Press reports on the Media Briefing on State of the Bangladesh Economy in Fiscal Year 2015 (First Reading) held at CIRDAP auditorium on Saturday, 3 January 2015.
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Published in Dhaka Tribune
CPD: Low private investment, infrastructural bottlenecks, sluggish reform hindering growth
Tribune Report
He termed the existing 6% GDP growth as ‘Bangla Growth’ and said Bangladesh needed ‘Super Bangla Growth’ of 8% to 10%
About 40% entrepreneurs did not opt for fresh investment in the current fiscal year due to political uncertainty that persisted in the country centring the January 5 election, said a new study.
On December last year, the Centre for Policy Dialogue (CPD), a local think-tank, carried out the study on the present state of investment by interviewing 11 entrepreneurs and businessmen from ready-made garments, pharmaceuticals, medical services, jute, IT, printing and publishing, light engineering, plastic and construction sectors.
According to the study, 60% of the interviewees made new investment during fiscal year 2014-2015 while the rest 40% did not do so fearing political instability.
The findings of the study titled ‘State of the Bangladesh Economy in FY 2014-15 (first reading)’ was shared at a briefing at the CIRDAP auditorium in the capital yesterday.
“This indicates that some entrepreneurs continue to have uncertainty in regard to business environment,” said CPD Executive Director Mustafizur Rahman.
The report said new investment was carried out by taking loan from the financial institutions although some sectors, such as jute, did not get loan as the sector was considered as ‘non-viable’.
Moreover, production growth of these enterprises during the first half of FY15 was not very impressive with only 30% respondents mentioning a rise in production while 50% reporting the same level of production. The rest 20% of respondents said production slumped in their enterprises.
In the backdrop of relatively calm environment of the first half of FY15, private investment was expected to pick up. But data shows only a modest rise in investment, the CPD said.
“Investors were unable to take the advantage of improved political stability after the election as uncertainty still persists,” said Rahman.
“Infrastructural bottlenecks coupled with lack of reform measures have held back private investment,” he added.
“Crowding in of the private investment will also depend on the speedy implementation of the major public sector infrastructure projects where pace of implementation has been rather slow.”
“For encouraging private investment and regaining the growth momentum, a conducive political environment that generates confidence, will be the key determining factor as the economy enters into the second half of FY2015,” he said.
The CPD executive director highlighted that Bangladesh was concerned only about the remittance inflow, but it was not aware about remittance outflow and money laundering. Quoting a survey of an Indian organisation, he said Bangladesh was the fifth largest remittance source for India.
Also present in the event, CPD distinguished fellow Debapriya Bhattacharya said the economy had remained stuck at 6% over the past few years due to the sluggish private investment.
He termed the existing 6% GDP growth as ‘Bangla Growth’ and said Bangladesh needed ‘Super Bangla Growth’ like 8% to 10%. And faster private investment growth was needed for that.
About Bangladesh Bank’s GDP growth estimation of 6.5% in the current fiscal year, Debapriya said it would be a daunting challenge for the government.
The CPD fellow said political uncertainty still looms large in the new calendar year, and the room for political coexistence and freedom of expression were shrinking day by day.
Identifying traditional hindrances like power, gas, land scarcity and corruption for sluggish private investment, he said, “these are nothing but uncertainty in the political front.”
Debapriya doubted the authenticity of many economic data and questioned industrial term loan, saying the government data produced on the industrial term loan and the classified loan do not reflect the true picture.
The CPD was critical of the growing non-performing loan in the banking sector and deceleration of the ready-made garment exports.
It said growth of export earnings, an important indicator of vibrancy in the manufacturing sector, had not picked up as yet.
On revenue target, it said the budgetary targets for FY15 needed to be reviewed at the earliest, and had to be matched with the reality.
“Without significant strengthening of institutional capacity, revenue collection will pose a greater challenge for the coming fiscal year as well,” it said adding that revenue generation targets for FY15 are already under serious strain.
The think tank also raised question over the role of Bangladesh Securities and Exchange Commission in giving IPO nod in 2014 saying the quality of initial public offering was questionable.
The early trends of macroeconomic aggregates in FY15 suggested that while positive trends are recorded in terms of declining inflation, stable exchange rate, higher foreign exchange reserves and recovery of remittance growth, a number of disquieting fault lines are emerging which could undermine the macroeconomic stability, the report said.
