Corruption, pol turmoil bar to investment
Big push needed to develop infrastructure01 September 2014 Kazi Zahidul Hasan
Economists on Sunday called upon the government to remove the existing roadblocks to investment to accelerate growth and poverty reduction.
They said, poor infrastructure and road connectivity, uneven regulatory framework and corruption have created barriers to investment and without rapid improvement in these areas, Bangladesh may not achieve the optimum economic growth targeted in its 'Perspective Plan.'
The Perspective Plan (2010-21) targets annual real GDP growth rate to rise to 8.0 per cent by 2015, and further to 10.0 per cent by 2021, significantly improving living standards of the population by drastically reducing unemployment and poverty, riding on substantially higher output and export growth.
Per capita annual income is projected to rise to about $2,000 (at constant 2013 dollars) by 2021, thus crossing the middle-income threshold. To achieve and sustain the high rates of growth, gross domestic investment will reach 38 per cent of GDP, with gross national savings at 39 per cent and headcount poverty dropping to only 13.5 per cent.
"Two principal goals of the 'Perspective Plan' are acceleration of economic growth and reduction of poverty. But these goals will not be achieved without rapid improvement in infrastructure and necessary investment," Prof Mustafizur Rahman, Executive Director of Center for Policy Dialogue, told The New Nation yesterday.
He added: A sustained democracy, good governance and energy security are also needed to achieve a higher scale of economic growth.
"Bangladesh fails to tap its economic potential mainly due to recurrence of political turmoil, gas and electricity crisis and corruption. Such odds have created roadblocks to both local and foreign investment hindering economic growth," he observed.
He further said, the government is trying to attract foreign investment when the local entrepreneurs remained hesitant to invest in new ventures in the wake of enormous infrastructure deficits. But the move of the government may not yield any positive result unless confidence is restored in the minds of local investors.
So, initiatives should be taken address these deficits in infrastructure and connectivity to lure both local and foreign investment with bringing dynamism and inter-linkages among the three broad sectors of the economy-- agriculture, industry and services-to attain a high economic growth, he noted.
"The government needs to give a big push in infrastructure development to take Bangladesh to the next level of socioeconomic development," said former central bank governor Dr Salehuddin Ahmed.
He said, the government should immediately outline a plan to put infrastructure development in top gear to bring the economy out of a difficult situation resulted from low investment coupled with infrastructure deficiency.
Besides, robust improvements are required in governance and human resource development in promoting investment as well as economic development.
When asked, Dr Salehuddin Ahmed said, "The foreign investors are much aware of the situation and may not come here for investment unless a congenial investment climate is restored with adequate infrastructure and political stability."
The growth prospect of Bangladesh economy was badly hurt by political uncertainty along with poor infrastructure, said Dr AB Mirza Azizul Islam, a noted economist of the country. To restoring momentum in economic growth, he said, the government should emphasize more on improvement on law and order situation, ensure uninterrupted energy supply to industries, and develop skilled manpower and investment-friendly climate. "Political stability should also be maintained to achieve a higher economic growth," he added.
He also suggested the government to diversify the economy, which still dominated by agriculture. "The government should sincerely work to diversify its economy with value addition on its main exports while at the same time improving the performance of its transport and logistics system," he added.
Dr AB Mirza Azizul Islam, who was an adviser of caretaker government, also said that the existing burdensome regulatory framework will have to be streamlined to facilitate the investment. "Investment, both private and public, in terms of GDP remained low in line with the Perspective Plan. It should be accelerated to attain the growth outlined in the plan," he added.