Dhaka Chamber of Commerce and Industry (DCCI) recommended rapid revival of smooth credit flow to the private sector for boosting the country's economy.
It said while the economy was recovering from the pandemic repercussions, the Russia-Ukraine war heavily destabilized the global geo-economic scenario and supply system across the world, including Bangladesh.
As a result, the private-sector investment dropped and was recorded at 21.8% of the gross domestic product (GDP), against the target of 24.8%, in FY23 -- having manifold negative impacts on the economy, DCCI president Md Sameer Sattar said in a statement.
He noted that over the past decade, Bangladesh has emerged as a role model for the developing countries, achieving an average 6% plus GDP growth backed by consistent development in socioeconomic fronts.
The trade body said currently, the private sector contributes more than 80% to the GDP with 37% share of industry to the GDP.
"Furthermore, the private sector has contributed greatly to build a strong local industrialization base by creating SMEs and large businesses in diverse sectors that have strengthened and connected our local value chain with the global value chain system."
Sattar further maintained that the private sector was experiencing smooth investment until the Covid-19 pandemic and geo-economic crisis kicked off.
Due to the pandemic stress, the private sector investment to GDP ratio dropped to 21.25% in FY21, which was the lowest in 14 years.
In the first half of FY23, public sector credit growth was targeted at 43%, while private sector credit at 10.9%.
"This wide gap in targets between private and public sectors indicates and causes underperformance of private sector credit flow."
The DCCI president observed that private sector investment has reduced due to rising development expenditure, relying on borrowing from the banks and non-banking financial institutions (NBFIs), meeting the huge budget deficit, soaring inflation, and contractionary monetary policy.
In addition, increased pressure on the foreign exchange has also affected private investment to some extent.
The trade-body urged the government to consider lowering the cost of doing business, easy access to credit for micro, small and medium-sized enterprises (MSMEs), promoting import-substitute industries, continuing the austerity measures, and selecting priority-based development projects.
These focused and time-bound solutions are expected to improve the pro-business environment in the economy and cease lowering private sector credit flow in no time, it opined.
"We need to exert shared and strategic efforts to enhance the private sector credit flow for steering the economy towards a higher and inclusive growth regime as well as much-needed economic graduation in the days to come," the DCCI president added.
