The country now needs to accelerate its GDP growth to over 8 percent and maintain the present remittance growth to become a middle-income country by 2021, said a leading chamber body on Wednesday.
Bangladesh’s economy has maintained a healthy 6 percent-plus growth rate in the past decade despite global shocks, according to the editorial of the current ICCB News Bulletin (July-Sept 2014 issue) of the International Chamber of Commerce-Bangladesh.
Sustained growth has generated higher demand for improved infrastructure, including uninterrupted power supply, better transport and telecommunication services. All these require increased private investment, it said.
In the budget for the current fiscal, the government has set 7.3 percent growth target. To achieve the target, according to the Asian Development bank (ADB), the total investment should be around 34.3 percent from the present level of 28.7 percent of GDP.
The Bank blamed lower-than-expected level of investment as principal reason for the growth deficit in Bangladesh.
There is no denying the fact that FDI inflow into the country has been increasing for the last several years. It stood at US$1.73 billion in FY 2013, registering a 45 percent growth over US$1.19 billion a year ago, the chamber body observed.
According to the Board of Investment (BoI) data, the United Kingdom topped the list of FDI inflow in Bangladesh followed by Malaysia, Singapore, South Korea and the USA in 2013. But analysts believe that most of these FDIs are for expansion of the existing industries.
FDI still constitutes a low share of 1.2 per cent of GDP in 2013 as against 1.3 per cent in 2012, which is considered to be much lower compared to other countries, such as Myanmar, Laos, Cambodia and Vietnam.
Bangladesh has the potentials to attract significantly higher levels of FDI by positioning itself as a competitive center for labor intensive garments and footwear manufacturing as well as having a favorable location between the two large and dynamic economies -- China and India.
Preferential access to key consumer markets in developed countries also makes it an attractive place for relocation of export oriented industries.
To attract FDIs, experts stressed the necessity of bringing all the services under one umbrella to ensure a hassle-free investment atmosphere and provide one stop service in its true sense.
At present, getting permission for any foreign investment-related project is very cumbersome. Investors need to move several ministries and government departments to obtain permission or licenses before making their investments
BoI, being the apex private investment promotion agency, should formulate an Investment Policy to attract more FDI.
Analysts say foreign investment would flow into the country if the BoI could assure the investors of two things -- land and primary energy like power and gas. There are vast amounts of government land which remained abandoned for long. The Privatization Commission took a number of measures to use those, but could not make any significant achievement because of some inter-ministerial problems. Besides, the BoI needs to strengthen its human resources, develop its own basic core staff and arrange necessary training to provide better and prompt services prospective investors.
Despite having very liberal legal framework, analysts stressed the need for removal of security concerns, further liberalization of trade-related policies and resolution of the problem of political uncertainty to attract FDIs.
To achieve a higher growth trajectory, Bangladesh has to attract FDIs to address infrastructure deficit, productivity gap and diversification of export base as well as transparent and timely decision-making and ensuring stricter enforcement of government commitments.
Higher GDP growth needs larger FDI: ICCB