Unnayan Onneshan, an independent think-tank, has said declining trend in the inflow of remittance might put adverse impact on rural economy, causing increase in poverty.
The rate of remittance inflow declined by 6.93 per cent during the period of July-February of the current financial year 2013-14 from the corresponding period of the last FY, the organisation said in its economic update report released on Saturday.
The report showed that total inflow of remittance during July-February of the FY14 came down to $9,206.55 million from $9,891.95 million during the corresponding period of the FY13.
The remittance is one of the most significant sources of income in rural households and their 17.28 per cent of total income came from remittance in 2010, the UO said.
The report mentioned that inflow of remittance had been decreasing since the FY08 primarily because of the decrease in the labour migrations to different destinations and decline in labour demand by the Middle East countries.
The think-tank said the growth in gross domestic product would decline than the previous year due to falling investment demand-induced decreased import, declining remittance, lack of diversity in export, and unsatisfactory foreign direct investment inflow.
Continuity of contractionary monetary policy, coupled with inadequate supply of infrastructure and depressed investment demand led to decrease in imports of capital machinery and industrial raw materials in the last two financial years, resulting in declining growth in the manufacturing sector of the economy, the UO report said.
Calling for a thorough re-examination of the current trade and industrial policies to address the structural bottlenecks, the think-tank suggested for adoption of a new policy regime to enhance entrepreneurial capabilities and increased production linkages.
The organisation observes that the manufacturing sector has been undergoing a declining rate of growth since the FY11.
According to the UO report, the import payments in the FY13 were $34,084 million which decreased by 4.03 per cent as compared to $35516 million with a growth rate of 5.52 per cent in the FY12.
In the FY11, the rate of growth in manufacturing sector was 9.45 per cent, the rate decreased to 9.37 per cent and 9.34 per cent in the FY12 and the FY13 respectively it said.
Observing the dominance of readymade garment as a single product in the country’s export basket, the UO pointed out that the single-commodity export concentration represents structural weaknesses of the economy and put a risk on the path of country’s growth.
The export of readymade garments reached $12,233.23 million comprising 81.7 per cent of total export earnings during July-February of the current FY compared to $10,225.68 million comprising 80.2 per cent of total export earnings during the corresponding period of the last FY, the report mentioned.
According to the report, export earnings from raw jute and jute goods, frozen food and leather fetched $527.38 million, $354.88 million and $321.01 million respectively during July-February of the FY14, while the earnings were $609.81 million, $259.52 million and $210.3 million respectively during the corresponding period of the FY13.
Despite increasing the amount the flow of FDI of Bangladesh increased by an irregular trend over the last 15 years and it is still lower compared to other Asian countries, said the think-tank.
In the FY12, inflow of FDI increased to $1,194.88 million with 53.38 per cent higher than that of the previous fiscal year, it said.
During the same period, major competitive countries like India, Indonesia, Vietnam and Pakistan, however, received FDI inflow of $32,000 million, $19,000 million, $7,000 million and $1,300 million respectively, the think-tank said.
Lack of infrastructural facilities and recent political instabilities and uncertainties were the causes of inadequate inflows of FDI in Bangladesh in compared with other countries of same economic characteristics, the UO said.
-With New Age input
