Energy crisis remains major barrier to investment

Although the BNP-led government has taken several positive initiatives during its first six months in office, Bangladesh’s key economic indicators have yet to show the desired improvement, said economist and distinguished fellow of the Centre for Policy Dialogue (CPD) Prof Dr Mustafizur Rahman.

He said high inflation, sluggish investment, weak private-sector credit growth, stagnation in employment generation and problems in the banking sector continue to pose major challenges to the economy.

He also identified the energy and power crisis as a major obstacle to investment.

“Overall, the government has taken several good initiatives. Some of the commitments made in its election manifesto have entered the implementation process. The budget also contains several investment-friendly revenue and institutional measures,” he said. He cited the expansion of bonded warehouse facilities, measures related to back-to-back letters of credit, banking-sector facilities and implementation of a single-window system as positive initiatives.

However, he said the accumulated challenges inherited by the government had not yet been resolved.

“The accumulated challenges we had been witnessing in the economy have not yet shown signs of easing. In some cases, the problems have become more acute,” he said.

Dr Mustafizur stressed that uninterrupted power and gas supplies are essential to boost investment.

“If the government says that new industries cannot be provided with gas connections, why would investors invest here?” he asked.

He suggested importing energy in the short term to tackle the crisis and strengthening domestic gas exploration in onshore, offshore and near-shore areas in the medium term by making Petrobangla’s exploration arm BAPEX more active.

He also called for the speedy implementation of plans to establish new floating LNG terminals.

At the same time, he stressed the need to strengthen institutions involved in investment, including BIDA and the PPP Authority, and ensure investors receive government services within stipulated timeframes.

“Investment will not increase through policy announcements alone. Reliable power and gas, infrastructure, speedy public services and strong institutional capacity must be ensured together,” he said.