Editorial
Economic challenges highlighted
WB charts out four major impediments
At a time when the government is pushing ahead aggressively to attract foreign direct investment in an effort to pump fresh blood into a stagnating economy, the World Bank has highlighted key impediments to growth. The four areas stressed up on by the financial institution are: the Euro crisis, turmoil in Gulf States, volatility of oil prices in international markets and internal energy crisis.
By far the biggest challenge is the severe energy crunch which continues to derail the existing production and acts as a major deterrent to future foreign investment. This coupled with, to a lesser extent the shortage of land availability and the culture of red tape-ism aid only in deterring prospective foreign investment in Bangladesh. With the bulk of new power added by the present government coming from oil-dependent plants, there is little that can be done to mitigate this problem since the global oil markets have been in flux due to various geopolitical reasons.
With nearly US$12billion generated annually from Bangladeshi expatriate workers in the Gulf countries, the continued political instability in the region is a major threat to Bangladesh' ability to preserve this precious flow of inward remittance that plays a crucial role in paying for essential imports and fund the major infrastructure projects needed to keep the wheels of the economy turning. In an effort to tackle the double-digit inflation in the local economy, the central bank has imposed credit control conditions which have inadvertently helped reduce private investment. On the external front, exports that bring in some $26billion a year for the Bangladeshi economy have been hard hit with European economies battling a nagging recession.
While external causes cannot be influenced, internal problems can certainly be mitigated provided the political will exists. Expediting the setting up of special economic zones with requisite facilities is very much within control. Simplifying long bureaucratic decision-making processes by streamlining functions of the Board of Investment along with other related ministries is very much within the government's powers. These steps need to be taken today as opposed to sometime in the future if the State is serious about attracting foreign investment.
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