Investors closely watching post-attack events: MCCI

Foreign investors have not turned their back on Bangladesh despite the deadly Holey Artisan restaurant attack but are closely following the developments, said a leading chamber yesterday.

“They keep their eyes on what happens next in the country,” said Metropolitan Chamber of Commerce and Industry (MCCI).

In its regular quarterly review on the economic situation in Bangladesh, the chamber said despite the deadly attacks, Bangladesh's low labour costs and efficient supply chain, especially in the readymade garment industry, remain attractive to investors.

However, the investors consider the underdeveloped infrastructure, shortage of power and energy, lack of consistency in policy matters, scarcity of industrial lands, administrative weakness of the Board of Investment, and political uncertainty as major impediments to new investment.

“The government needs to address these impediments to attract more FDI.”

The chamber said the volume of foreign direct investment received by the country is not enough for its economic development. Prospective foreign investors have adopted a 'go-slow' strategy in making fresh investments since 2013.

The review said Bangladesh's economy is progressing well, but below its true potential. Inadequate infrastructure and shortage of power and energy are now major impediments to the growth of the economy.

Major challenges include accelerating economic growth, raising private investment which is essential for achieving higher GDP growth, and containing inflation.

“There is no alternative to raising the level of investment, if Bangladesh is to attain the status of a middle income country by 2021.”

The chamber also said political harmony should be maintained in the country to achieve the government's growth and inflation targets.

The review, which covered the April-June period, said the agriculture sector performed well last fiscal year, but continuous government support with inputs and finance will be needed to sustain the sector's growth.

“Services and manufacturing sectors are also doing well but they will need government support in different fields,” it said, adding that infrastructure deficits and gas and power supply problems were undermining the performance of all productive sectors of the economy in particular.

MCCI said a shortfall in revenue collection and weak implementation of the annual development programme are currently the major worries for the government.

Job creation for the two million people joining the country's workforce every year will be a daunting task.

Quoting a study of UN Women conducted in 2014 in the UAE, the chamber said migrant female workers, especially the housemaids from Bangladesh, were working virtually under forced labour conditions.

They cannot communicate with their employers, recruiting agencies, social organisations and relevant government agencies or with the embassies. They are not even aware of the terms and conditions of their employment and their rights and privileges in the host country, it said.

The study, however, said the global demand for women workers from developing countries like Bangladesh is increasing day by day. To cope with the demand, Bangladesh needs to make its labour force ready with proper skills.

“The government should focus on practical training programmes to get the desired result,” MCCI said.   

The chamber assumes that the relatively calm political situation that currently prevails will continue in the first quarter of the present fiscal year.

Therefore, export, import and remittances will increase further, it said.