On two broad macro-economic parameters, there has been a certain break with trends exercising the minds of the economists a good deal. The first one relates to national investment poised to outstrip gross national savings; and the second centres around the FDI inflow curving downwards.
The hitherto known trend of gross national savings-public and private- keeping above gross national investment is found to be on a reverse gear! Gross investment stood above gross national savings in the past two fiscal years-FY 2017 and FY 2018. In fact, according to an IMF country staff report, 'the gross investment is projected to stand at 32.3 per cent of the gross domestic product in FY 2018-19, up by 2.3 percentage points than that of gross national savings.' The reversal of trend is being ascribed to two factors: One, a rise in public investment owing to implementation at various stages of a number of mega projects in the last few years; and two, as Zahid Hussain, the lead economist of the World Bank suspects the unusual trend is exacerbated by a spike in capital flight out of the country.
The Bangladesh Bank is said to have recently told newsmen that 'a group of businesses were reportedly involved in capital flight amounting to TK 40 billion in the guise of import and export.
Surely, as they say, "Knowledge is responsibility", so that we find the central bank 'asking the tax authority to take necessary actions regarding the matter by probing it.' Such proforma exhortation can't do , a mechanism based on best practice method will have to be followed to freeze attempted capital flight on its track.
The central issue is such a rise in investment is widening the economy's current account deficit.
Ironically as we encounter negative / upset current account equations, a balance of payments (BOP) figures, in the shape of a downslide in the FDI inflow. According to BoP data of Bangladesh Bank the gross inflow of FDI declined by 9.90 per cent between FY 2016-17 and FY 2017-18-from $ 3.03 billion to $2.79 billion over the period in question.
It is relevant to note that the country had last experienced a decline in FDI inflow in FY 2014 so that it may not have been a mere coincidence that we have been going through another round of downward FDI flow as the election approaches. It may be on hold till general election is held credibly ushering in a stable government.
At any rate, we may not sit idly by as the factors that stood in the way of our matching other countries in garnering FDI cry out for urgent attention. 'The corporate tax in Bangladesh is one of the highest in Asia' -ours averaging 40 per cent vis-à-vis between 17 and 25 per cent in Thailand, Indonesia, Vietnam and India. Let's examine the proposal of the entrepreneurs to be accommodated there.
Our selling points of quick returns on investment and cheap labour are outweighed by underdeveloped infrastructure, port-handling delays, scarcity of land for industry (special zones may ease the problem), land-related litigations, etcetera.
We believe, the impediments are not insurmountable, and that the government in cooperation with the business community will remove them realising that we are in a race with time. Indeed, we can't afford to fall behind after traversing such a long distance.
