Raise investment-GDP ratio to improve economic status
Bangladesh needs to accelerate its investment to gross domestic product ratio to achieve the status of an advanced economy by 2041, said a senior banker of Standard Chartered yesterday.
“Currently the investment to GDP ratio in Bangladesh is hovering around 30 percent. Definitely, it needs to be increased and it is possible to increase,” said Abrar A Anwar, CEO and managing director of Standard Chartered Malaysia.
He spoke while presenting a keynote paper at a discussion on “Gateway to growth and investment” at an international conference at Bangabandhu International Conference Centre in Dhaka, organised by Dhaka Chamber of Commerce and Industry.
When Malaysia got the Asean economic tiger status in the middle of 1990 and 2000 its investment to GDP ratio was more than 35 percent to 45 percent, although it has come down to 25 percent, Anwar said. Similarly, Vietnam's investment-to-GDP ratio stands at 35-37 percent and Indonesia's 35 percent.
“Bangladesh's economy has been one of the most consistent in the world delivering 6 percent plus GDP growth for more than a decade,” said Anwar.
The economy has been stable and resilient in the wake of global geo-political incidents and economic crisis, Anwar said.
Unfortunately, the story of Bangladesh's economic success is not very much known in the outside world, he said, adding that Bangladesh has the ability to grow faster with larger investment and quick execution of economic strategies.
Achieving the status of an advanced economy by 2041 is possible but Bangladesh's GDP size will have to be $1.7 trillion and per capita income should be over $12,000.
To achieve the target on time, the country will need an investment of $320 billion to develop infrastructures, the banker said.
Anwar said loans are available and the country's GDP versus debt is only 15 percent. Provident and gratuity funds can be used to attract investment, he said.
Bangladesh also needs a massive investment in
power, energy, technology-enabled services,
healthcare, telecoms, transportation, logistics, pharmaceuticals, manufacturing and light engineering sectors, he said.
“Bangladesh can gain competitive advantage by developing human resources.”
The country needs 9 percent GDP growth per year and $16,000 in per capita income to become an advanced economy by 2041, said Prof Shamsul Alam, a member of the General Economics Division of the Planning Commission.
Bangladesh needs to spend $8 billion for infrastructure development in a year, but it can spend only $2.5 billion now, said Alam, adding that foreign direct investment is required for infrastructure development.
Economic governance is needed and the country needs to sign free trade agreements and improve regional cooperation, he said.
Alam said project costs climb by 2 percent to 2.5 percent from the original costs because of non-execution of infrastructure projects on time.
Currently, 269 Japanese companies have operations in Bangladesh, mainly in the form of buying house and garment factories, said Taiki Koga, representative of the Japan External Trade Organisation in Dhaka.
He said many Japanese are working in the construction of new airport in Bangladesh and the Matarbari power plant. The Japanese government has provided $6 billion to the country to implement a number of projects.
The number of Japanese people working in different projects in Bangladesh fell sharply after the death of some Japanese businessmen and officials in the Holey Artisan attack in Dhaka in 2016.
Koga said Japanese people have started working in Bangladesh in full swing now.
The government should improve the quality of service at Hazrat Shahjalal International Airport and ease visa system for foreigners to allow more people to travel to Bangladesh, said Syed Nasim Manzur, managing director of Apex Footwear Ltd.
He called for stop harassing foreign investors when they seek arrival visas after reaching Bangladeshi airports as such attitude portrays a bad image of the country.
Currently 20 local pharmaceutical companies invest $700 million a year in the sector in Bangladesh, said Abdul Muktadir, chairman and managing director of Incepta Pharmaceuticals.
“The companies will be able to invest $10 billion in the next 10 years to grab more international markets.”
In Bangladesh, private and public universities are producing adequate numbers of skilled workforce to run the pharmaceuticals sector, he said, adding that the country is now more advanced in biological medicines compared to many other countries.
Of the total exports from Bangladesh, more than 90 percent are merchandises whereas the percentage in other least developed countries are 15 to 20 percent, said Masrur Reaz, senior economist at the International Finance Corporation.
So, Bangladesh has the potential to grow more in the export market worldwide, he said.
He recommended for a massive investment in infrastructure development for sustaining the economic growth.
No neighbouring country should be allowed to use the Chittagong port, Mahbubur Rahman, president of International Chamber of Commerce Bangladesh, said while moderating the discussion.
He said the capacity of the premier port of the country should be doubled. An expressway is needed between Dhaka and Chittagong as the four lanes can hardly carry the load now. Vehicular movement on the roads should be more scientific, he said.