Published in Dhaka Tribune
CPD: Over-invoicing takes toll on local industry
Tribune Report
‘Higher growth of industrial term loan and high imports of capital machineries and intermediate inputs do not fully correspond with real investment on the ground’
Rampant over-invoicing in import of a large number of goods is affecting domestic manufacturing industry, Centre for Policy Dialogue (CPD) said yesterday.
It said the declared prices of imported items such as base metal and articles of metal, electrical equipment parts, vehicles, aircraft, vessels and associated transport equipment are shown much higher than their actual value.
The situation is worst in case of imports of base metal and articles of base metal that saw a growth of 595% in July-November 2014 as compared to the same period a year earlier, according to the CPD.
During the period, the import of electrical equipment parts rose by 134.89% and vehicles, aircraft, vessels and associated transport equipment increased 44.38%.
The analysis of National Board of Revenue (NBR) data on import of capital machineries reveals suspicious growth in import during July-November period, said CPD Executive Director Mustafizur Rahman while presenting on the state of Bangladesh’s economy in FY15 at the CIRDAP auditorium.
“Higher growth of industrial term loan and high imports of capital machineries and intermediate inputs do not fully correspond with real investment on the ground,” he said.
He said the imports for a large number of items are exceptionally high, and do not tally with off-take of term loan.
Whether this is an issue of “misdeclaration” or mispricing or whether flight of capital is taking place through this is something that needs to be examined thoroughly by competent authorities, he added.
Mustafizur Rahman maintained that analysis of capital machinery import payments raises concerns about reliability of the data in view of growing questions as regards trade mispircing or deceleration leading to capital flight.
CPD distinguished fellow Debapriya Bhattacharya said investable assets have been going out of the country in the form of capital flight and on the other hand, investment remains sluggish, which is a matter of concern for the country’s manufacturing industry.
As per GFI, some $1.8bn was taken out of the country in 2012, he said, adding that the amount is larger than the foreign aid received by Bangladesh annually.
He said money was laundered in the name of capital machinery import by showing factitious price.
Even some might look for scope of capital account convertibility facility to conduct transaction of local financial assets into foreign financial assets freely, Debapriya observed.
According to a recent report of Global Financial Integrity (GFI), a Washington-based research and advocacy organisation, the amount of money has been flown out of the country through illicit means stood at $1.78bn in 2012 while it was $593m in 2011.
The annual average money laundering through manipulation of commercial invoices hit $1.31bn during a period between 2003 and 2012 in Bangladesh.
Trade misinvoicing involves deliberate manipulation of commercial invoices in order to misreport the value of a transaction, thereby illegally shifting money across international borders without detection.
According to the report, Bangladesh was ranked 51st among 145 developing countries that lost huge amount of money through siphoning.
Published in The Daily Star
Investigate huge remittance outflow to India
CPD urges govt
Star Business Report
The Centre for Policy Dialogue yesterday recommended the government should form a committee to investigate the large remittance outflows to India.
Bangladesh is now the fifth largest remittance source for India, with around $3.7 billion sent in 2013.
The number is expected to only increase in the coming years, according to Silicon India, a portal for professionals.
“This is a warning signal,” Mustafizur Rahman, executive director of CPD, said, adding that both the Board of Investment and Bangladesh Bank may want to investigate how such huge sums are flowing out of the country and into India.
The government should initiate necessary steps to curb reverse remittance flow, deal with the issue of illegal migrants and develop skilled human resources for substitution, the local think-tank said in its report on the economy’s performance so far in fiscal 2014-15.
At present, there are hundreds of thousands of Indian nationals working in the country, as per Silicon India.
Most of them work in readymade garment and textile industries and non-governmental organisations, often without proper permissions and documentations.
Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association, tipped the remittance by the industry’s Indian and Sri Lankan experts and technicians to cross the $4 billion-mark soon.
The total number of foreign technicians in the garment sector now stands at upwards of 19,000, the majority of whom are Indian, he said.
“Our universities should introduce different technical subjects for producing skilled manpower for the garment and textile sectors,” Islam added.
