Political feud takes a toll on pvt investment flow

Jasim Uddin Haroon and Rezaul Karim

The present confrontational and volatile political scenario is affecting the country’s ability to attract investment, especially in the private sector, as observed by major industry players.

The import of capital machinery during the current fiscal year’s first seven months ending on January 31, 2013 dropped 21.59 per cent to US$ 1175 million compared to that of the same period in 2011-12, according to Bangladesh Bank statistics released Sunday.

Local and foreign investments registered with Board of Investment (BoI), the country’s investment promotional body, dropped to $12.806 million in December 2012 against $457.706 million in November 2012, according to BoI data.

The latest provisional data of the central bank showed that the private sector credit growth which had been 17.41 per cent in November last fell further to 16.55 per cent in December, 2012.

Abul Kalam, a leading entrepreneur and managing director of TK Group, said: “Definitely, this (confrontational politics) is a key worry for us in the context of investment.”

“There are lots of factors that acts as incentives for the private sector to make investment, and one is clearly political stability” Mr Kalam, who along with his elder brother Mr Tayeb, has built the country’s one of the largest commodity conglomerates TK Group, said.

“Many of us now are thinking about whether we would invest in this adverse situation this year,” Mr Kalam added.

Alihussain Akberali, another leading entrepreneur and chairman of the country’s largest steel company — BSRM — said: “The party in power and the opposition should address the problem in order to encourage investment.”

“We need investment, especially FDI, right at this moment, and should not lose opportunities,” he said.

Mr Akberali added: “The government should address the issues involving key infrastructure including improvement of services at Chittagong port.”

Md Jahangir Alam, chairman of MI Cement, said: “We do not know where is the end of this political crisis. If I knew, I would take plans accordingly.”

“The future appears to be completely bleak for me,” Mr Alam, who is also chairman of rod manufacturing company GPH Ispat, added.

According to some analysts, the total investment in the last fiscal fell short of the target by 1.4 per cent of GDP, and this shortfall is believed to have increased further in the current fiscal year.

“Lack of improvement in general economic, political and governance indicators are believed to have contributed to a significant decline in private investment in relation to gross domestic product (GDP),” Ahsan H Mansur, executive director of Policy Research Institute (PRI), said.

Mr Mansur said, a prospective investor before coming up with investment will check on competitiveness of Bangladesh’s economy and its general business environment.

“Even with its cheapest labour cost among some regional nations, Bangladesh is perceived to be quite ‘uncompetitive’ in relation to its competitors like India, China, Sri Lanka and Vietnam,” Mr Mansur added.

Source: Financial Express


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