Policy Action Plan for Boosting Investment, Trade & Exports

1. Policy Action Plan for Boosting Investment, Trade & Exports • Chief Guest, Mr. AbulKalam 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. SelimRaihan, 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. CHINA’S SLOWING ECONOMY  CHINA’S 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.  CHINA’S 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.  JAPANA’S 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. INDIA’S FALLING EXPORTS WORRY BUSINESS … By DR. B.K. MUKHUPADHAY, MANAGEMENT ECONOMIST, W. BENGAL STATE UNIVERSITY, AUG 19, 2015 (Financial Express) IN JULY 2015 INDIA’S MERCHANDISE EXPORTS CONTRACTED FOR THE EIGHTH CONSECUTIVE MONTHAFTER 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 INDIA’S 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 INCENTIVESFOR BOTH MERCHANDISES & SERVICES TO HELP EXPORTERS OVERCOME THE CURRENT CRISIS. PAKISTAN CUTS INTEREST RATES TO 42-YEAR LOW AFP, KARACHI PAKISTANI’S 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 BANGLADESH’S 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 COUNTRY’S 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 • 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. • Today, Dr. SelimRaihan 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.