Published in The Daily Star
Private investment remains stagnant
CPD economic review says relatively calm political situation after last election could not ensure investors’ confidence
Staff Correspondent
Private investment has yet to pick up steam after the last national polls, as the relative political calm failed to remove investors’ uncertainty, said Centre for Policy Dialogue (CPD) yesterday.
“We expected that private investment would rise after the parliamentary election. However, investment has not increased despite political calm, economic stability and lower commodity prices in the global market,” said Debapriya Bhattacharya, distinguished fellow of CPD.
“On one hand, investment remains sluggish and on the other, a large amount of capital is siphoned off, mainly through over-invoicing. The latest amount of capital flight is higher than the net foreign aid,” he added.
The private think-tank shared these views as it released its first reading on State of Bangladesh Economy for the first half of fiscal year 2014-2015 at CIRDAP.
According to the CPD reading, reduced subsidy requirements for falling petroleum prices, increasing remittance inflows and foreign exchange reserves and stable exchange rate were good signs for the country’s economy.
But there were a number of challenges as well that included risk of revenue collection shortfall against target, sluggish export growth and rising default loan in banks, and sluggish investment scenario, the reading added.
“Stagnation in private investment is the major concern. Uncertainty relating to investment has yet to be over for dearth of confidence,” said CPD Executive Director Mustafizur Rahman.
The research organisation further said continued problems of electricity and gas supply to industries, land availability and transport infrastructure, sluggish progress of reform in financial, institutional and administrative sectors, and political uncertainty had caused the failure to pick up investment confidence.
The pace of financial, institutional and administrative reforms had also slowed in recent times, CPD observed.
“Lack of progress in reform acts as a major deterrent in accelerating economic growth,” said Debapriya, adding, political uncertainty was another factor affecting investments.
“We see that the space for political co-existence and freedom of expression are getting more squeezed since the beginning of the year. On the other side, fear of rising terrorist activities has also increased,” he said.
The CPD said the labour market got 20 lakh new entrants every year and creation of jobs for those new entrants would be difficult without acceleration of private investment and economic growth from the present cycle of 18-19 percent and 6 percent a year respectively.
“Job creation has become important against the backdrop of falling outflow of migrant workers abroad,” Debapriya observed.
He said this workforce could not be absorbed in agriculture; so, non-farm sectors should be developed to provide jobs for them and steps should be taken to lure investments.
The target of attaining 6.5 percent economic growth would be challenging without acceleration of investments, he added.
According to CPD, to stimulate private sector investment and regain the growth momentum, a conducive political environment which generates confidence in entrepreneurs, and inclusive politics that ensures predictabilities and business-friendly environment, would be key determining factors as the economy enters into the second half of FY 2015.
Debapriya termed Bangladesh’s current economic growth of 6 percent a year “new normal or Bangla rate of growth” meaning that economy would attain average 6 percent growth automatically given the present level of infrastructure and other supports.
“The main challenge is to scale up this Bangla rate of growth to super Bangla rate of 8-9 percent a year. Private investment is the single most important driver to accelerate the growth to attain that goal,” said Debapriya, also former executive director of CPD.
He said banking sector and capital market played a supportive role in boosting investment. However, banking sector, which has so far played a key role in investment financing, is struggling with rising default loans.
“Problems afflicting the banking sector, in terms of rising non-performing loan and loans of questionable quality, are likely to have adverse implications for private sector investment performance,” warned CPD.
To boost investment, CPD favours keeping prices of electricity and gas unchanged. “The cost of production should be kept lower to increase private investment,” Debapriya observed.
The CPD said the government would not require spending Tk 3,000 crore allocated for fuel subsidy owing to falling petroleum prices in the international market.
It further said total amount of subsidy requirements for electricity in FY 2015 could be around Tk 8,000-10,000 crore, adding that total allocated subsidy was sufficient to meet the current demand.
So, the government should keep away from hiking prices to protect the interests of investors and consumers, CPD suggested.
Published in The Daily Star Business
CPD denounces govt stance on banking sector
Star Business Report
The Centre for Policy Dialogue yesterday came down hard on the government for recapitalising the state banks despite their financial malpractices, and rescheduling the bad loans of Beximco Group.
The think-tank went on to term the recapitalisation, which is being done with taxpayers’ money, as ‘nationalisation of losses’ and the rescheduling ‘denationalisation of profits’.
