The growth of private investment slimmed down over the past six months due to the Covid-19 fallouts, slow reform initiatives and high cost of doing business in the country, according to a recent assessment.

The ratio of private investment to gross domestic product fell to 12.72 per cent while local and foreign investment declined 72.16 per cent in the July-September period of fiscal 2020-21, it said.

The assessment, carried out by the Dhaka Chamber of Commerce & Industry (DCCI), was unveiled at a webinar held yesterday.

"The economy is progressing in the right direction despite the various Covid-induced challenges," DCCI President Rizwan Rahman said during his presentation.

However, some room remains for further private sector-centric economic development, he added.

Rahman went on to say that both the public and private sectors should work hand in hand in the coming days to achieve a game-changing economic transformation for Bangladesh by 2041.

Mashiur Rahman, adviser to the prime minister on economic affairs, also addressed the webinar, styled "Current state & future outlook of Bangladesh economy: private sector perspective (July-December FY2020-21)".

"The economy should now be fully functional as the government stimulus packages have been disbursed," he said.

Rahman fears that the excess liquidity currently prevalent in the banking sector could increase inflation.

He also pointed out that the private sector should take responsibility for certain government initiatives while claiming that the authorities successfully managed the Covid-19 crisis.

"The policies are on the right track and growth momentum is sustained," Rahman said.

Although demand remains a bit subdued amid the ongoing pandemic, the private sector needs to become more productive now. Bangladesh enjoyed reasonably good exports despite Covid-19 while remittance has also increased.

"But we need to be more careful about the non-resident Bangladeshis returning home from the Covid-hit labour markets," he added.

The prime minister's economic adviser suggested that people should be optimistic now as the government has come up with various policy support for the private sector.

He urged private sector entities to utilise this policy regime.   

Meanwhile, DCCI President Rahman said the poverty rate rose 9 per cent to 29.5 per cent due to the Covid-19 impact.

Aside from recommending that the tax system should be automated, the DCCI chief said that considering the Covid-19 impact, the national budget should be reviewed on a quarterly basis so that allocations can be reconsidered based on priority.

With a view to facilitating local private sector investment, Rahman suggested a reduction in corporate tax, an increase in investment for infrastructure development, and framing sector specific investment roadmaps.

Atiur Rahman, a former governor of Bangladesh Bank, said it is important to help the micro, small, and medium entrepreneurs (MSME) recover their Covid-induced losses as these will fuel economic growth in the future.

Bangladesh was able to manage its economy relatively well amid the ongoing crisis even though other countries are still facing severe complications.

"The economic uncertainty has been resolved as growth is better than many other countries in the world," he said.

"The supply of liquidity should be sound and it should not go to any unproductive sector instead of financing the real economy," Rahman added.

According to the former central bank governor, any issues in the agriculture and MSME sectors should be addressed properly so that these sectors do not face discrimination.

Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said the Covid-19 worsened the country's poverty levels, which should be addressed first in the post-pandemic era.

In this regard, financing support should be ensured to the entrepreneurs to help reduce poverty, he said.

Foreign direct investment in Bangladesh declined over the last few years while it increased in neighbouring countries like India, Pakistan and China.

Mansur went on to suggest that the exchange rate should be adjusted in accordance with the real exchange rate instead of over-appreciating the taka.

Masrur Reaz, chairman of the Policy Exchange, said that, to identify the post-Covid challenges, public-private dialogues may play a key role.

During the Covid-19 pandemic, supportive measures for the agriculture supply chain worked well.

Meanwhile, exports were slightly subdued as the export market is going through uncertainty but thanks to vaccination drives across the world, the situation will improve within six months, Reaz added.

Abul Kasem Khan, chairman of Business Initiative Leading Development, said the economy is in a recovery stage but there are some challenges.

"In the taxation policy, we need to be competitive with other countries. Our Tax-GDP ratio is one of the lowest in the region," he said, adding that the National Board of Revenue should go after people who are not paying taxes.