7.3pc GDP growth impossible unless pvt investment raised: experts
Private investment hit a seven-year low at 21.40 per cent in the financial year 2013-14 due to ‘extreme economic mismanagement’ along with the recent political unrest, said experts. According to the latest Bangladesh Bureau of Statistics data, private investment as a proportion of gross domestic product decreased to 21.40 per cent in the FY14 from 21.70 per cent in the FY13.
The private investment-GDP ratio stood at 22.50 per cent in the FY12, 22.20 per cent in the FY11, 21.60 per cent in the FY10, 21.9 per cent in the FY09, 21.7 per cent in the FY08 and 21.01 per cent in the FY07.
The public investment-GDP ratio, however, increased to 7.3 per cent in the FY14 from 6.6 per cent in the FY13.
Due to increasing trend in public investment, the overall investment-GDP ratio increased to 28.70 per cent in the FY14 from 28.40 per cent in the FY13.
Dhaka University economics professor MA Taslim told New Age on Friday that the private investment-GDP ratio had maintained a downward trend in the recent years due to extreme economic mismanagement by the government.
The financial sector faced a number a scams in the last few years which discouraged the businesspeople to expand their business, he said.
Capital market scam which occurred in the years 2010 and 2011 hit the confidence level of the businesspeople after which the multi-level marketing company Destiny scam also put a negative impact on them, Taslim said.
‘Major financing of the private sector usually comes from the scheduled banks. The banking sector also faced huge scams in the last few years. Hallmark and Bismillah groups embezzled around Tk 5,000 crore from the banking sector’, he said.
The recent political unrest along with the economic mismanagement has brought a negative dimension on the private investment, Taslim said.
Against the backdrop, the businesspeople continuously discouraged to expand their enterprises in the recent years, he said.
The government, however, increased its public investment-GDP ratio in the period, but it failed to put positive impacts on the financial sector, Taslim said.
He said, ‘It is proved that the public fund is usually misused resulting that it fail to make vibrant the financial sector’.
The government will have to increase between 32 per cent and 33 per cent of the total investment-GDP ratio in the FY15 if it wants to achieve practically the proposed GDP target of 7.3 per cent, Taslim said.
It is a tough job as the political uncertainty is still persisting, he said.
In a post budget analysis, the country’s leading think-tank Centre for Policy dialogue on Friday said it was an impossible target to attain the 7.3 per cent GDP growth as the government would have to ensure 25 per cent private investment-GDP ratio.
The CPD said it would be needed a private investment of around Tk 75,000 crore in a single year to ensure four per cent growth in private investment-GDP growth.
Former caretaker government adviser Mirza Azizul Islam told New Age that the country was still facing political unrest as the political parties frequently called blockades in different parts of the country.
The general people are feeling anxiety due to downward trend in law and order situation, he said.
Under the circumstances, the country’s business sector is yet to rebound from an unfriendly situation, Aziz said.
For this reason, the entrepreneurs do not encourage to receive fresh initiatives to open new businesses, he said.
-With New Age input
