End to political uncertainty, infra crisis key to investment

Boosting private sector investment, generating adequate employment and ensuring good governance will continue to be the major challenges in next year to achieve higher economic growth and other targets of the proposed budget for fiscal year 2016-17, economists and politicians told a dialogue on Sunday.
At a dialogue on budget organised by the Centre for Policy Dialogue at Hotel Lakeshore in Dhaka, they said that removing political uncertainly, improving the bad shape of infrastructure and providing required gas and electricity would be catalyst for attracting both domestic and foreign direct investment.
At the dialogue, CPD recommended to the government for establishing a public expenditure review commission for ensuring quality, efficiency and accountability in implementation of the next budget.
Abdur Razzaque, chairman of the parliamentary standing committee on finance ministry, said that there were two major challenges—attracting private investment and creating employment— for accelerating economic growth.
Improved infrastructure, uninterrupted gas and power supply and political stability, among others, are needed to attract both domestic and foreign direct investment, he said.
He said that good governance was also necessary for achieving the growth target.
Adviser to the BNP chairperson, also former commerce minister Amir Khosru Mahmud Chowdhury, blamed the government for exaggerating the costs of development budget projects benefiting the rent-seekers.
‘The government is spending Tk 54 crore for constructing a kilometer of four-lane road while China and India are spending only Tk 13 crore and 11 crore respectively for the work,’ he said.
The cost of Padma Bridge project also increased to US$ 6 billion from the World Bank estimation of US$ 3 billion and finally the cost will rise to US$ 9 billion, he said.
The share of public investment is increasing but where is it going and what the real investment is if the government implements the project with such high costs, he raised the question.
Time has come to decide whether the country needs democracy or not as different quarters of the government are talking about giving emphasis on development democracy, Amir Khosru Mahmud said.
Development and growth do not sustain without democracy, rule of law, human rights and freedom of press, he added.
CPD executive director Mustafizur Rahman, in his keynote presentation, said that public expenditure review commission would monitor the process of public money expenditure, how efficiently the allocation is being spent and where the money is allocated.
He said that the private investment ratio to GDP had declined to 21.8 per cent in the ongoing fiscal year from 22.1 per cent in last year while the pace of additional jobs creation slowed down to about 3 lakh per annum during July 2013 to September 2015 from 13 lakh per annum during 2010 to 2013.
Every year, around 2 million youths join the labour force, he said.
Denying the statistics, planning minister AHM Mustafa Kamal, however, said that employment generation target remained on the track.
In FY 2014-2015, a total of 2.08 million jobs were generated in the country, he said.
The health of economy remained good over the last few years on increasing GDP growth, export earnings, reserve and other macroeconomic indicators, he added.
Regarding GDP-investment ratio, he said that Malaysia, Thailand, Vietnam, Singapore and some other countries achieved higher GDP growth despite having lower level of GDP-investment ratio than Bangladesh.
So, why Bangladesh will not achieve higher growth with lower investment? he asked.
Differing with planning minister’s opinion, CPD Board of Trustees member and former finance minister M Syeduzzaman, who presided over the dialogue, said that only South Korea managed to graduate to high income country from lower income one in last thirty years.
South Korea had to invest heavily in different sectors to achieve the status, he said adding that there are also problems in investment and good governance in Bangladesh.
State minister for finance and planning MA Mannan said that the cost of land was very high in Bangladesh compared with that of China and India that increases the cost of construction in the country.
Meghna Bank managing director Nurul Amin said that there was no demand for credit for investment in real sectors despite banks have huge liquidity because of lack of infrastructure, gas and electricity and political uncertainty.
Bangladesh Bank chief economist Biru Paksha Paul denied the statement that the private sector investment was stagnant.
‘It is not true as private sector credit growth has been increasing,’ he said.
Former Member of Parliament Fazlul Azim said that private investment would not take place unless law and order situation improves, and appropriate infrastructure and favourable environment are ensured.
Former NBR chairman Abdul Mazid, Ganaswasthya Kendra founder Zafrullah Chowdhury, Bangladesh Foreign Trade Institute chief executive officer Ali Ahmed, former member of parliament SM Akram, businessmen ASM Mainuddin Monem, SM Shahidul Islam, Business Initiative Leading Development chief executive director Ferdous Ara Begum, among others, participated in the dialogue.