Faruque Ahmed
At a time when Bangladesh stands at the cross roads with immense growth potentials to achieve higher economic growth, some business leaders have surprised many by speaking of their desire to make overseas investment avoiding the country’s moribund investment climate.
They have said that the country lacks necessary infrastructures to support investment while the short supply of gas and electricity also remains the biggest impediment to new investment.
These investors, who made money in this country through hard work and ingenuity, are now looking for an opportunity to invest profitably abroad. They may have a point when they talk about profitability and safety of their investment. Foreign investors are also not coming to take the advantage of the nation’s unutilized growth potentials and create jobs and income generating activities for the rising army of unemployed blaming adverse environment.
New job needed for 5750 daily!
A World Bank recently released in Dhaka said: “(M)ore than 21 million people who will enter the country’s labour market in the next one decade will make it one of the country’s greatest development challenges to provide employment to more than two million people who will join the labour force each year over the next decade.” In other words, new job for 5750 people needs to be created every day of the year.
The report titled ‘Toward New Sources of Competitiveness in Bangladesh’ said: “Only 58.1 million of the country’s 103.3 million working age people are now employed while Bangladesh needs to use its labour endowment even more intensively to increase growth and, in turn, absorb the additional labour… Bangladesh’s ambition to accelerate its growth to become a middle-income country by 2021 will largely depend on high pace of poverty reduction, and share prosperity more widely among its citizens by creating jobs for the new labour force.”
But the question is where does the money come from and if the investment risks from uncertain political situation does not disappear and lack of infrastructure facilities and energy short supply can’t be resolved, the country will fail to utilize its development potentials and more local investors will try to move out while foreign direct investment may also remain out of sight.
In free market economy investment inflow is always dictated by risk free environment and profitability. The government is failing to offer the same to local and foreign investors. In fact it is the problem of political leadership to provide the nation peaceful environment and stability. The current situation is clearly volatile and the future growth perspective appears uncertain.
Analysts believe that the country now needs a quick resolution of the hostile political environment at a time when violence is gripping the nation and terrorist attacks on foreign nationals are making the country’s investment environment more questionable. So, efforts must be made by the concerned authorities to improve the situation, facilitate local investment and plug the loopholes for massive capital flight.
Attracting investors
It should be remembered that if local investors are encouraged to invest, foreign investors and global financial institutions could regain their confidence to make investment in Bangladesh.
The WB report said the country can achieve a sustained higher economic growth by full exploitation of the knowledge, resources and export markets and its labour force. Bangladesh will need to exploit the international market more intensively to accelerate export that has already played a key role in providing gainful employment.
Report said: “Its exports have exhibited strong growth and doubled between 1995 and 2012, owing to success in garments, catering largely to the European Union and the United States. Since 2009 it has become the world’s second largest garment exporter making it unique among least developed countries (LDCs) in its high share of manufacturing in total exports, which reached 90.5 percent in 2013 compared with about 26.2 per cent for (the) LDCs.
It further said: “…Apart from existing market, newer products will also slowly emerge to penetrating to market such as China, India, and Japan and other ASEAN countries. If Bangladesh can capture 20 per cent of China’s current garment exports, its total exports would more than double in next one decade based on current parameters to create 5.4 million new jobs and 13.5 million new indirect jobs. These would be virtually enough to absorb all new entrants into the labour force over the next decade.”
Now one may question why some Bangladeshi entrepreneurs want to move their capital out to invest elsewhere? Many believe that the problem of political uncertainly and the absence of infrastructures are there, but many of these businessmen would like to take the advantage to move their unaccounted for funds – amassed through political patronization – out for safety as they don’t feel their money is safe here.
Taking out ill gotten fund?
It may mentioned here that many with close ties with the power that be were involved in swindling state-owned banks such as Sonali Bank, Basic Bnk, Bangladesh Agricultural Bank, Rajshahi Krishi Bank and others and robbed over Tk 12,000 crore and remained untraced.
Those perpetrators because of their clones to the top politicians etc remained untouched, except only a few bank officials were arrested to bluff the people. Many businessmen using political connections are routinely using fake import documents to transfer capital out of the country under the cover of paying import bills.
It is apprehended that these people in the name of making investment abroad, are looking for an opportunity to formally transfer money. It does not make sense that when lucrative investment opportunities are available locally why would anyone like to invest outside and jump into uncertainties?
Meanwhile, the government is going to launch the Seventh Five Year Plan from 2016 to 2021. Its investment outlays have been estimated at Tk 31,903 billion and the government plans to invest Tk 7,252 billion while it looks forward that the remaining fund of Tk 24,651 billion would come from private sector. Most mega projects will be implemented under public-private partnership scheme where the private sector would shoulder the biggest responsibility and profitability.
Economists say development expenditure would create the jobs and income generating activities to absorb the workforce that will enter the labour market during the plan period. Dr Salehuddin Ahmed, former Governor of Bangladesh Bank said ‘the first choice should be accelerating local investment to make the economy more vibrant and sustainable. Therefore the government must do everything quickly to remove the infrastructure bottleneck and red-tape.
Besides, there is a need for an appropriate regulatory body to monitor foreign investments. Without it opening overseas investment may turn out suicidal for the national economy. “Businessmen can misuse the facilities making shadow investment proposals paving the way for illegal fund transfer,” he apprehends.
Dr AB Mirza Azizul Islam, former adviser to the caretaker government said it may only happen at the cost of national economy. It may hurt economic growth and job creation for the unemployed within the country. It may even give cover to capital flight if not properly accounted ror, he said.
Source: Weekly Holiday
