Prime Minister Sheikh Hasina has reiterated government policy of extending cooperation to the private sector to further flourish and develop through transparent management. The private sector, she said, is the driving force of the economy and the government will continue to create a business-friendly environment for developing the private sector.
Addressing the inaugural ceremony of an international conference titled 'New Economic Thinking: Bangladesh 2030 and Beyond', she expressed firm optimism that the country's economy will usher in a new horizon of success creating a win-win situation in improving sub-regional and international economic relations and expanding trade, commerce and investment.
Private investment has remained virtually stagnant at 22 per cent of gross domestic product (GDP), with foreign direct investment (FDI) accounting for about 1.0 per cent of GDP. The key challenges for Bangladesh are acceleration of private investments and the better use of public sector resources to implement important infrastructures.
In order to achieve its goal of graduating to middle-income country status by 2021 and to accelerate inclusive growth as well as reduce poverty and income inequality, the country will require a substantial increase in yearly investments from 29.0 per cent of GDP in FY2015 to 34.4 per cent of GDP by FY2020.
The major three economies of the region -- China, Japan and India - expressed their readiness to make substantial investment, mainly in infrastructure development, including energy. With the timely implementation of various projects, Bangladesh will definitely be able to attract more FDIs in the very near future.
Hopes are abound that Bangladesh would be at the centre stage of the regional economy of Asia while local supply chain and global value chain will play an important role in regional and sub-regional connectivity.
According to a report of the UK-based multinational company Price Water House Coopers, Bangladesh will become the 29th economy of the world by 2030 and 23rd by 2050. In order to achieve this goal desired employment opportunities will have to be created through sustainable economic development, industrialisation, trade expansion, boosting remittance, developing infrastructure and improving education and healthcare services.
There is no denying that Bangladesh has a big opportunity to grow further but it needs to address a number of challenges for sustainable development. There are many opportunities for further growth. Apart from the readymade garment sector, Bangladesh has potential in pharmaceuticals, tourism and agriculture sectors.
The country is now rapidly urbanising, which is another reason for being optimistic about its economic growth. However, the country's development should not be considered on the basis of its GDP growth only. The qualitative development it made in sectors like health, energy services and social inclusion of people and minority groups should also be taken into account.
Bangladesh has 32 thrust sectors that have the potential to fetch billions of dollars in investment and export earnings. But the main challenge will be how the country will exploit the potential. The sectors include apparel, agriculture, information and communication technology (ICT), light engineering, pharmaceuticals, infrastructure, frozen food, energy, handicrafts, ceramics, tourism and healthcare.
The ICT will be a billion-dollar export earning sector by 2018. Per capita footwear use in Bangladesh last year was less than a pair, which indicates that the sector has huge potential. The light engineering sector is expected to grow significantly in the next 15 years.
The government is providing lucrative incentives to attract foreign investment while steps have been taken to build 100 Special Economic Zones (SEZs) across the country to attract domestic and foreign investment. The industrial sector will start getting uninterrupted natural gas supplies in the next two years. The government has been working to mitigate the energy shortage by importing liquefied natural gas (LNG).
As the total discovered natural gas reserve will be depleted by 2030, the country will have to be import-oriented within the next several years to meet the growing demand. However, there are various efforts on the part of the government to discover hydrocarbon, both at offshore and onshore.
Bangladesh has around $300 billion worth of high-calorific-valued coal underground in five different mines. But the coal mines are located in high-fertile land having aquifers. A right kind of technology has to be found to utilise the coal without affecting the fertile land and managing appropriately the aquifers.
The government is planning to provide electricity to all by December 2018, three years prior to the target of 2021. It is thinking to mitigate the energy shortage through a number of ways, including import of piped gas, investing in hydropower plants in Nepal and Bhutan and bringing the produced electricity back into the country.
According to economic analysts, the government should take steps to dispel uncertainties among investors, fix infrastructure bottlenecks and provide services to boost private investment. If the government wants to achieve the 7.2 per cent growth target of GDP, it needs to increase the investment-to-GDP ratio by at least 2.0 percentage points for the private sector.
It is true that foreign investors will not come to Bangladesh if local investment does not look vibrant. The government should invest for developing infrastructures such as ports, energy supplies, deep-sea port and railways as the private sector will not go into these areas.
Private investment rate has continued to stagnate and has remained largely unchanged as a share of the GDP since fiscal year 2012-13. Private investment and growth remain constrained by disabling regulations, infrastructure deficiencies, financial sector weaknesses and political uncertainties, according to the World Bank.
One of the sources of private investment is the long-term borrowing from the financial system. But that long-term borrowing from the financial system is very inequitably distributed. There is excess liquidity in the banking system but private investors are not sufficiently stimulated to invest in the country. Because of investment uncertainty, capital flight takes place.
In order to attain the status of middle- income country by 2021, the country's GDP should grow at around 7.0 per cent and per capita income should be increased significantly from the current level of around US$ 1,400. The resilience of Bangladeshi people and the commitment of businessmen will be the driving force towards attaining the country's growth targets.