In the backdrop of dwindling investment in the country, both from overseas and local, the government said it will do everything for the development of the country. In order to attract the much-needed foreign investment, the authorities are even ready to bring down tax rates to zero per cent.
Now time has really come to give proper attention to development of the infrastructure projects. Padma bridge, Rooppur nuclear power plant, 1320MW Rampal power plant and deep seaport are some of the priority projects of the government that need urgent attention of the investors.
The government has, at this moment, US$29 billion in its hand for taking up different projects for the country's development. The country has made significant progress in different areas of the economy. Internal resources now help meet around 90 per cent finance of the national budget.
Many say lack of modern infrastructure is the reason for low investment in the country, which is currently recorded at 2.87 per cent of GDP. In fact, for last 25 years the private sector growth outpaced the public sector planning and development. The limitation of resources resulted in meagre allocation to infrastructure when the requirement is much higher in Bangladesh.
Planning Minister AHM Mustafa Kamal unveiled the GDP growth estimate prepared by the Bangladesh Bureau of Statistics (BBS) last week which was shown to hit 7.24 per cent in the current financial year. The government has, of late, increased spending by 300 per cent since 2011-2012 fiscal, he said.
Some progress has been made by the government in helping to ease doing business; however, there is still some way to go if the country is to attract large investment from local and foreign investors.
Although the present government has boosted electricity generation, the per capita electricity consumption in Bangladesh is one of the lowest in South Asia. This is one of the 'chronic problems' in Bangladesh and an obstacle to investment and businesses. The initial cost of the Rooppur nuke power plant was only US$4.5 billion which now jumped to nearly $12 billion.
Meantime, land scarcity and complex land-related laws, and complex procurement system have now emerged as key hindrances for investors too. Lack of good governance, discipline and complex regulatory system are some other major obstacles to set up businesses.
The One Stop Service Act, 2017 will be placed in the upcoming session of parliament to facilitate businesses in the country. Once the bill is passed, the cost of doing business in Bangladesh will come down through some reforms and initiatives within the shortest possible time.
Successful implementation of the one-stop service act will bring down the overall construction time in Bangladesh from 269 days to 60 days only and electricity connection from 400 days to 28 days only. The country will, the government believes, be able to improve its ranking at the World Bank's flagship report on the 'Ease of Cost of Doing Business' through such reforms.
Finance Minister AMA Muhith expressed his hope recently that the country's investment-GDP ratio would reach 32 per cent within the next two years and the export growth would cross double-digit within the current fiscal year. For the present, the ratio remains below 30 per cent.
Reaching such a threshold in terms of investment is expected to give the country's economy an extra confidence for going forward. However, there is still an unemployment challenge as around 2.0 million job aspirants enter the job market every year. But only 0.4 million of them are able to manage jobs. On the other hand, the industrial sector is still facing an energy crisis.
At present, the country is paying too much attention to garment and textile exports. However, it needs to diversify its export and attract investment. Bangladesh can be the next destination of foreign investment after China and India. There are seven core areas each of which can attract billion dollar investment -- physical infrastructure, power, backward linkage industry for garment and textile, automotive, pharmaceuticals, leather, and shipbuilding.
In fact, Bangladesh has to be investment-centric to bring in more investors. Also, retention of investors is crucial. Almost 30 per cent of all the investments that goes to developing countries stop expanding or leave because of regulatory constraints. The reasons include adverse regulatory changes, expropriation, non-honouring of government's guarantees, breach of contracts and transfer and convertibility restrictions.
There is a need for initiating policy reforms as many of the policies, including the one on FDI, are not forward-looking. Local businesses say giving more focus on innovation and quality education will definitely raise skilled manpower and standard of services.
Some analysts are of the opinion that easing the cost of doing business is possible through proper government policy and structural reforms and massive infrastructure development. There is no denying that the country's business climate is still unfavourable due to complex land procurement, policy and legal issues and higher cost of services.
The easing of business setup and investment regulations, and rapid execution of infrastructure projects will be the driving factors for Bangladesh to increase economic growth to 8.0 per cent and attract expected level of foreign direct investment by 2020.
It is thus time that the country must make higher investment in infrastructure development. Establishment of a National Infrastructure Development and Monitoring Authority (NIDMA) will quicken the investment process.