Private sector investment is not picking up but the government is making all-out efforts to increase its pace. Economists and businessmen believe if government investment increases, the private sector will follow the same path. During the last five years, the government investment has multiplied but the private sector did not respond. Foreign investment is not also forthcoming. Experts feel that this stagnation in investment is due to absence of gas and power connections for a long time. Many investors were ready with proposals but they pulled back for lack of utility connections. Undeveloped infrastructure, high manufacturing cost and high interest rate are also holding back investment. Economists feel that political stability has to be improved. Businessmen feel that there is no environment conducive to investment. One eminent economist has said there is no political instability in the country now but investors are worried about the future political situation. Investors feel that the political situation could become unstable in the long run. They are now showing interest in economic zones, but the cost of industrial production has to be reduced in order to stimulate local and foreign investment. Scared foreign buyers have postponed their trips to Bangladesh. Meetings of foreign buyers with local manufacturers have been cancelled for security reasons, but they have not cancelled their orders. Garment owners think that this may impact orders for the next season. Buyers want to discuss business matters with producers in some neutral venues. The buyers’ forum has already expressed concern over the killing of two foreigners in quick succession. The BGMEA (Bangladesh Garment Manufacturers and Exporters Association) leaders feel that the government should take strong measures to ensure safety of foreign nationals. The export sector will bear the brunt of the present situation. Foreign investment was negligible during the last three months. Local investors are not getting encouragement. There are still no positive steps to encourage investors. The Bangladesh Investment Summit was held in Singapore in last September. But it did not produce any result. The Korean EPZ authorities were harassed in many ways. In order to start an industry, permission is to be obtained from 10/15 departments /ministries of the government. Bribery is quite normal. There is a lot of talks about investment but nothing happens in reality. According to the Board of Investment, from the beginning of 2013, investment started declining due to political instability. Investment proposals increased in 2014 but these were not translated into investment. There has been an unusual decline of investment proposals during the last three months. Energy crisis has to be solved to attract investment. Foreign investment is not coming due to poor infrastructure, and gas-power crisis. Foreign investors have cancelled their trips to Bangladesh due to security risks. Economists and businessmen feel that it will be impossible to achieve the investment targets fixed in the 7th Five Year Plan. They have made three recommendations in this regard. These are: infrastructure development, institutional reforms and improvement in law and order situation. In the index for doing business brought out by the World Bank, the ranking of Bangladesh has gone down to 174 from 172. The investors go to those countries where environment is more conducive. In the 7th Plan, investment has been projected to be at 27 per cent of the Gross Domestic Product (GDP) but since 2005 it has not exceeded 22 per cent. It is estimated that 77 per cent of investment will come from the private sector. But they may not come forward if the situation is not investment-friendly. Banks are interested in making profits from short- term investment and are not willing to go for long-term ventures. They will have to make investment in productive sectors. The banking sector is not performing its responsibility. The real estate sector is a potential area for investment but banks are neglecting this sector. There is political uncertainty. Businessmen are not taking risks to invest their money in the country. There is plenty of liquidity in banks. Confidence has to be brought back to the investors. Gas and electric connections have to be made available. Economic zones have to be made operational. Because of slowdown in investment, import of industrial capital machinery has gone down during the first two months of the current financial year by 11 per cent. This rate was 19 per cent last year at the same time. Import of industrial raw materials has also declined. Unemployment is increasing. Businessmen will have to take new initiatives. If the investment situation does not improve, banks will have to face losses at the end of the year. Because of stagnation in investment, liquidity has increased in banks which have also lowered the rates of interest on deposits because of this. Investors are shifting to saving certificates. Entrepreneurs are borrowing from abroad at low rates of interest. The 7th Five Year Plan has envisaged an investment of Tk 31.9 trillion. It also envisions an employment target of 12 million people. But strategies for achieving these targets need to be articulated. Experts say several steps are needed for realising these targets. These are firm assurance for gas and power connection, lowering of interest rates on borrowing from banks, stopping bribes and corruption in government offices, special facilities for investment outside Dhaka, infrastructure development and operationalising the economic zones. Political stability has to be continued. Good governance is needed in the financial sector.
