The next two years are going to be the best time for investment as the interest rate on loans has come down to a single digit, Finance Minister AMA Muhith said on Friday.
“I believe the rate will stay at this level for some time. We should make the best use of it,” he said at a discussion on the upcoming budget for fiscal 2016-17.
The Federation of Bangladesh Chambers of Commerce and Industry and private broadcaster NTV jointly organised the event at Sonargaon Hotel.
Commerce Minister Tofail Ahmed, former caretaker government advisers AB Mirza Azizul Islam and Wahiduddin Mahmud and businessmen attended the event moderated by FBCCI President Abdul Matlub Ahmad. Muhith's remark came after businesses demanded low-cost loans, a continuous supply of quality electricity, faster implementation of major infrastructure projects and improvements in traffic and business-friendly tax and VAT rates to boost trade and investment.
The appeal came as private investment remains sluggish despite banks sitting idle with quite large amounts of funds.
Muhith said the government does not fix the interest rate on loans. The market determines it, he said, adding that the interest rate already declined to a single digit.
Mahmud said private investment remained sluggish in the last couple of years. In the coming budget, finding ways to boost private investment will be the biggest challenge for Bangladesh, he added.
Muhith is expected to place a Tk 340,000-crore budget in parliament on June 2, taking the outlay 15 percent higher than in the current fiscal year.
Muhith said the garment industry will continue to get top priority from the government.
In addition, incentives would be given to leather and footwear, plastics, pharmaceuticals, shipbuilding, ICT and furniture industry to encourage investment in these sectors, he added.
The minister said the government has to consider the interests of the business community and poor farmers in framing the fiscal measures. For these reasons, the government must set ambitious goals, he added.
Bangladesh's budget will account for 20 percent of GDP; the ratio is one of the smallest in terms of GDP around the world, he said.
He said he would present a separate budget for mega-projects as eight such projects are running now. And four more mega projects will be added during the present government's tenure, he said. Former caretaker government adviser Mirza Azizul Islam said the projects that have been taken would play a pivotal role in speeding up the country's economic growth.
But the problem lies in implementation, he added.
“We have to allocate adequate resources for timely completion and ensuring value for money,” he said, citing delays in completion of various projects such as the Dhaka-Chittagong four-lane project.
There is no doubt that infrastructural weakness is a major barrier to accelerating private investment, he added.
The construction of the ongoing large projects would stimulate private investment, said Mustafizur Rahman, executive director of the Centre for Policy Dialogue, in a recorded interview broadcast at the programme.
He stressed the need for boosting revenue collection, bringing efficiency and enhancing the capacity of public agencies to utilise the funds timely and judiciously. The commerce minister said the government is aware of the needs and concerns of the business community. He said the government increased electricity generation to 13,000 MW from 3,000 MW after taking responsibility.
“Economic growth alone should not be the target. The next budget should focus on generating more jobs,” said Md Siddiqur Rahman, president of Bangladesh Garment Manufacturers and Exporters Association.
Apparel exports gradually recovered after the slowdown following the Rana Plaza collapse in 2013, he said. There was a dearth of investment in the sector in the last two years, he said.
Discussants also suggested environment-friendly energy generation, increased allocations for education, health and social protection and safety nets to attain sustainable development goals by 2030.