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Accelerated investment prerequisite for higher growth: ICCB
Bangladesh will emerge as the biggest driving force in the global Gross Domestic Product (GDP) in 2030 as predicted by HSBC Global Report The World in 2030.
The country is going to become the 26th largest economy in the world from the current 42nd position followed by the Philippines, Pakistan, Vietnam and Malaysia, the report added, according to the editorial of the current News Bulletin (July-September 2018) of International Chamber of Commerce-Bangladesh (ICCB) released on Wednesday.
The brand value of Bangladesh is also rising as the country has ranked 39th in a global brand value index 2018 reflecting its socioeconomic vivacity. Bangladesh has a brand value of $257 billion, up 24 per cent from last year, according to the London-based Brand Finance Nation Brands 2018Õ report.
Bangladesh economy has kept up an impressive annual average growth rate of more than 6.0 per cent over the last ten years and has been having increased GDP over the last couple of years. In FY18, its GDP growth rate was 7.86. It is believed that the country could have easily achieved 8 per cent plus growth by controlling the project implementation time, which would automatically minimise the project cost.
The public sector investment has increased over the last couple of years because of mega projects. But the private sector investment did not increase proportionately. For about a decade private investment to GDP ratio has been stuck at 21 to 23 per cent. But according to country's growth ambitions the ratio has to be about 35 per cent of GDP. A number of ASEAN countries have achieved higher GDP as their investment to GDP ratio has been in the range of 35-45 per cent.
Experts claimed that in the absence of an appropriate investment environment, caused by insufficient infrastructure, port congestion and poor transportation facilities, desired investment is not flowing into the country. FDI is only moving forward because of the reinvestment of current investments.
It is estimated that Bangladesh needs investment of more than $600 billion for its infrastructure, against which the country can manage around $400 billion. In order to meet the shortfall, the country has to explore alternative sources of funding.
The private sector investment is a pre-condition for attracting FDI as the foreign investors would also like to see increased commitment of the private sector, improved infrastructure facilities as well as better facilities and pro-active government agencies.
The latest Ease of Doing Business Index of the World Bank has ranked Bangladesh at 176th out of 190 countries, lowest in the South Asia ( Bhutan 81, Sri Lanka 100 and India 77). So, it is of utmost importance that all out efforts are made to improve the Index in order to attract FDI as well as private sector investment.
The Government has enacted a new law for much needed ÒOne-Stop ServiceÓ by Bangladesh Investment Development Authority (BIDA). It is definitely a welcome move and early implementation of the One-Stop Service will hopefully attract higher FDI and private sector investments. Besides, to facilitate private and foreign direct investment, the government has offered a number of Special Economic Zones (SEZs). The government also aims to establish 100 economic zones by 2030 to ease the crisis of land for businesses and industries and already leased a total of 76 land units for economic zones—out of 100.
A number of US companies are seriously considering relocating their operations from China in view of the current trade war between China and the US. Bangladesh should be able to capitalise in this situation and offer all-out facilities to attract the US companies to relocate their operation in Bangladesh.
In order to meet the criteria applied by the UN for graduation to developing country status and attain Sustainable Development Goals (SDGs) and achieve higher GDP, Bangladesh needs huge investment in different sectors like infrastructural development, especially in the power and energy sector, modern and effective air and sea ports, highways etc as well as ensure timely and cost effective implementation of Mega Projects.