This is not a good sign for the economy and the banking sector, Mustafizur Rahman, executive director of CPD, said at the unveiling of a report on the economic performance so far this fiscal year.
The government last week provided Tk 1,500 crore to the two most scam-hit state banks — Sonali and BASIC — to meet their large-scale capital shortfall as a result of mounting bad loans. BASIC Bank received Tk 790 crore and Sonali Tk 710 crore.
The amount came from the Tk 5,000 crore earmarked by the government in this year’s budget for recapitalisation of state banks.
This is the second year that the government has provided funds to the state-banks for their incompetency. Last fiscal year, the government gave the four state-owned commercial banks a total of Tk 4,100 crore for recapitalisation.
“With generous support from the government, the state-owned banks were able to adjust their accounts to make up for their losses created through various financial malpractices,” CPD said in the report.
While the government is injecting capital into these troubled banks in order to keep them afloat, allocation for other priority areas including social sectors remain less than adequate, it said.
Thus, recapitalisation of the banks raises questions about prioritisation of public resources, particularly when they continue to be fraught with governance challenges.
“The fact that such capital infusion has not seen any improvement in the recipient banks is rather frustrating.”
Ironically, in most cases, these incidences have occurred in collaboration with officials and directors of banks through various types of dubious practices such as by setting up fake companies, forging bank documents, documenting fake board meetings and influencing the monitoring officials.
In the state-owned banks, the senior management is appointed by the government and as a result, are not held accountable for the irregularities, the report said.
In case of scams at Sonali and BASIC, the concerned chairpersons and the directors of the board were not questioned by the authorities.
About the rescheduling of Beximco Group’s loans amounting Tk 5,269 crore, CPD said: “This is an unprecedented measure.”
Beximco sought to reschedule its loans from seven banks for repayment to 2026.
In November last year, Sonali rescheduled loans of the group amounting Tk 982.44 crore at 10 percent interest rate for 12 years till 2026, which is now awaiting approval from the Bangladesh Bank.
Inspired by Sonali, Janata has also decided to reschedule Tk 1,849 crore given as loan to five garment and textile units of Beximco Group for 11 years, till 2025 at 11 percent interest rate.
Rupali has followed suit too.
The other four banks — Agrani, National, Exim and AB — are likely to offer similar facility to the group, the report said.
“None has ever been given such a long time for repayment in the history of Bangladesh,” CPD said, citing the interest rate charged on the loans, which is far below the market rate of 13-14 percent.
“This is also a violation of rescheduling norms set by Bangladesh Bank, which says that no default loan can be rescheduled more than three times. However, Sonali Bank has so far rescheduled Beximco’s loans seven times.”
Citing Beximco’s rescheduling example, CPD went on to mention of special benefits extended to a select few in the private sector.
“This is yet another example of a biased lending decision-making. Ironically, such political favours to the chosen sections of the society further encourage lenders to engage in malpractices, which, in turn, weaken the banking sector.”
The think tank also said the concentration of outstanding loans in the hands of a few business groups indicates the high level of risk and vulnerability in the sector.
With a view to establishing discipline in the sector, the central bank has to work independently without external pressure, it said.
The think tank also criticised the private banks.
“Private commercial banks are not unscathed either. Fraudulent activities are also observed in these banks where owners and the management have been party to,” it said in the report.
Officials cannot go against the wishes of the management for fear of losing their jobs. But on the other hand, some are rewarded through high salaries for facilitating malpractices of the owners of private banks.
By and large, the banking sector suffers from supervision and oversight weaknesses, Rahman said.
“It is in a very vulnerable situation — and it is time to address these issues. But instead of doing that, we see a lot of opportunities being offered to state banks to make up their losses created through various financial malpractices,” he said.
The think tank went on to call for an independent commission for the financial sector to identify the inherent problems and the emerging challenges and make recommendations for an efficient banking system.
Published in New Age
Political uncertainty, infrastructure hurt investment in post-polls year
Says CPD, apprehends capital flight going on in various forms
The Centre for Policy Dialogue on Saturday said that the private investment in the country did not pick up to the expected level in the first post-election year because of infrastructure shortage and political uncertainty.
