Had the momentum the economy gained after absorbing shocks induced by the first wave of the novel coronavirus sustained, there would have been a huge demand for private sector investment.
This would also have helped to achieve the private sector credit growth target set by the government.
But, the new wave of infections that began in April this year has hurt the economy badly. Production in the country's industrial sector is virtually closed. Overall, we have moved away from the stability we had.
In this situation, I think it will not be possible to meet the target of disbursing new net loans of Tk1,76,000 crore in the private sector.
Overseas markets are reopening. Economies of our major export destination countries and regions, including the United States and the European Union, are rebounding.
Even if we have the opportunity to be optimistic about exports in this situation, it is very important whether our local industry, especially the manufacturing sector, cottage, micro and small industries can continue production.
The reality is there is no reason to think that lowering interest rates will lead to more investment and increase the flow of debt. If people's income does not increase, if purchasing power is not right, if shops are not open, if there is no guarantee of income growth in the coming days, the demand for manufactured goods will not increase. There will be no investment.
Much also depends on what happens after 5 August – whether the lockdown will be extended or not. Vaccination drive has got momentum. Much also depends on how far this progress in vaccination activities go.
The sooner we can overcome these problems, the faster the economy will recover. The demand for investment will increase if the immunisation activities can be taken to a satisfactory level and the economy can be fully opened.
I repeat, interest rates on loans are not the only determinant of investment. We traders have been saying for a long time that the interest rate on loans is high here. Interest rates have fallen in recent times. Traders are in a little better state in that respect.
But, many other factors are linked to investment. Investment decisions are made taking into account many factors, including taxation policy, simplification in taxation, ease of doing business, cost of starting and operating a business.
It is true the investment climate in Bangladesh has improved fast. In recent times, interest rates have fallen and power generation has increased.
However, the global investment environment is being taken very seriously. And as the investment climates in other countries are improving more rapidly, we are lagging behind in terms of competitiveness.
Abul Kasem Khan, Chairperson, BUILD, and former president, DCCI; spoke to Jahidul Islam of TBS over the phone.