Policy Action Plan for Boosting Investment, Trade

1
Policy Action Plan for Boosting Investment,
Trade Exports

• Chief Guest, Mr. Abul Kalam Azad, Principal
  Secretary
•  
• Special Guest, Mr. Mahbub Ahmed, Senior
  Secretary, Ministry of Finance
•  
• Special Guest, Mr. Hedayetullah Al Mamoon, ndc,
  Senior Secretary, Ministry of Commerce
• Keynote speakers, Dr. Selim Raihan, and Dr. Ahsan
  H. Mansur
• Distinguished guests, government officials,
  fellow members of the business community, ladies
  and gentlemen.
•  

2
Low Investment-Low growth trap

• We all know by now that to attain middle income
  country (MIC) status by 2021, Bangladesh needs
  to ensure over 8 GDP growth rate for the next
  5-7 consecutive years.
• Our FDI to GDP ratio was 1 in 2013, 0.9 in
  2014, according to FDI Intelligence Report 2015.
• Need to substantially boost our Investment-GDP
  ratio from 28 at present in order to achieve the
  desired 8 annual GDP growth.

3
GLOBAL SLOWDOWN OF INTERNATIONAL TRADE
? 2014 WAS THE THIRD CONSECUTIVE YEAR WHEN
GLOBAL TRADE GREW AT LESS THAN 3. ? GLOBAL
GROWTH AVERAGED 2.4 OVER EACH OF THE LAST 3
YEARS THE SLOWEST RATE ON RECORD FOR A THREE
YEAR PERIOD WHEN TRADE WAS EXPANDING. ? 2014
International Trade Growth Rate --
Forecast 4.7 -- Revised 3.1 --
Actual Estimated 2.8
WTO Sept 2014
4
CHINAS SLOWING ECONOMY ? CHINAS PRODUCER
PRICE INDEX (PPI) HAS BEEN FALLING FOR 41 MONTHS
STRAIGHT. ECONOMIC GROWTH IS SLOWING MANY
CHINESE INDUSTRIES ARE SUFFERING FROM OVER
CAPACITY ITS RAVENOUS APPELITE FOR COMMODITIES
IS MAKING. ALL THAT SLACK MUST BE PUTTING
DOWNWARD PRESSURE ON PRICES MUCH ACROSS MOST OF
THE WORLD. ? CHINAS ECONOMY EXPANDED 7.4 IN
2014 ITS WEAKEST SINCE 1990 AND SLOWED FURTHER
THIS YEAR TO JUST 7.0 IN THE FIRST 2 QUARTER. ?
SHOCK CURRENCY DEVALUATION OF NEARLY 2 ON
AUGUST 11, WHICH CAUSED THE YUAN TO TUMBLE ALMOST
5 IN AUG. THE UNIT IS WIDELY EXPECTED TO WEAKEN
MORE AGAINST THE USD. ? JAPANAS NOMURA EXPECTS
THE YUAN CURRENTLY AROUND 6.4 YUAN TO THE DOLLAR
TO DEPRECIATE FURTHER TO 6.6 BY THE END OF THE
YEAR. ? CHINESE SLOW DOWN IS LIKELY TO BE A KEY
WORRY FOR THE FED AND A 14 DROP IN CHINESE
IMPORTS OVER THE PAST YEAR, THE TENTH STRAIGHT
MONTHLY DROP, ALONG WITH AN ANNUAL FACTORY GATE
DEFLATION OF ALMOST 6, DOES NOT HELP RATE LIKE
ARGUMENTS. Reuters, Frankfurt, 13 Sept.
5
INDIAS FALLING EXPORTS WORRY BUSINESS By DR.
B.K. MUKHUPADHAY, MANAGEMENT ECONOMIST, W. BENGAL
STATE UNIVERSITY, AUG 19, 2015 (Financial
Express) IN JULY 2015 INDIAS MERCHANDISE
EXPORTS CONTRACTED FOR THE EIGHTH CONSECUTIVE
MONTH AFTER MAKING AN ANNUAL DROP OF 10.3 DUE TO
THE CONTINUED DEFICIENCIES IN GLOBAL DEMAND OIL
PRICES AMONG OTHERS. DURING THE FIRST TWO MONTHS
OF THE FY 2015-16, INDIAN EXPORTS DECLINED BY
15.04 TO 9.92 BILLION .. WHILE INDIAS DECLINING
EXPORTS REMAIN A MAJOR CONCERN CHINA HAS DEVALUED
ITS CURRENCY BY 6 IN 3 TRANCHES PERHAPS TO
MAKE ITS OWN PRODUCTS MORE COMPETITIVE IN THE
GLOBAL MARKET. PERTINENTLY INDIAN MANUFACTURERS
EXPORTS HAVE EXPRESSED THEIR CONCERNS REGARDING
A) GRADUAL DECREASE IN INDIAS EXPORTS TO CHINA
AND REST OF THE WORLD AND B) SUBSTANTIAL RISE IN
CHEAPER IMPORTS FROM CHINA. THEY HAVE SUGGESTED
THAT INDIA SHOULD TAKE STEPS TO PROTECT ITS
MANUFACTURING SECTOR AND STOP THE PROLIERATION OF
CHINESE GOODS IN THE INDIAN MARKET. MOREOVER THE
FEDERATION OF INDIAN EXPORT ORGANIZATIONS (FIEO)
HAS SOUGHT IMMEDIATE REINTRODUCTION OF THE
INTEREST SUBVENTION SCHEME FOR EXPORTERS
TIMELY REIMBURSEMENT OF INPUT TAXES AND
RESTORATION OF THE HIGHER RATES OF EXPORT
INCENTIVES FOR BOTH MERCHANDISES SERVICES TO
HELP EXPORTERS OVERCOME THE CURRENT
CRISIS. PAKISTAN CUTS INTEREST RATES TO 42-YEAR
LOW AFP, KARACHI PAKISTANIS CENTRAL
BANK SATURDAY REDUCED INTEREST RATES TO A
42-YEAR-LOW OF SIX PERCENT, AFTER INFLATION FELL
DRAMATICALLY. THE STATE BANK OF PAKISTAN (SBP)
ANNOUNCED IT HAD CUT RATES TO SIX PERCENT FROM
6.5 PERCENT.
6

