Concerns remain as private investment dull: CPD [ Tritiyo Matra News ]

Concerns remain as private investment dull: CPD

Local January 04, 2016

The Centre for Policy Dialogue on Sunday expressed concern over prolonged stagnant situation in private investment despite overall stability in the economy over the first half of the current fiscal year.
Evaluating the macro-economic situation of the country, the CPD said that economy was not vibrant and some volatility was there despite overall stability being in place.
At a press briefing, the local independent think-tank suggested the government for adopting a package of reform measures in different areas including in government development expenditure and banking sector for boosting private investment.
Other suggested reforms measures include reduction in different policy rate of Bangladesh Bank for banking sectors, appreciation of the Taka against US dollar and reduction of fuel prices, it said.
The CPD organised the press briefing at BRAC Centre Inn in Dhaka on the occasion of its regular publication of the state of the Bangladesh economy for the first half of the fiscal year 2015-16.
‘The major weakness in the economy in the first half of the fiscal year is no rise in private investment despite peaceful law and order situation in the country, stability in economy, lower commodity price in international market, tolerable inflation in domestic market and lower interest rate in lending,’ CPD distinguish fellow Debapriya Bhattacharya said.
Registration for new investment with the Board of Investment has declined, foreign direct investment has remained sluggish and import of capital machinery has decreased along with lower term-loan disbursement in the period which was not expected, he said.
Emphasizing on reforms in banking sector, Debapriya said that there was political lending in state-run banks while huge lending by the owners in private banks were causing rise in non-performing loans.
The Bangladesh Bank may also consider lowering policy rates for Repo and Reverse Repo as it may put positive impact on interest rate in lending and inflation, he said.
The government may also consider for a slight appreciation of the Taka against the US Dollar for increasing competitiveness in global trade, he added.
Reduction in fuel prices is also important, he pointed out.
Maintaining political stability and public security is also critical in the backdrop of recent incidences of militancy activities in the country, Debapriya said.
According to the CPD report, improvement in the quality of government expenditure, timely execution of annual development programme, particularly accelerating the ADP implementation by the large ministries in terms of allocation are needed for boosting the private investment,
It said that the government should give priority to completion of mega projects including Padma Bridge, Dhaka-Chittagong and Joydebpur-Mymensigh four lane projects on urgent basis so that investors can reap the benefit of public investment.
In the report, CPD projected the overall revenue collection shortfall could be around Tk 40,000 crore mainly following overambitious targets, sluggish investment, low international prices of imported commodities and wide incentives in the budget.
It also suggested for enactment of a law on allowing entrepreneurs to invest abroad.
The research organisation did not make any projection on economic growth in absence of sufficient required data of the first half of the fiscal year on various macro-economic indicators.
CPD executive director Mustafizur Rahman, research director Fahmida Khatun, additional research director Khondaker Golam Moazzem and research fellow Towfiqul Islam Khan also spoke at the briefing.