Capital machinery import falls for third year in FY21

Summary:

Import of capital machinery into the country declined for three years in a row and the GDP to private sector investment ratio dropped significantly in FY21 apparently due to lack of investment-friendly environment in the country.

Content:

Businesses necessarily import capital machinery for the escalation of industrial units and to increment new plants. The government also imports machinery for different infrastructures.

In Bangladesh, capital machinery import was the highest in FY2018, according to financial analysis data found in different sources. Then the import of this machinery in FY19 was 8.13 percent or $486.62 million lower from $5.16 billion import payments in FY18.

Surprisingly import of capital machinery, investors’ appetite for their business expansion, and investment situation declined for three consecutive years Fy19-21 in the country.

With the control of the pandemic situation, the country’s import of capital machinery grew somewhat in May 2021, which was somewhat down even in the start of this year, faded again in the subsequent two months-June & July.

In FY21, the letter of credit settlement of industrial raw materials dropped by 13.62 percent to $3.74 billion from $4.33 billion in FY20. Whereas in May, import of capital machinery rose to $436.53 million which was almost close to the import of Fy18.

Mirza Aziz, a former adviser to a caretaker government and economist reasoned an unreceptive environment for investment for the impediments to investment, since the country is not improving since the coronavirus situation. He also reasoned the weak infrastructure and dismal state of governance for the poor investment in the country.

Apart from the capital machinery import, private sector investment is also going through a dismal investment situation for more than a year. In July of FY22, private sector growth was 8.38 percent which is far behind Bangladesh bank’s target of 14.8 percent.

In the World Bank’s ease of doing business index, Bangladesh ranked 168th, which makes it a difficult choice for investors to invest their valuable money. Total 167 countries are ahead of us to make us less visible or invisible to the eyes of the investors.

It is feared that the situation might remain unchanged until the confidence of the investors and the businesses get restored. The present state of the country is not fully impressive for them to invest in.

Source:  NAB

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