• BANGLADESH STARES AT EXPORTS REVENUE LOSS DUE TO
  REALITY
• BDNEWS24.COM 2015-0705
• A) FOR THE FIRST TIME IN BANGLADESHS HISTORY,
  THE GOVERNMENT ACCEPTS THAT ANNUAL EXPORTS WILL
  DIP, BLAMING IT ON TWO MAJOR CURRENCIES THAT HAVE
  LOST VALUE.
• THE VOLUME, SAYS EPB CHIEF SUBHASISH BOSE, WILL
  NOT BE DOWN, BUT WEAKER EURO AND RUSSIAN RUBLE
  WILL MEAN THE EXPORTERS WILL TAKE HOME MUCH LESS.
• B) BANGLADESH EXPORT GROWTH
• FY 11 (2010-11) 26
• FY 12 (2011-12) 28
• FY 13 (2013-14) 24
• FY 14 (2014-15) 4
• JULY (FY15) - 1.37
• OVER THE LAST DECADE EXPORT CONCENTRATION HAS
  INCREASED FROM 67.7 IN 1990 TO 87.4 IN 2014
• EXPORT GROWTH SLOWED TO 3.35 THE LOWEST IN THE
  LAST 13 YEARS , DESPITE VOLUME GROWTH OF ALMOST
  1.5 times OVER LAST YEAR. THIS INCLUDES A LOSS OF
  EXPORT REVENUE OF US 2 BILLION IN VALUE TERMS
  LAST YEAR ALONE DUE TO THE EURO CRASH.

7
PLUMMETING EXPORT GROWTH RATE
EXPORT GROWTH OF BANGLADESH SUFFERED A FAIRLY
DRAMATIC DECLERATION IN THE FISCAL YEAR 2014-15
(FY15). THE GROWTH RATE PLUMMETED TO 3.3 - THE
LOWEST SINCE FY02 WHEN THERE WAS A NEGATIVE
GROWTH. THE DECELERATION IS VIEWED AS A MATTER OF
GRAVE CONCERN BY VARIOUS SECTIONS OF SOCIETY
ECONOMISTS AS WELL AS POLITICIANS . .. IT IS
OF CRUCIAL IMPORTANCE THAT POLICY MAKERS
BUSINESS PEOPLE AND THE ECONOMIC ANALYSTS JOIN
TOGETHER IN IDENTIFYING THE DETERMINANTS OF
EXPORT GROWTH OF BANGLADESH AND ADOPT APPROPRIATE
REMEDIAL MEASURES. OTHERWISE, THE COUNTRYS LOW
MIDDLE INCOME STATUS TO UPPER MIDDLE INCOME
COUNTRY WILL BE STUNTED. EXPORT GROWTH OF
BANGLADESH DO WE KNOW THE DETERMINANTS
Dr. Mirza Azizul Islam Aug
19, Financial Express, P-4
8
MCCI INITIATIVE

• Today, Dr. Selim Raihan will expand on the topic
  of second generation reforms required in our
  investment regime.
• Dr. Ahsan H. Mansur will present his ideas on how
  to facilitate investment and boost
  competitiveness.
• Business leaders will provide the view from the
  trenches of areas for policy reform innovation.

• MCCI organized a discussion on August 1, 2015
  jointly with SANEM, where it was identified that
  second generation reforms are urgently
  required in areas of Policy, Institutions, and
  Infrastructure.