Referring that the private sector has been contributing significantly to the economy in terms of investment, production, trade and employment growth, the Dhaka Chamber President Barrister Md. Sameer Sattar, in a statement, on Thursday urged the government to consider lowering cost of doing business, easy access to credit for MSMEs and promoting import substitute industries.
He also urged to continuing the austerity measures and selecting priority-based development projects above all low-cost of borrowing may ease the private sector investment and credit growth to some extent.
The statement mentioned that currently, the private sector contributes more than 80% to the GDP with 37% share of Industry to GDP. Furthermore, the private sector has contributed greatly to build a strong local industrialization base by creating SMEs and large businesses in diverse sectors that have strengthened and connected our local value chain with global value chain system.
"As Bangladesh is on its journey towards graduating into a developing country by 2026 and aspires to become a knowledge based SMART and developed economy by 2041, the role of private sector investment in achieving this target is immense and instrumental" said the President of Dhaka Chamber of Commerce & Industry (DCCI).
It is worth mentioning that the economy was experiencing smooth private sector investment until Covid-19 pandemic and geo-economic crisis kicked off. Due to pandemic stress, private sector investment to GDP ratio has fallen 14 years lowest to 21.25% in FY2021, statement said.
It reads while the economy was recovering from the pandemic repercussions, the Russia-Ukraine war has heavily destabilized the global geo-economic stability and global supply system including Bangladesh. As a result, the private sector investment looked downward and recorded 21.8% against the target of 24.8% of GDP in FY2023 having manifold negative impacts on the economy.
In this regard, despite various efforts by the government and other stakeholders, private sector credit growth has not revived yet at the expected level.
In the first half of FY2023, public sector credit was targeted at 43% while private sector credit at 10.9%. This wide gap in targets between private and public sectors indicates and causes underperformance of private sector credit flows.
It is observed that private sector investment has reduced due to the rising development expenditure relying on borrowing from Banks and NBFIs to meet the huge budget deficit, soaring inflation and contractionary monetary policy.
In addition, increased pressure on the foreign exchange market has also affected private investment to some extent.
Amidst this context, the DCCI President stressed to make both the private sector and the economy competitive, improving private sector credit growth is essential.
