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Government needs to attract new investments for economic growth

  • Published at 10:41 pm June 4th, 2018
  • Last updated at 10:44 pm June 4th, 2018
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'In the absence of timely implementation of projects, the government’s efforts to attract foreign investors go in vain'

With the upcoming budget in mind, the government should focus on encouraging and promoting private investments, both from home and abroad, to create better employment opportunities in order to retain economic growth.

As in previous fiscal years, this year’s Foreign Direct Investment (FDI) and local investment have seen little growth.

In order to meet the criteria applied by the UN for graduation to developing country status, Bangladesh needs more investment to maintain GDP growth and other indicators such as per capita income.  

In the last fiscal year, Bangladesh recorded a 7.28% GDP growth, which is projected to rise to 7.5% in the next year.

On March 16, the UN Committee for Development Policy (CDP) declared Bangladesh’s eligibility for graduating from a Least Developed Country (LDC) to a developing country as it has fulfilled requirements for all three criteria - gross national income per capita, human assets index, and economic vulnerability index.

But to attain Sustainable Development Goals (SDGs), Bangladesh needs huge investment in different sectors to reduce unemployment and poverty.

According to private sector investors and economists, attracting investments is going to be the bigger challenge, as the current state of investment in the country is in poor shape.

They also stressed upon an appropriate fiscal and economic environment to draw in investments, and emphasized upon the need for clear directions to end bottlenecks in case of starting businesses.

In the absence of an appropriate investment environment caused by insufficient infrastructure, port congestion, and poor transportation facilities, desired investment is not flowing into the country, claimed experts.

‘Paving way for newcomers can be the key to increase investment’

While talking about the current investment scenario in the country, Research Director of Centre for Policy Dialogue (CPD) Khondaker Golam Moazzem said: “FDI is only moving forward because of the reinvestment of current investments.”

He said: “No new investments are taking place as entrepreneurs are not getting utility services such as gas and electricity connections. But paving way for newcomers might be the only key to enhancing investment income.”

Moazzem urged the government to take steps to attract new investments and create opportunities for expansion of the existing industries.

“In the absence of timely implementation of projects, the government’s efforts to attract foreign investors go in vain,” said the research director. “The government has to pressurize the implementation of projects to see they come to life.”

He added: “Actually, the focus should be given on improving the capacity for implementation, as every year, funds as well as projects remain under-utilized and unimplemented.”

‘FDI will gain momentum in the coming fiscal year’

On the other hand, Executive Chairman of Bangladesh Economic Zone Authority (Beza) Paban Chowdhury has said FDI will get momentum in the coming fiscal year as Bangladesh is now ready with Special Economic Zones (SEZs) and required infrastructure to attract investment.

“As of now, we have received investment proposals amounting to $8 billion from several business groups in different countries,” said Paban. 

Paban also talked about several economic zones which are slated to start operation from this year, including the Mirsarai Economic Zone, the first state-owned industrial enclave and the largest industrial zone in the country.

Land allocation has been completed for the Mongla Economic Zone where industries will be established by the end of this year, said the executive chairman.

Among the six private Economic Zones, four have already been completed and the work for building the rest of them will soon be done.

“As a result, FDI, as well as local investment will peak as soon as those who were allocated lands in the Economic Zones start investing,” said Paban. 

‘Without increased investment flow, Bangladesh might fail to realize its SDG objectives’

Increasing investment on infrastructural development, especially in the power and energy sector, and enhancing port, road, and highway capacities are required to attract investments from home and abroad, said Abdus Salam Murshedy, former president of Bangladesh Garment Manufacturers and Exports Association (BGMEA). 

“The government should prioritize the emerging investment sector,” said Murshedy. “It should also come up with attractive packages to lure new investments.

“Full-fledged implementation of one or two SEZs will build investors’ confidence,” said the former chairman. “If Bangladesh fails to expedite investment flow needed for creating jobs in its budgetary policies, it may not attain its SDG goal of reducing poverty.”