Political harmony needed to achieve GDP target: MCCI
Political harmony should be maintained in the country to achieve the government's economic growth and inflation targets, said the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) yesterday.
It said adequate infrastructure, energy, policy continuity, skilled manpower, political stability and investment-friendly climate are the key factors for higher economic growth.
"It is assumed that the peaceful political situation that currently prevails will continue in the coming days. Therefore, export, import, and remittances can be expected to increase."
The oldest chamber of the country made the observation in its review of the economic situation for October-December 2017.
It said the overall economic situation in the country was positive in the quarter under review as indicated by steady improvements in the major economic indicators.
"The economy is progressing well despite the presence of some risk factors such as marginal growth in remittances, slower growth in the export receipts, and a higher rate of inflation."
The country, however, experienced stable economic growth. Inflation, though a bit higher, was under control, and the exchange rate remained almost stable. Foreign exchange reserves rose to a comfortable level.
During the July‐December period, the agriculture sector performed well, but continuous government support with inputs and finance will be needed to sustain the sector's growth.
Infrastructure deficits and gas and power supply problems were undermining the performance of the manufacturing as well as the agriculture sector, said the review.
"The government will, therefore, need to adopt suitable measures to remove these bottlenecks in order to support the growth of these two important sectors."
The chamber said the services sector is doing well, but it will also need support in specific areas.
The foreign exchange reserve will somewhat fall in January and March and it is a regular annual phenomenon as the government makes payments to the Asian Clearing Union against imports.
The rate of inflation is, however, likely to go up from January because of the probable rise in some essential commodities, including fuel oil, said the chamber.
The MCCI said the government needs to improve the country's road and rail infrastructure, develop port facilities, increase power and gas production, and remove other infrastructure bottlenecks to attain faster economic growth.
At the same time, impediments such as the delay in execution of development projects, lack of skilled manpower and insufficiency of industrial land must be removed to restore the confidence of the country's business and investor community.
"There are also the challenges of rising geopolitical tensions and the Rohingya refugee crisis that will need to be met." The chamber said Bangladesh must focus on new and emerging markets such as China and Japan. Product upgradation is a must for a better price.
About the flow of foreign direct investment, the chamber said the FDI inflow to Bangladesh is low compared to many countries at a similar stage in development.
Bangladesh's low labour costs are generally believed to be attractive to foreign investors, but they still hesitate to make fresh investments because of the country's underdeveloped infrastructure, political uncertainty, and other impediments. "The government needs to address these impediments to attract more FDI."
The review said the real estate, renting and business activities performed better in FY2016-17 compared to 4.47 percent in FY2015-16.
In spite of the tremendous potential of the sector, factors such as land value distortion and absence of a secondary property market adversely affected its development.
The real estate business has of late seen some improvement thanks to property price corrections and falling interest rates on home loans, according to the chamber.