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Budget not investment friendly: Experts

photo by NN Photo

Former Adviser of Caretaker Government Dr ABM Mirza Azizul Islam speaking at a discussion organized by Economic Reporters\' Forum (ERF) on budget for Fy 2014-15 at the Jatiya Press Club on Sunday.

By UNB, DHAKA
09th-Jun-2014       
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The proposed budget lacks the proper steps required for removing basic obstacles facing by the investors making it difficult to overcome sluggish private investment scenario and achieve higher economic growth, leading economists observed here on Sunday.
They also tagged 'political uncertainty' and sense of insecurity for life and assets with those basic problems which might appear as a major roadblock towards reaching the investment target.
They said, the removal of the problems could help achieve the targeted 7.3 percent GDP growth in the coming fiscal year.
The country, according to the economists, needs additional investment worth Tk 75,000 crore or $9 billion within the next one year to reach the targeted higher growth, and a solution is needed in terms of the availability of land, gas, electricity and other infrastructure facilities apart from removing political uncertainty.
They, however, observed that the proposed budget contains some 'fiscal incentives' which will definitely encourage the investors to return to investment but those incentives are not adequate to address the overall investment obstacles.
Economic Reporters' Forum (ERF) arranged the discussion titled 'Budget for 2014-15: Will it boost growth and investment?' with its President Sultan Mahmud in the chair.
Eminent economist and former finance adviser to a caretaker government Dr AB Mirza Azizul Islam spoke at the discussion as the chief guest.
Research Director of Bangladesh Institute of Development Studies (BIDS) Dr Zaid Bakht, former Chairman of the then Securities and Exchange Commission Faruq Ahmed Siddique, Dhaka University Economics Department Prof Dr MA Taslim, Additional Research Director of Centre for Policy Dialogue (CPD) Dr Khondaker Golam Moazzem, Vice Chairperson of Nitol Niloy Group and founder of Bangladesh Women Chamber of Commerce and Industry (BWCCI) Selima Ahmad, Ifad Group Director Tashfeen Ahmed and ERF General Secretary Sajjadur Rahman also spoke at the post-budget discussion.
Speaking at the discussion, Mirza Aziz said, "It's not possible to give a boost to investment only with fiscal incentives. Other factors are more important. We're not seeing any specific plan or allocation for addressing those matters."
He also said, improving the overall rule of law and removing political uncertainty are also important for boosting investment.
"There're enough reasons to question whether this budget will be supportive for investment and how much that investment will help achieve the 7.3 percent growth," he added.
Zaid Bakht said there have been incentives for boosting investment.  But the issue of improving overall investment climate including electricity, gas and infrastructure issues is not well-attended. "At the end of the day, private investment will not increase without a conducive political environment. It doesn't require mentioning afresh," he said.
The economist also said the existing political stability must continue, and the political uncertainty which is still there needs to be resolved to create a political environment favourable to investment. "It's government's responsibility to create such an environment." Golam Moazzem said, the fiscal incentives proposed in the budget would encourage investors to go for fresh investment but they will face problems once they will go to the field for investment. He said there is no specific outline how gas, electricity, land and other infrastructure will be provided for the investors. "So, the target for growth and investment is ambitious," the CPD economist said mentioning that the country needs investment worth Tk 75,000 crore within the next one year. Mentioning the targets proposed in the coming budget, Faruq Ahmed said, "We're observing with concern that higher targets are being set. As a result, a credibility gap is prevailing. If it goes on, people will take budget lightly."

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