At a press briefing on its first report on the state of the Bangladesh economy in the fiscal year of 2014-2015 held at the CIRDAP auditorium in Dhaka, the independent think-tank also said that a conducive political environment and an inclusive politics would be the key determining factors in the second half of the fiscal year for stimulating private sector investment and regaining the GDP growth momentum.
The CPD also expressed apprehension about capital flight saying that capital flight was taking place in the forms of money laundering, trade mispricing and remittance outflow from the country.
Achieving of the revised GDP growth rate at 6.5 per cent set by the government for the year will be challenging if private investment remains sluggish, it said adding that relatively political calm did not remove investors’ uncertainty.
Increasing of private investment will be the key challenge for the government to transform the 6-per cent GDP growth to 8 per cent growth rate in the country.
It also opposed the government move to increase prices of electricity and gas right now.
‘Private investment did not get momentum during the period though national and international situation — calmness in the political arena, stability in macro-economy and fall in prices of commodity on the international markets — was favourable,’ CPD distinguished fellow Debapriya Bhattacharya said.
Traditionally, the post-election years witness upswing in private investment and economic growth all over the world and it was expected that investment in Bangladesh would also increase after January 5 elections, he said.
The CPD identified three major setbacks — traditional bottlenecks in infrastructure, electricity, gas and corruption, lack of reform measures particularly in financial sectors, and political uncertainty — for the sluggish private investment in the period.
Debapriya said that the scope of political consensus and freedom of expression were shrinking while apprehension of political violence was increasing.
CPD executive director Mustafizur Rahman said that the government needed to ensure political consensus and inclusive politics to generate confidence in entrepreneurs and increase predictabilities so that investors could go for medium- and long-term investment.
‘Current political situation could not remove uncertainty and investors’ worries. So they refrained from new investment,’ he said.
He said that a CPD perception survey found that 40 per cent entrepreneurs did not go for new investment in the year that indicated that their uncertainty over business environment while 60 per cent made new investment and 85 per cent of them carried out the investment by taking loan from financial institutions while the rest of them made it by self finance.
The share of new investment ranged from 15 per cent to 50 per cent of their existing investment, the survey showed.
Thirty per cent respondents said that production in their factories increased in the July-November period of the current fiscal year compared with that of last year while 20 per cent said it decreased and 50 per cent said it remained unchanged.
No new employment was generated in 80 per cent of the units in the period while 20 per cent respondents said that number of employees decreased in their factories, the survey showed.
The CPD also suggested that the government should form an independent banking sector reform commission to look into the anomalies, malpractics and to come up with remedial measures and strategic recommendations.
The government should also increase supervision and oversight activities on banks particularly state-owned ones to prevent scam in future, it said.
Regarding capital flight, Debapriya said that the amount of money being laundered from Bangladesh was more than total inflow of foreign aid.
‘The government should also carefully examine the remittance outflow to India to find out if citizens of that country work in Bangladesh with legal status or not,’ he said adding that in 2012 $3.8 billion remitted to India from Bangladesh.
Fearing capital flight through import of capital machinery, the CPD said that there was some doubtful growth in import of some machinery like base metals, electrical equipment parts, vehicles and aircraft.
The volume and value of the items increased tremendously compared with that of previous year and the government should examine the issue thoroughly whether there was any mispricing in trade or capital flight.
Debapriya said that many might be bringing back the laundered money in the forms of foreign investment and foreign loan.
Terming the prospect of the current fiscal year mixed, the CPD said that revenue collection, achieving export target, attracting foreign loans and grants, managing classified loans and liquidity situation would remain major challenges.
Revenue earnings may fell short of target by Tk 25,000 crore in the year, it said.
CPD additional research director Khondaker Golam Moazzem and senior research fellow Towfiqul Islam Khan spoke, among others, at the briefing.
Published in The Financial Express
CPD portrays not-so-rosy picture of economy
‘Over-invoicing’ listed as major vehicle for capital flight
FE Report
Private policy think tank CPD Saturday said a relative political calm prevailing over the past one year couldn’t convince the investors to make new investment decisions.
As a result, the investment-GDP (gross domestic product) ratio is unlikely to reach its desired level of 33.8 per cent in the current fiscal year 2015 to post the targeted 7.3 per cent economic growth.
