There is no denying the fact that Bangladesh economy is moving forward. The graduation of the country to the Lower Middle-Income Country (LMIC) category from the Lower-Income Country (LIC) category in the middle of 2015 is a recognition of the development of the economy. For the last one decade and more, growth of gross domestic product (GDP) is fairly persistent which has built a strong foundation of another step forward of the economy as well as the country as a whole. The private sector is the driving force of the economy and growth. Long-term private investment is essential for stable economic growth and the country’s graduation to middle-income category. But the current composition of investment-GDP ratio tells a different story. Gross Domestic Investment stood at 29 per cent of GDP in fiscal year 2014-15 (FY15) which was 28.58 per cent in FY14 and 28.39 per cent in FY13. But, the contribution of private investment was 22.07 per cent of GDP in FY15 which was 22.03 per cent and 21.75 per cent in FY14 and FY13 respectively. On the other hand, public investment was 6.9 per cent of GDP in FY15 which was 6.55 per cent and 6.44 per cent in FY14 and FY13 respectively. Thus, growth of private investment is quite slow compared to public investment. The Sixth Five Year Plan (6FYP) projected 8.0 per cent GDP growth in FY15 with investment of 32.5 per cent of GDP which means 4.07 per cent Incremental Capital Output Ratio (ICOR). Private investment was projected to contribute 25 per cent of GDP and public investment, 7.5 per cent. In reality, economy registered 6.51 per cent growth in the last fiscal year and investment was also well below the projected figure. In fact, over the last few years, private investment did not increase as expected or required to raise the growth rate to 7.0 per cent and above. Particularly in 2015, there was a sluggish trend in investment despite having very favourable atmosphere like political stability (except the first three months of the year when hartals and blockades disrupted national life), improved production and supply of electricity, lower interest rate and rise in infrastructure building along with formal inauguration of Padma Bridge construction. But the entrepreneurs were not apparently comfortable with such positives as they also faced some critical barriers to long-term new investment. These include: shortage of supply of gas, problem of acquiring land, lack of improved physical infrastructure, inefficient bureaucracy and corruption. Thus, most of the entrepreneurs opted for continuation of their existing business operations wit moderate expansion which didn’t require very large investment. This trend is reflected in the Quantum Index of Industrial Production (QIIP) for Medium and Large-Scale Manufacturing Industry which shows that manufacturing output registered 11.2 per cent growth on average in January-September period. Although this double-digit growth and 22 per cent growth in industrial credit disbursement in the same period, may appear attractive, some caution is needed to interpret these statistics. It is difficult to depict the real scenario of investment as no update statistics is available. However, some proxy data are good enough to get a clear idea about the investment situation. Excess liquidity and lower interest rate in the banking sector are good indicators of investment situation. The amount of surplus liquidity was around Tk 1.0 trillion at the end of September 2015. At the same time, weighted average interest rate for lending came down to 11.48 per cent from 12.32 per cent in January. Thus, there were investable resources but businessmen and entrepreneurs did not utilise these adequately. Import statistics is another indicator. Import payments (C&F) increased only 2.3 per cent in January-October period of 2015. While slump in global commodity market contributed partially to reduced import cost, low domestic demand for industrial raw materials and capital machinery was also another reason for this. While data do not always capture everything, it is the first hand experience of the entrepreneurs and businessmen that tells the many parts of the story. They talk about lack of gas and uninterrupted power supply in different forums. In response to their specific complaints about shortage of power supply, Finance Minister AMA Muhith and Energy Adviser to the Prime Minister Towfiq-e-Elahi, at a discussion meeting in December, assured them that power problem would be fully fixed within the next two years. Thus, top policymakers acknowledged that there is a shortage of gas and electricity which affect economic activities in general. This also explains why investment didn’t peak up in the outgoing year. On the government side, there were some efforts to facilitate private investment. The approval of several special economic zones (SEZs) was one of them. But, no visible investment took place in any SEZz in the last year. Rather, a few zones triggered social disturbance as poor people were under threat of displacement. Again, the failure to resolve the crisis of the Korean Export Processing Zone (KEPZ) in Chittagong gave a wrong signal to both domestic as well as foreign investors. Meanwhile, bureaucratic complications continue to disappoint investors. Business people still have to run from one office to another for days to obtain different documents including trade licenses. Smooth payment of taxes reamins a distant dream especially for small and medium enterprises which provide around 70 per cent of the industrial employment. In fact, 6FYP projected to create 61.6 million employments by the end of FY15. It envisaged 3.0 per cent annual growth on employment generation and targeted to bring down unemployment rate to 3.7 per cent. No update is available for employment statistics. But, without significant increase in private investment, there cannot be adequate employment generation.
