Non-budgetary measures like ensuring personal security and removing political uncertainty are crucial to put sluggish private investment and growth on right track, economists and entrepreneurs said yesterday.
Fiscal sops proposed in the budget for next financial year beginning next month are not enough to exceed 7% of GDP growth, they viewed.
The observation came at a discussion on “Budget for 2014-15: Will It Boost Growth and Investment” organised by the Economic Reporters Forum (ERF) at the national press club in Dhaka.
A panel of renowned economists and entrepreneurs took part in the discussion.
“Per-condition for accelerating economic growth is to pick up private investment,” said former finance adviser to the caretaker government AB Mirza Azizul Islam.
“But we are witnessing the government focused only to increase public investment, which has insignificant contribution to the economic growth.”
Usually, rising public investment is supposed to crowd in private investment but in our country, the story is different, said the eminent economist.
Terming the proposed budget unrealistic, he said, it lacks specific plan to attract private investment – only mentioned some infrastructure development and fiscal incentives.
“With traditional problems like shortage of land, power and gas, absence of good governance, rule of law, administrative efficiency and political stability hold back private investment.”
Professor of economics at Dhaka University MA Taslim said since 2010-11 the private investment is falling. “It is not only for traditional problems but for some undesirable incidents that took place during the period,” he said.
He said a number of factors – from share market debacle to fraudulence of multilevel marketing companies and scam in the banking sector – have affected the investment.
“Public investment is far less efficient than the private investment and output from public investment brings no meaningful result to the country's economic growth.”
Bangladesh Institute of Development Studies (BIDS) research director Zaid Bakht said Hallmark loan scam still hunts the private investment. “The situation is not yet conducive to investment,” he said.
Without setting investment-friendly political climate, it is not possible to attract private investment, he said. “The onus lies on government to put the derailed private investment back on track.”
Former Bangladesh Securities and Exchange Commission Chairman Faruq Ahmed Siddiqui said: “We are discussing much about the budget because of emerging questions of its credibility.”
From the past experience, the budgetary targets and even revised ones never came true, which stimulates question of credibility, he said. “In the long run, it is not good for the country.”
About the proposed capital gain tax, he said, it is good but not right time as the market is on recovery path from debacle in late 2010.
Founder of Bangladesh Women Chamber of Commerce and Industry and Vice Chairperson of Nitol-Niloy Group Selima Ahmad blamed bureaucratic tangle, shortage of gas, power and land for restricting the private investment. “Failure in project implementation is another barrier for investment,” she said.
CPD Additional Director Khondoker Muazzem, Ifad Group Director Tashfeen Ahmed, ERF President Sulatn Mahmud and ERF General Secretary Sajjadur Rahman also spoke.