The Centre for Policy Dialogue (CPD) made the observations in a report on the state-of- the economy, presented Saturday at a press meet at the CIRDAP conference room in the city.
Speaking at the function, CPD Executive Director Professor Dr Mustafizur Rahman observed there had been a peaceful environment in terms of political situation after the January 5 polls, but the uncertainty still haunts investors’ minds when it comes to taking decision about new investment.
He said traditionally the post-poll years had witnessed an upswing in both private and public investment.
“But available data and information do not support the prospect of regaining momentum significantly in fiscal year 2015,” Professor Rahman said, portraying a bleak scenario on the economic front.
He said for stimulating private investment and regaining growth momentum, a political environment conducive to generating investors’ confidence is an imperative of the day.
“Inclusive politics ensures predictabilities and business-friendly environment,” said the policy exponent in this context.
Speaking at the meet, CPD distinguished fellow Dr. Debapriya Bhattacharya said the economy remained stuck at 6.0 per cent over the past few years mainly for a lack of acceleration in the rate of private investment.
The economist dubbed the 6.0 per cent reversionary real GDP growth ‘Bangla Growth’ and stressed necessary steps for a breakthrough.
Bangladesh now needs ‘Super Bangla Growth’ like 8.0 to 10 per cent, and that presupposes acceleration of private investment, Dr Debapriya said.
Dr Bhattacharya thinks attaining even the Bangladesh Bank-estimated 6.5 per cent growth in the current fiscal year would be a daunting task for the government.
He identified three reasons behind the low private investment in the country in recent years.
First comes lack of land, infrastructure, and utilities–power and gas
The second hurdle, according to him, is lack reforms needed to modernise its services to facilitate the private investment.
He said the government took many reform initiatives in 2009-10, but it now remained far away from doing so.
And the third hurdle facing private investment is “nothing but uncertainty on the political front”.
The economist, on the other hand, was critical of the rising capital flight that surged threefold in 2012 to $1.8 billion.
In this regard, the CPD cited the gimmicks of over-invoicing.
The CPD report stated that the declared prices of imported items such as base metal and articles of metal, electrical equipment parts, vehicles, aircraft, vessels and associated transport equipment are much higher than their actual value.
The situation is “graver” for import of base metal and articles of base metal that saw a growth of 595 per cent in July-November 2014 compared to the same period a year earlier, according to the CPD.
During the period, import of electrical appliances rose 134.89 per cent and vehicles, aircraft, vessels and associated transport equipment increased 44.38 per cent.
Analysing NBR (National Board of Revenue) data on the import of capital machinery reveal “suspicious growth” in imports during the July-November period, said CPD executive director Professor Rahman.
“Higher growth of industrial term loans and high imports of capital machinery and intermediate inputs do not fully correspond real investment on the ground,” he told the function.
He said the imports for a large number of items are exceptionally high, and do not tally with off-take of term loans.
Dr Bhattacharya shed light on the riddle: many again bring back the siphoned-off money to show it as foreign direct investment (FDI).
He said the reliability of many economic data is on the fast decrease.
Raising his eyebrow on some data, he said the government data produced on the industrial term loan and the classified loan do not reflect the true picture.
The CPD fellow further said, “Political uncertainty still looms large in the new year, and the freedom of expression is shrinking day by day.”
Professor Rahman, on the other hand, said Bangladesh thinks only of the remittance inflow, but it is not aware about remittance outflow.
“Bangladesh is the fifth-highest remittance source of India according to an Indian study,” Professor Rahman pointed out.
The CPD report was critical of the growing non-performing loan in the banking sector and deceleration in the readymade garment export.
Professor Rahman said: “We’ve been observing weak governance in the banking sector.”
The CPD said concern has been raised as regards quality of initial public offerings (IPO) and oversight of Bangladesh Securities and Exchange Commission (BSEC).
Published in Daily Sun
More pvt investment key to higher growth: CPD
Staff Correspondent
Accelerating the economic growth from the existing around 6 percent to much needed 8 or 9 percent hinges on spurring private investments, local think tank Centre for Policy Dialogue (CPD) observed.
The private think tank came up with the observation on Saturday in its half-yearly economic analysis for the current 2014-15FY, spotting the flagging private investment as the main challenge for the country’s economy now.
