Stagnant private investment to affect economic growth: ICCB
Stagnant private investment and weak institutional capacity to implement development projects may pose as challenges for Bangladesh to achieve higher economic growth, said the International Chamber of Commerce Bangladesh (ICCB) yesterday.
It said the Bangladesh economy embraced 2017 with some challenges including declining remittance and rising nonperforming loans on the domestic front, and volatile global and Gulf region politics and a troubled European economy on the external front.
It said Bangladesh may face formidable challenges in achieving 8 percent plus GDP growth and earning the status of a middle income country.
“The foremost challenge lies with the stagnant private investment followed by weak institutional capacity to implement development projects,” said the chamber in its regular bulletin.
The chamber said, in order to step into the higher growth trajectory, Bangladesh urgently needs to reduce the average number of days required for contract enforcement and improving port facilities, among others.
Bangladesh's GDP, after almost a decade of 6 percent plus growth, saw 7.24 percent growth in FY2017.
In order to accelerate inclusive growth and reduce poverty and income inequality, Bangladesh will require a substantial increase in yearly investments from 29 percent of GDP in FY2015 to 34.4 percent by FY2020, according to Asian Development Bank.
More than $11 billion in external resources will be needed during the plan period for public sector investment.
Even though public sector investment has increased to nearly 7 percent of GDP from 5 percent several years ago, that in the private sector has remained static at 22-23 percent for over five years, said the ICCB.
It said Bangladesh has huge potential to attract more foreign direct investment as the central point of the eastern part of South Asia and a connector between South Asia and East Asia.
According to the ICCB, Bangladesh is moving forward with several big development projects, including the $3.7 billion Padma bridge, $2.7 billion metro rail, elevated expressway, flyovers, dozens of economic zones and Payra seaport.
“Falling interest rates, increasing access to finance and improvement in working conditions at garment factories have made businesses confident of taking new challenges and boosting export earnings.”
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