8th Five Year Plan targets 8.51% growth in 2025

In the preface of the country's 1st Five Year Plan formulated in 1973, the first deputy chairman of the Planning Commission, Professor Nurul Islam, highlighted the challenges the newly independent country was going to face.

"Bangladesh inherited a poor, undiversified economy, characterised by under-developed infrastructure, stagnant agriculture and a rapidly growing population," he wrote.

The Tk4,445 crore investment target in the 1st plan focused on bringing people's purchasing power back to pre-Liberation War levels over the next five years as well as meeting basic food and medical needs, population control, and restoring infrastructure.

After 47 years, the 8th Five Year Plan – to be tabled for approval at the National Economic Council (NEC) meeting on Tuesday – includes targets of domestic and foreign investments of Tk64.96 trillion over the next five years.

Also, through this investment, a target has been set to achieve 8.51% economic growth in 2025, the last year of the plan.

Prime Minister Sheikh Hasina will preside over the NEC meeting to be held through videoconference.

In the 1st Five Year Plan, 89% of investment was estimated from state coffers. In the 8th plan (2021-2025), 81% of investment has been estimated from the private sector.

Of the domestic investment estimated in the next five years, Tk52.66 trillion will be from the private sector. The remaining 19% (Tk12.3 trillion) has been estimated from government funds.

Moreover, Tk8.9 trillion investment is expected to come from foreign sources.

The plan aims to increase investment to 36.99% of Gross Domestic Product (GDP) in fiscal year 2024-25. In 2019-20 financial year, investment was 31.75% of GDP.

Besides, the government wants to increase private investment from 23.63% of GDP to 27.35%, though such investment remains stagnant at 22-23% for more than a decade.

Dr Shamsul Alam, a member of the Planning Commission's General Economics Division who was involved in the new plan's formulation, said the private sector would have to play a leading role in growth and employment.

"With that in mind, the new plan emphasises ease of doing business to grow private sector investment," he said.

He said the country has no shortage of electricity and LNG import has begun to meet the demand for gas.

"Once the ongoing mega projects are completed, transport infrastructure limitations will also be removed," explained Shamsul.

He said at least 15 more economic zones would be launched by 2025.

"In addition to readymade garments, the plan has identified several potential sectors for development, such as leather, ICT, machinery and light engineering, motorcycle, and agro-based industries," Shamsul added.

But economists and industrialists believe it will be difficult to meet private investment targets if the business environment does not improve.

Noted economist Dr Zahid Hussain said domestic and foreign investment goals in the private sector are never achieved due to a lack of a proper action plan aimed at solving the identified problems.

He said the actual private investment in the 7th plan was much less than the target, and the lessons learned from that failure must be included in the new plan.

The new plan should also contain detailed information on how to tackle the impacts of Covid-19 on health and business, Zahid added.

Chattogram Stock Exchange Chairman Asif Ibrahim said reforms and infrastructure projects need to be implemented fast to meet private investment targets.

He said the supply of funds for long-term investments needs to be ensured to increase trade.

The former Dhaka Chamber of Commerce and Industry president also suggested strengthening the capital market.

"The GDP to market capitalisation ratio is 12% at present. This needs to be increased to at least 35%," added Asif.