It said the current pace of GDP’s 18-19 percent private investment is confining the growth rate to around 6 percent, a trend the CPD termed ‘Bangla growth rate’, adding that the country will need 25 percent private investment to achieve the required growth.
“The GDP growth remains stuck at 6 percent for years. The 6 percent growth rate can be called as Bangla growth. If we want to go to hit super Bangla growth, i.e. 8 or 9 percent, we will have to increase private investment,” CPD distinguished fellow Dr Debapriya Bhattacharya told a press briefing.
He said the private investment remains sluggish despite a peaceful political environment following the January 5 parliamentary elections. He blamed lack of reforms and infrastructures for the slowdown.
“Private investment is not getting momentum because of lack of reforms. If reforms do not take place, investment is unlikely to rise,” the economist said.
About the reforms in financial institutions, CPD Executive Director Prof Mustafizur Rahman added: “Our institutional capacity couldn’t catch up with the pace of economic development.”
Even the revised GDP growth target of 6.5 percent might not be achieved in FY15, if private investment grows by 20 percent, CPD said.
CPD also stressed on “room for political coexistence” in removing uncertainties in investment as well as in overall economy, saying political uncertainty still looms large in the new calendar year.
“Though a peaceful environment was restored after the January 5 elections, uncertainty is still there in investors’ minds and that has to be removed,” Prof Mustafizur Rahman said.
“We need to be careful so that the country doesn’t slip into political turmoil again. We need a political consensus and environment of inclusiveness,” he added.
The local think tank expressed concern over money laundering, mainly through false statement in the name of capital machinery purchase, and raised doubt about the credibility of some official data that do not reflect the real picture.
“Credibility of some government data and figures is diminishing now. For instance, the data of default loans are sometimes window dressed,” Dr Debapriya pointed out.
CPD also raised concerns over the rising non-performing loans in the banking sector, especially in the state-owned banks, which brought down SCB’s Capital Adequacy Ratio (CAR) below 10 percent, while implementation of Basel III will require 12.5 percent CAR.
Analysing first quarter’s revenue collection figures, CPD projected that overall revenue shortfall could be Tk 25,000 crore in FY15 as achieving the required target will need 40.6 percent growth in revenue collections in the last three quarters.
Regarding the possible price hike of energy, it suggested: “Government may stay away from any price adjustment for now” as the falling global fuel prices could ease the subsidy burdens.
CPD suggested the government to “export rice cautiously” as food inflation still remains high though the overall inflation is on the decline. It said the government has to think about greater food security and ensure that food subsidies do not benefit other countries.
RMG exports could rebound in the next fiscal year, CPD predicted, although apparel exports witnessed some setbacks this fiscal because of compliance issues.
In the face of falling manpower exports in Saudi Arab, a major manpower market of the country, the think thank put special emphasis on exploring other markets to enhance remittance inflow.
Besides remittance inflow, Bangladesh has to think about remittance outflow as well to avert challenges stemmed from the outflow.
Referring to an Indian study, CPD said, “Bangladesh is the fifth highest remittance source of India.” If the institutional capacity doesn’t improve, the economy will be facing various challenges because of its size and depth.”
Published in The Independent
Huge pvt investment must for ‘Super Bangla Growth’: CPD
UNB
Centre for Policy Dialogue (CPD) yesterday said Bangladesh needs to regain momentum in private investment through reforming financial institutions and removing political uncertainties if it wants to take the GDP growth to ‘Super Bangla Growth’ rate of 8 percent from the existing 6 percent, reports UNB.
The civil society think tank said the reform of the country’s financial institutions is essentials to boost private investment and check money laundering, especially siphoning off.
“The GDP growth has remained stuck at 6 percent for years. The 6 percent growth rate can be called as ‘Bangla Growth’. If we want to go to hit ‘Super Bangla Growth’…8 percent, we’ve to increase private investment,” CPD distinguished fellow Dr Debapriya Bhattacharya told a press briefing on State of the Bangladesh Economy in FY 2014-15 at Cirdap auditorium.
Dr Debapriya said attaining 8 percent growth is challenging one but not impossible. To achieve the target, the rate of private investment should be raised to 25 percent from the existing 18 percent.
