Published in The Financial Express on Thursday, 1 January 2015.
Luring investment could prove a daunting task in 2015: Experts
Jasim Uddin Haroon
Creating an environment conducive to doing business by the entrepreneurs and netting higher private investment as its dividend might prove to be the most daunting challenges for the economy in 2015.
This is what the most economists said on the eve of the New Year that begins today (Thursday) amid signs of brewing political unrest.
Some leading economists said the prevailing trend of low revenue receipts might take a turn for the worse in the event of the business activities continuing to be sluggish.
They singled out an Achilles’ heel in the economy coming from the financial front: ballooning non-performing loan (NPL). This particular development, they apprehend, might create a serious trouble for the banking industry in 2015.
And the implementation of the proposed new national pay scale in 2015 might create a big fiscal pressure in the year.
Turning to the capital market, another barometer for the country’s economic health, they foresee little chance for a ‘big’ rebound of the bourses in 2015.
Dr Mirza AB Azizul Islam, an adviser of caretaker government, said the economy was embracing the new year 2015 with many weak indicators.
“Many growth-drivers like exports that had grown less than 1.0 per cent until November and revenue collection remained much below the targets, so the basis of the new year is weak,” he said.
Dr. Islam, who is now a professor at BRAC University, said: “Whereas the foundation is weak, so there is unlikely to happen any satisfactory event in the economy in the new year.”
He noted that banking sector is now beset with many problems like the growing level of classified loan at 11.60 per cent until September last and many financial scams.
The credit flow to the private sector is also poor, 12.12 per cent in October. “In my view, the situation prevailing in the financial sector is not that satisfactory,” the economist noted.
Dr Islam, a former chairman at the Bangladesh Stock Exchange Commission (BSEC), said the capital market maintained a “low-level stability” in 2014.
He said the index hovered around 5000 points in the just-past year.
“In my view, if the share-market investors behave rationally, there is no chance for a big rebound in the capital market,” he said.
Dr Mustafizur Rahman, executive director at the private think-tank Centre for Policy Dialogue (CPD), said accelerating the growth both in terms of investment and economy would remain another challenge in 2015.
A former professor at the Department of Accounting and Information Systems, the University of Dhaka, Dr Rahman said the government should pursue different initiatives made by Japan, China and SAARC.
He said the initiatives might benefit the economy and the government should strengthen such moves in the new year.
Dr Rahman said infrastructure, special economic zones, and public-private partnership should be accelerated for luring investors.
Dr Zaid Bakht, director (research) at the Bangladesh Institute of Development Studies (BIDS), pointed out that many investors have long been facing problems like lack of basic infrastructure and utilities.
Dr Bakht, also chairman at the state-owned Agrani Bank, said not only private investment but also the public investment remained low in 2014.
He noted that bigger public investment has some ‘trickle effect’ on the private investment.
“We are not seeing any big jump about the Padma bridge and elevated expressway. If so, private investment also picks up to some extent to supply some materials,” Dr Bakht said.
He said for lack of investment, there has been a build-up of idle money in the banking sector.
He suggests the regulator should take measures to realise the money from the top defaulters.
Dr Zahid Hussain, lead economist at the Dhaka office of the World Bank (WB), sees revenue mobilisation as a major challenge for the economy in 2015.
He said the new pay hike set to be implemented in July next will create fiscal pressure.
jasimharoon@yahoo.com