WB focuses on decline in private investment, capital flight

WB focuses on decline in private investment, capital flight

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The World Bank has said that the country’s private investment has been experiencing a declining trend while public investment is increasing.According to the donor agency, private investment declined to a three year low of 21.8 percent of GDP as investment growth declined despite stability.
“The gap between the actual and required private investment rate is widening,” said World Bank chief economist in Dhaka office Zahid Hussain while making a presentation on the donor agency’s latest update report titled: “Bangladesh Development Update” on Monday at the donor agency’s local office.
He said the decline in private investment is not for lack of saving. Rather, it is for lack of adequate infrastructure and also for absence of business climate.
“If investment is not made here, where does the money go?” Raising such a question, Zahid himself replied, “World Economic Forum and other international agency reports reveals, this money is flying out of the country. Capital flight from Bangladesh peaked in fiscal 2012-13.”
Until 2013, several billion dollars made their way out of the country, he added, quoting the report.
According to the multilateral donor agency, another weak point in the economy is that remittances continued to decline because of the bad financial situation in the Middle East (ME) nations where most Bangladeshi expatriate workers are employed.
“These ME countries have cut salaries, bonuses and overtimes of workers because of their declining financial situation against the backdrop of oil price fall,” said Zahid Hussain.
Presenting different updates on economic performance, the World Bank projected Bangladesh’s current fiscal’s GDP growth at 6.8 percent against the government’s target of 7.2 percent for the current fiscal 2016-17.
The World Bank, however, said Bangladesh’s extreme poverty has significantly reduced in recent years.
Presenting a new revised international poverty line of $1.90 a day on 2011 PPP (purchasing power parity), the donor agency said, now 18.5 percent or 28 million people are living in extreme poverty as of 2011.
“Some 16.2 million people were lifted out of poverty in between 2000 and 2010,” said the World Bank Report.
Appreciating Bangladesh success, World Bank Bangladesh country director Qimiao Fan said conditional cash transfers, gender equity in education and successful family planning are reflected in notable poverty reduction and improvement in lives of citizens.
He mentioned that the World Bank chief is coming to Dhaka to celebrate such success.
But despite such success, World Bank said that it is unlikely for Bangladesh to eliminate poverty by 2030 as per target set by the UN Sustainable Development Goals (SDG).
“Zero poverty means below 3 percent poverty. But until Bangladesh GDP growth achieves a faster GDP growth rate, it is unlikely to reach such target,” said the WB’s Bangladesh lead economist.
About the economic performance, the World Bank said all the indicators of the economy, except private investment and remittance, are showing good signs.
Explaining the issue of lack of business climate for which private investment is declining, Zahid Hussain said it takes 404 days to get an electricity connection while property registration takes 244 days and land conflict resolution process through the courts takes 1442 days on average.
“If the situation is not improved, investors will not come to invest. Delay has a cost itself in investment,” he added.
Focusing on decline of remittance, Zahid Hossain said it’s almost certain that oil price will remain at a lower level and that’s why global economy continues to remain in bad shape. The Brexit issue will also influence the global economy, he pointed out.

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