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PPPs changing the face of modern Bangladesh

Article - December 16, 2011
The private sector’s contribution to the total investment in Bangladesh’s economy is remarkable
The contribution of private investment in the national economy amounted to 20.19 per cent of GDP in 2009-2010, rising from 19.67 per cent the previous year, while public investment sector contributed only 4.77. A total of 24.96 per cent of GDP came from investments. An analysis of the investment data reveals that while the contribution of the public sector in total investment is gradually decreasing, the contribution from the private sector is steadily increasing.

Multiple private sectors are showing steady growth. Thanks to participation in health and medical services, there are currently a total of 43 privately owned general insurance companies, and 17 life insurance companies in Bangladesh. To continue encouraging these private investments, the government is offering various incentives including financial assistance. At present, there are 40 private medical colleges, 11 dental colleges, and 2,114 private hospitals and clinics with a total of 33,727 beds. In addition, 4,509 privately run diagnostic centres are currently operating.

Private-sector participation in pharmaceuticals is also significant. More than 97 per cent of total domestic requirements are met by local production. At present, Bangladesh is exporting 182 different brands of medicines to 73 countries worldwide, including the UK and the USA.

In the 2009-10 fiscal year, private sector credit increased, mainly due to mandatory lending and refinancing to the agriculture sector, lending to small and medium-sized enterprises, and other priority sectors including trade. On the other hand, net outstanding government borrowing from the banking system declined due to an increase in revenues, and the higher level of financing from non-bank sources.

As a result of the growth in private investments in multiple sectors in Bangladesh, the government has instituted reforms in privatisation schemes, to give momentum to the process and also put in place the necessary institutions and infrastructure to create a private sector-led, investment-friendly environment. It is also implementing short, medium and long-term plans to create an investment-friendly environment and a competitive market system, both of which will ensure adoption of innovative technology and infrastructural facilities to attract entrepreneurs and expand the domestic market. In addition, the government is implementing its industrial policy, first outlined in 2009, to realise the goals of Vision 2021. Its major aims are to revamp small and medium-sized enterprises, stimulate employment creation, and increase the availability and use of information technology.

The government is also keen to allocate investment resources in private-public partnership for risk-averse greenfield start-ups, infrastructure for industrial clusters and parks, and the development of employment-intensive industries in difficult and remote areas.