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The government's goal of doubling private investment as percentage of gross domestic product or GDP, in fiscal year 2020-21 is unrealistic, economists said on Saturday.
The government seeks to raise the private investment to GDP ratio to 25.3 per cent from the outgoing fiscal's 2.7 per cent trajectory.
Taking the coronavirus effects into consideration, the government for FY2020 has slashed the investment-GDP ratio estimates to 12.7 per cent from its earlier projection of 24.2 per cent.
Economists said the new private investment target in the next fiscal is like daydreaming when the global economy is set to dive into the deepest recession after the World War-II.
Still, finance minister AHM Mustafa Kamal remains upbeat about the higher private investment growth in the next fiscal banking on the government's several fiscal measures and lots of incentives.
In a post-budget press briefing on Friday, Mr Kamal said the COVID-19 would undergo transformation in the global trade and business scenario from which Bangladesh would grab some shares in investments.
The government in its new target said the overall investment is expected to rise at 33.5 per cent of the country's total GDP in FY2021 from that of 20.8 per cent in FY2020.
The public investment-GDP ratio in the next fiscal has been set at 8.1 per cent of FY2020.
Former lead economist of the World Bank Dr Zahid Hussain said higher private investment target during this COVID-19 impact scenario is not realistic.
"In normal years in the past, the private investment-GDP ratio was not noticed to grow by more than 1.5 percentage points. How is the government expecting to double private investment growth within a year?" he questioned.
If the health situation becomes normal in the next financial year, the private sector's replacement investment will need to be almost doubled from the government's revised target of 12.7 per cent this year.
In addition, it will require boosting the investment-GDP ratio by 1.8 percentage points within a single year.
"It is almost impossible for a country like Bangladesh," Dr Hussain told the FE.
Given the virus fallout, it will take some time to bring back confidence among the foreign and local investors, the economist argued.
Centre for Policy Dialogue research director Dr KG Moazzem told the FE that the private sector investment target was very much "unrealistic."
"If the government wants to take the private investment-GDP ratio to 25.3 per cent, the country will require additional Tk 4.25 trillion investments. It is 125 per cent higher than the current base," he said.
"The existing industries are now unutilised and under-utilised due to the COVID-19 pandemic. How will a new entrepreneur come up with fresh investments amid this situation. After economic recovery, they will first try to use under-utilised and unutilised capacity," he added.
But he said some investment possibilities are there in sectors like IT and pharmaceuticals.
"There is a propaganda that a lot of FDI will be relocated to Bangladesh. But keep in mind that --the global FDI will decline 35 per cent and the domestic corona situation will have an impact on foreign investments too," he added.
The foreign investor will not come to Bangladesh for health security reasons for a period even after normalising the situation, the CPD researcher said.
When asked about the lower bank interest rate, Dr Moazzem said this has been administrated by the government.
"The commercial banks would charge some hidden costs from the borrowers, which will ultimately fail to boost the investment," he feared.
"Besides, the banks will lose the interest to finance small and medium enterprises as their operating costs are higher. This will also be a big blow to increasing private investments," he said.