FE Report

The government should target a four per cent growth rate in the agriculture sector to stabilise domestic prices, alleviate poverty and provide a steady market for industrial sector, said a leading chamber chief on Sunday.

Metropolitan Chamber of Commerce and Industry (MCCI) president Abdul Hafiz Choudhury told a World Bank assessment team that to achieve that goals lending to agriculture sector should be ten per cent of the total banking loans.

"Agriculture sector's contribution to gross domestic product is declining but it will remain a critical sector as it creates maximum number of employment," Mr. Choudhury said.

"Lack of institutional credit facilities and other inputs are the main reasons behind the limited level of agriculture productivity," he said, seeking lending from the banks to farm sector.

"High yielding varieties of seeds have already helped increase rice yield by 10 to 15 per cent in many years. More loans to the related farm sectors will also make a huge difference," he added.

About energy issue, Mr. Choudhury suggested the government give highest priority for early operation of coal-based Barapukuria power station.

The country is facing 1,800 megawatt shortfall of electricity everyday and immediate steps must be taken to reduce it to 800mw level, he said.

"To maintain a 5.5 per cent GDP growth, the demand for electricity will be 8,364mw a year," he added.

Solar energy should be popularised in the urban areas along with rural areas, the MCCI president said.

The international funding agencies should provide low interest cost credit in energy and power sector under private-public partnership programme, he said.

The government can also use rental power plants to help overcome power crisis in the short term, he added.

Remittance contributes 10 per cent of the GDP but bulk of the amount is not invested in productive sectors, Mr. Choudhury said.

Only five per cent of around nine billion dollars remitted to the country last year was used for investment and three per cent for savings, he said.

If more educated and skilled persons get overseas jobs, a significant amount of remittance would be channelised for investment, he added.

The government should cut down non-development expenditure and mobilise revenue collection for more public savings, the MCCI president said.

"The chances of any increase in private savings are limited," he said, adding lower saving is the main reason behind poor investment.

At least 30 per cent investment is needed if the country is to achieve 7.5 per cent GDP growth rate from the current rate of 24.2 per cent, he said.

The government should provide policy support to poultry, livestock, and other employment oriented programmes to create job opportunities for one million additional people by 2013, he added.

Senior Country officer of World Bank Thomas Buckley said the multilateral lending agency is interested to fund Padma Bridge to improve socio-economic condition of the south-east of the country.

The WB has just resumed lending in power sector after a long disengagement and it has already approved credit to a $350 million power plant project, he said.

"There is a trade-off between fertiliser and power production and the decision must be taken prudently," he added.

International Chamber of Commerce, Bangladesh president Mahbubur Rahman said the World Bank is partly responsible for current shabby power situation as it suspended funding in the sector for the last several years.

He said the government should ensure transparency in the PPP projects and it should not be politically motivated.

Member of MCCI executive committee Anis Ud Dowla said 2.7 tonnes of rice are produced per hectare of land in Bangladesh.

"If it is increased to 3.5 tonnes, Bangladesh will be food surplus country and also can export to other nations," he said.

Former MCCI president Laila Rahman Kabir said National Skill Development Council, a wing of Bangladesh Better Business Forum, has developed an 'action plan' for providing training.

"About 20 ministries will provide training under the action plan," she said.

President of Association of Bankers' Bangladesh K Mahmood Sattar the country needs five billion dollar investment in gas exploration.

"The World Bank and other multilateral lending agencies should come up with funds to invest in the sector," he said.

President of Dhaka Chamber of Commerce and Industry Zafar Osman said the modalities of PPP are not clear.

Adviser to the MCCI executive committee C K Hyder said the private sector might be crowded out due to higher government borrowing from the banking system.

Vice president of MCCI Syed Nasim Manzur stressed increasing industrial productivity to become more competitive.

Income disparity is growing as it is difficult to set up plants outside Dhaka due to lack of proper infrastructure, he said.