‘Boosting private investment a must for sustainable GDP growth’

It will not be possible to sustain the present economic growth without an increase in private investment, said prime minister's Economic Affairs Adviser Dr Mashiur Rahman.

He expressed concern, and added that the growth could become sluggish if financing decreases for ongoing mega projects across the country.

Dr Mashiur made the comments at a programme held in memory of Moazzem Hossain, the founding president of the Economic Reporters' Forum and a pioneer of financial journalism in Bangladesh.

Expressing satisfaction over Bangladesh's GDP growth and inflation in the past decade, the prime minister's economic affairs adviser said, "The private investment sector of the country is stagnating.

"If private investments do not grow, revenue collection will not increase either. Down the line, the issue will affect the government's financing capabilities. Which in turn could disrupt the economic growth of Bangladesh."

According to the Ministry of Finance, GDP growth in the country reached 8.15 percent in the previous fiscal year. The GDP growth rate has increased over the last five consecutive years, and has reached its current figure from 6.6 percent.

However, public investments have played a much larger role in this growth than private investments.

From 2013-14 to the 2018-19 fiscal years, private investments have hovered around 22 percent of the GDP. Meanwhile, public investments have increased from 6.6 percent to around 9 percent. The increase is mainly fueled by government-financed mega projects.

For this particular reason, Dr Mashiur expressed concern over sustaining GDP growth if financing for mega projects decreases.

The prime minister's adviser further said, "Private investments must be increased to sustain GDP growth. Additionally, the development of sustainable human resource must be given importance.

"Other important factors in this matter are curbing corruption and keeping indicators such as inflation and GDP growth rates as error free as possible."

Dr Mashiur pointed out that Bangladesh is witnessing a good time, and added, "The words 'Demographic Dividend' is being widely discussed. However, we need preparation to avail the benefits of the demographic dividend. I believe we are lacking in this sector.

"Our education system is not very aligned with the current job market. We need more qualified personnel in mid-level and junior-level jobs. Such personnel can be developed through vocational and technical education. But everyone wants to make their child a graduate."

Discussing the agricultural sector, he said, "Employment in this sector will further drop in the future. We must make up for the loss with the industrial sector. I support a protectionist policy to encourage industrialisation."

Speaking about the industrialisation, Dr Mashiur said, "Local businessmen always ask for protection and incentives. Some of these demands are logical, but most are not. A new industry needs policy protection because it will not be able to compete with foreign products.

"However, if efficiency remains low even after granting this protection, and if their products continue to be more expensive that foreign ones, it becomes a burden for local consumers."

He added, "Local entrepreneurs demand incentives as soon as any changes or issues hit the global economy. If they cannot tackle a little shock so many years after independence, they will never be able to stay in business on their own."

Regarding the global economy, Dr Mashiur said, "Too much dependence on remittance is a risky move. This sector is beyond our control. Fluctuation in oil prices and tension in the Middle East because of Iran or any other issue bring uncertainty in this sector."

Remembering journalist Moazzem Hossain, the prime minister's adviser said, "During the 90's, we felt there was a dire need for a specialised financial newspaper in Bangladesh. We also had concerns on whether such a newspaper would be able to survive in the market.

"Moazzem Hossain came bravely forward to take up the challenge and proved our fears wrong."

Moazzem Hossain served as the editor of The Financial Express – the first business newspaper in Bangladesh. He passed away on August 1, 2018.