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The government has set a target of raising public investment to 6.3 per cent while private investment to 27.4 per cent of the gross domestic product (GDP) in the proposed budget for the fiscal year 2023-24.
Economists and businesses, however, say it would not be possible for the government to attain the target due to drop in forex reserves, energy crisis, high inflation, and LC opening hurdle.
The experts also said reducing inflation and increasing investment in the budget will be the biggest challenge for the government as it is the election year.
Economists said private investment is one of the major burning issues in the economy right now. If the current situation does not improve immediately, new job creation will hit a snag. As a result, unemployment rate and inflation in the next fiscal year would rise in the country, they added.
They also suggested that a congenial environment should be ensured for attracting more investments in the country. Hence, macro-economy must be stabilised, foreign development fund be increased and money supply be reduced for next 8-12 months.
Talking to The Business Post, Chairman of Policy Exchange Bangladesh Dr M Masrur Reaz said overall economic output may come down in the next fiscal year as many challenges lie ahead such high inflation, and forex, energy and LC opening crises in the country. “It will be a tight and tough fiscal year,” he said.
The economist added: “Gas and electricity crisis is now disrupting production in local industries which is discouraging new investors and current businesspeople. So, the target of investment is not realistic at this moment. Inflationary pressure will remain persistent at most of times in the next fiscal year. We don’t see any good news about more investment.”
Suggesting increasing allocation for the energy sector now, Dr Masrur said the government must focus on stabilisation of the macro-economy. Investors have numerous complaints regarding the existing tax systems. So, it should be easier, he said.
Metropolitan Chamber of Commerce and Industry (MCCI) President Md Saiful Islam said some criteria set for boosting investment must be fulfilled.
“There is a big impact on investment due to the ongoing dollar crisis. So, we cannot expect more investment this year as it is the election year. If the incumbent government stays in power, there will be positive outcomes in investment,” he also said.
He added that all businesses want political stability for investment. Besides, infrastructure development should continue while congenial environment is a key to attracting more investments.
Habibullah N Karim, founder & CEO at Technohaven Company Ltd, and also MCCI vice president, said the private sector should be motived to draw more investments.
Placing the proposed budget for FY24 in the parliament on Thursday, Finance Minister AHM Mustafa Kamal said 100 economic zones are being established for environment-friendly industrialisation and enhancing domestic and foreign investment along with youth employment.
“We expect to return to higher growth trajectory and achieve a 7.5 per cent GDP growth in the coming fiscal year, by way of investing in the productive sector and stimulating productivity and domestic demand. To achieve the growth target, we will gradually come out of the contradictory policy and invest in ongoing and new growth-inducing projects, including the mega-projects.”
He also said for this purpose, the FY24 budget has set a higher target of raising public investment to 6.3 per cent of the GDP. And, investment will continue to be facilitated in economic zones with an investment-friendly environment consisting of various facilities such as undisputed land, improved infrastructure, uninterrupted utilities, financial incentives and ease of doing business etc.
“Development of the logistics sector and reforms of financial management will reduce time, cost and complexity in investment or business processing. As a result, private investment, which has decreased slightly in the current fiscal year, is expected to increase to 27.4 per cent of GDP in the next fiscal year,” he also said.
