needs be more active in encouraging vocational training so that the country could earn more than the present US$15 billion remittance.
Another grey area in the economy is that over 200 thousand foreign workers are working in Bangladesh and about US$5.0 billion are taken out of the country by these foreign workers. They are all skilled hands employed mostly in the RMG (ready-made garment) sector. Technical people could be trained at home and the foreign workers could be discouraged and avoided to prevent outflow of foreign currencies.
To knock down poverty Bangladesh needs to create adequate jobs for its unemployed people and accelerate growth. Over two million join the Bangladesh job market every year. Our people will continue to remain unemployed if the jobs are taken by the foreigners. To avoid this requires promotion of technical education and skill development programmes at various level within the country.
 The mobilisation of domestic resources as well as encouraging Foreign Direct Investment (FDI) should be augmented. Besides, the law and order situation should remain stable so that the foreign and local investors feel safe with their investment.
Though the World Bank's projection is quite encouraging, but the achievement of this target depends on several factors. The most important is ensuring socio-political stability and practising democracy in all spheres of national life. The national consensus should be forged to show the world that Bangladesh is truly stable and truly democratic. Added to these, Bangladesh needs to further improve infrastructure facilities and ease "administrative rules" to attract more FDI.
'Grow the pie' is an expression used in macroeconomics to refer to the assertion that growing the economy of a nation as a whole creates more availability of wealth and work opportunities than does redistribution of wealth. Bangladesh needs to start its economic development very vigorously before it becomes too late. Â
The writer is a retired Professor of Economics, BCS General Education Cadre.
sarwarmdskhaled@gmail.com
Removing hurdles to investment for higher growth
Sarwar Md. Saifullah Khaled | Published: January 18, 2016 00:00:00 | Updated: February 01, 2018 00:00:00
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