He said the private investment has remained stagnant since the January-5 parliamentary elections despite a peaceful political environment, stable economy and stable international market.
The CPD fellow said political uncertainty still looms large in the new calendar year, and the room for political coexistence and freedom of expression are shrinking day by day.
“On one hand, there’s no growth in private investment and siphoning off money on the other. In 2012, $ 1.8 billion was siphoned off from Bangladesh,” he said.
Speaking at the function, CPD Executive Director Prof Mustafizur Rahman said though a peaceful environment was restored after the January-5 elections, the uncertainty is still there in investors’ minds and that has to be removed.
“We need to be careful so that the country doesn’t slip into political turmoil again. We need a political consensus and environment of inclusiveness,” he said.
About the reform of financial institutions, Prof Mustafizur Rahman said, “Our institutional capacity couldn’t catch up with the pace of economic development.”
He said Bangladesh thinks only about the remittance inflow, but it is not aware about remittance outflow. “Bangladesh is the fifth highest remittance source of India according to an Indian study. If the institutional capacity doesn’t improve, the economy will be facing various challenges because of its size and depth.”
The CPD assessment report titled ‘State of the Bangladesh Economy in FY 2014-15’ said a conducive political environment that generates confidence among entrepreneurs, and inclusive politics that ensures predictabilities and business-friendly environment, will be the key determining factor for stimulating private sector investment and regaining the growth momentum as the economy enters the second half of 2014-’15 fiscal year.
The report observed that the Bangladesh economy experienced relative macroeconomic stability in the 2014 FY, but the much-needed investment acceleration to spur GDP growth rate to a higher trajectory remained wanting.
Published in News Today
No growth in pvt investment
$1.8b siphoned off from country in 2012: CPD
Centre for Policy Dialogue (CPD) on Saturday said Bangladesh needs to regain momentum in private investment through reforming financial institutions and removing political uncertainties if it wants to take the GDP growth to ‘Super Bangla Growth’ rate of 8 percent from the existing 6 percent, reports UNB. The civil society think tank said the reform of the country’s financial institutions is essentials to boost private investment and check money laundering, especially siphoning off. “The GDP growth has remained stuck at 6 percent for years. The 6 percent growth rate can be called as ‘Bangla Growth’. If we want to go to hit ‘Super Bangla Growth’…8 percent, we’ve to increase private investment,” CPD distinguished fellow Dr Debapriya Bhattacharya told a press briefing on State of the Bangladesh Economy in FY 2014-15 at Cirdap auditorium. Dr Debapriya said attaining 8 percent growth is challenging one but not impossible. To achieve the target, the rate of private investment should be raised to 25 percent from the existing 18 percent. He said the private investment has remained stagnant since the January-5 parliamentary elections despite a peaceful political environment, stable economy and stable international market. The CPD fellow said political uncertainty still looms large in the new calendar year, and the room for political coexistence and freedom of expression are shrinking day by day. “On one hand, there’s no growth in private investment and siphoning off money on the other. In 2012, $ 1.8 billion was siphoned off from Bangladesh,” he said. Speaking at the function, CPD Executive Director Prof Mustafizur Rahman said though a peaceful environment was restored after the January-5 elections, the uncertainty is still there in investors’ minds and that has to be removed. “We need to be careful so that the country doesn’t slip into political turmoil again. We need a political consensus and environment of inclusiveness,” he said. About the reform of financial institutions, Prof Mustafizur Rahman said, “Our institutional capacity couldn’t catch up with the pace of economic development.” He said Bangladesh thinks only about the remittance inflow, but it is not aware about remittance outflow. “Bangladesh is the fifth highest remittance source of India according to an Indian study. If the institutional capacity doesn’t improve, the economy will be facing various challenges because of its size and depth.” The CPD assessment report titled ‘State of the Bangladesh Economy in FY 2014-15’ said a conducive political environment that generates confidence among entrepreneurs, and inclusive politics that ensures predictabilities and business-friendly environment, will be the key determining factor for stimulating private sector investment and regaining the growth momentum as the economy enters the second half of 2014-’15 fiscal year. The report observed that the Bangladesh economy experienced relative macroeconomic stability in the 2014 FY, but the much-needed investment acceleration to spur GDP growth rate to a higher trajectory remained wanting.