BD needs to overcome key hurdles for higher growth

Dhaka,  Tue,  26 September 2017
Published : 18 Aug 2017, 00:49:04
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BD needs to overcome key hurdles for higher growth

Foremost challenge lies with stagnant pvt investment: ICCB
FE Report


The declining remittance, rising non-performing loans, stagnant private investment, delay in project implementation and contract enforcement and poor port facilities are key challenges for Bangladesh to go into the higher economic growth trajectory, International Chamber of Commerce, Bangladesh (ICCB) said.

"Experts observed that Bangladesh may face formidable challenge in moving to a higher growth path of 8.0 per cent plus GDP and earn the status of a middle-income country," said the trade body in its quarterly (April-June 2017 issue) news bulletin editorial on Thursday

The foremost challenge lies with stagnant private investment, followed by weak institutional capacity to implement development projects, it added.

"Bangladesh economy embraces 2017 with some other challenges including declining remittance and rising non-performing loans from the domestic side. Volatile global and gulf region politics and troubled European economy pose as external threats," the trade body said.

In order to step into higher growth trajectory, Bangladesh urgently needs to overcome the hurdle of project implementation delays, reduce an average number of days required for contract enforcement and improve port facilities, among others, the international trade body's Bangladesh chapter said.

The bulletin said considering its strategic location, Bangladesh has huge potential to attract more foreign direct investment (FDI) as the central point of eastern part of South Asia, being a connector between South and East Asia.  

"Increased private sector investment will allow the country to reap the benefits of annual world trade growth of US$ 1.0 trillion under implantation of WTO Trade Facilitation Agreement."

The ICCB further said the main hurdle the country is facing is inordinate delays in implementation of development projects, unreasonable delays in contract enforcement, inefficient management and congestion at Chittagong Port as well as at Dhaka International Airport, the two main gateways to international trade.  

As a result, according to the latest World Bank annual ratings, Bangladesh ranked 176th among 190 economies in the ease of doing business while the war-torn economies such as Iraq and Syria ranked 165th and 173rd respectively, it added.

The ICCB quoting the PricewaterhouseCoopers (PwC) report said Bangladesh ranked 31st among the world's 32 largest economies in 2016. "Its GDP (PPP) was $ 628 billion, and it was projected to increase to $ 3,064 billion in 2050."

"By 2050 Bangladesh, India and Vietnam will become the fastest growing economies, with Bangladesh expected to see an impressive growth that will push it to 23rd place overall. PwC ranked 32 countries by their projected global gross domestic product (GDP) at PPP, and made projections for up to 2050," the bulletin said.

According to analysts, Bangladesh now a $220 billion economy is moving forward with mega development projects, including US$ 3.7 billion Padma Bridge, US$ 2.7 billion metro rail, elevated expressway, flyovers, dozens of economic zones and Payra seaport.

"Falling interest rates, increasing access to finance and improvement in working conditions at garment factories have made businesses confident of taking new challenges and boosting export earnings."

The ICCB bulletin said during last FY2017 many of the fast-track projects have also attracted foreign investments.

"The Asian Development Bank announced $1.5 billion fund to build a key train line from Dohazari in Chittagong to Cox's Bazar ( the longest sea beach in the world), in its largest investment in railways in the continent. ADB is funding this new railroad, which is part of the Trans-Asia Railway network, to improve Bangladesh's access to Myanmar and beyond," it added.

Referring to ADB, the ICCB said in order to accelerate inclusive growth and reduce poverty and income inequality, the country will require a substantial increase in yearly investments from 29.0 per cent of GDP in FY2015 to 34.4 per cent by FY2020.

"More than $11 billion in external resources will be needed during the seventh five-year plan period for public sector investment. Even though the public sector investment has increased to nearly 7.0 per cent of GDP from 5.0 per cent several years ago, the private investment remains static at 22-23 per cent for over five years," the news bulletin said.

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