Government's apparent inaction for the improvement of infrastructure services such as port, electricity and gas has reduced national competitiveness, the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) said.

"In the absence of requisite public investment in sensitive areas such as electricity and gas, the economic competitiveness was jeopardised," MCCI said.

The country's oldest trade body in its 'Review of Economic Situation on July-December, 2004' depicted a bright picture of Bangladesh economy for 2005 with prolific industrial sector-led economic recovery process from flood-ridden losses.

Quantum index of production marked a 7.91 percent increase during July-October period of last year. In manufacturing sector, disbursement term loans marked a rise of 60 percent and working capital 40 percent, MCCI said.

Service sectors such as telecommunications, hospital, transport and housing have monopolised the term loan. But small and cottage industries have accounted for only two percent credit expansion, for which the chamber found it necessary to give policy attention towards the growth of micro industries.

The growth of agriculture sector production dropped in the first half of current fiscal year due to flood. The July-August flood caused substantial loss to the production of aus crop of 0.218 million hectares of land resulting in production loss of 0.4 million tonnes, an 18.9 percent loss compared to the previous year. Flood also caused heavy damages to standing aman crops in 46 districts, MCCI said.

During July-November, 2004, the country received $89 million as foreign direct investment and Tk 71,760 million as domestic investment, which shows a good investment scenario in the country.

Total remittance increased to $1779 million in H1 of FY'05 from $1578 million in H1 of FY'04 marking an increase of 12.7 percent.

Export growth in first five months of FY'05 was 15.3 percent compared to 13.2 percent in the corresponding period of previous fiscal year. Import payments also grew by 15.64 percent in July-November period of FY'05 compared to 16.59 percent in July-November, 2003, MCCI said.

During the review period of FY'05, trade deficit increased to $1515.51 million from $1301.84 million in the same period of FY'04. Current account surplus improved to $284 million in September 2004 from $227 million in September 2003, MCCI review said.

With increase in remittance and export receipts, foreign exchange reserve position stood at $3223 million in December 2004 compared to $2624 million in December 2003.

The rate of inflation as measured by consumer price index increased by 6.19 percent, 6.06 percent and 5.88 percent in November, September and July, 2004 respectively mainly due to the rise in food item prices, MCCI said.

Revenue collection during July-December period of FY'05 was 9 percent higher than corresponding period of previous fiscal year. However, the amount was 39.6 percent of the total revenue target of this fiscal.

Monetary growth also showed an increasing trend. The year-on-year broad money growth was 15.6 percent till November 2004, which was 14.7 percent in November 2003. The liquid money increased by 17.9 percent in November, 2004 which was 13.7 percent in November, 2003, the chamber noted.

About 77.5 percent source of the expansion of money supply was banking system's credit while the other 22.5 percent was the effect of increase of net foreign assets of banking system. The ratios were 66.9 percent and 33.1 percent in the previous year.

The domestic credit growth on year-on-year basis increased by 16 percent in November 2004, which was 8.7 percent in November 2003, MCCI report said.