Putting in place the required infrastructure is both time-consuming and costly. Successive governments resorted to this negative rationale to shield their positions while in power, and whatever that was in place could barely match the soaring demands for, say, electricity, gas, roads, specialised industrial parks and so on. As a result, the cost of doing business has always been on the rise. Coming to corruption and inefficient bureaucracy, one may find that these are but the same side of the coin, each complementing the other. While corruption breeds inefficiency, inefficiency may not necessarily breed corruption. But in our case, it is a vicious mix. It is not only instrumental in routinely harassing business people but the common people as well who may have no links to business at all.
Inadequate infrastructure, corruption and inefficient bureaucracy were found to be endemic bottlenecks in scores of studies and surveys conducted at home and abroad. According a World Economic Forum (WEF) survey, 21 per cent of businesses in Bangladesh identified inadequate infrastructure as the top barrier in doing business. Corruption was identified as the second problem by 20.7 per cent of the respondents, while 15.3 per cent of the respondents found inefficient government bureaucracy severely affecting business environment. Now, looking at the percentage of the stakeholders who rated these problems as the top three, one may tend to see that the sequence may change depending on the nature of the businesses to which the respondents belong. However, the fact that poor or inadequate infrastructure has featured most prominently among these three shows how this deficiency cuts across all business segments as a common malady.
Viewed from this perspective, it is the government that at the end of the day remains answerable for not doing what it was supposed to do to help businesses grow and at the same time take steps to do away with harmful practices. It is commonly believed that much of the inadequacies and accompanying ills are, for the most part, augmented by inactivity of the government or its laid-back moves.
Of the other deterrents to doing business in the country, inadequate access to financing, discontinuity in government policies, lack of trained workforce figured prominently. In this context, it may be pertinent to argue that the impact of much of these inadequacies could have been felt less had infrastructure been in place, at least in critical areas such as electricity and gas, transport and communication, specialised industrial parks and economic zones etc.
For some time now, experts have been stressing the urgent need to make Public Private Partnership (PPP) functional and to attract increased foreign direct investment and quality investment in infrastructure. They opine that the country's allocation for infrastructure development should be increased to 6.0-8.0 per cent of GDP from the existing 2.85 per cent. In this regard, one important instrument through which to push funds into the ongoing and future PPP projects could be the creation of an infrastructure fund with both government and private resources.
Sometime ago newspaper reports said the government was working to create a sizeable infrastructure fund to ease financing of projects under PPP. The fund amounting to $500 million would primarily be financed by the private sector with the initial seed money worth $100 million or 20 per cent of the total funds to be availed from government sources. The Prime Minister's Office reportedly formed a committee to make recommendations on the creation of the infrastructure fund and introduction of an effective financing solution for PPP projects. A concept paper on this has been prepared by the Public Private Partnership Authority (PPPA) under the PMO. The fund was meant to raise long-term capital from private investors with the government supporting the fund's structural framework, seed capital, risk guarantees and regulatory support, including investor incentives.
It is not known how far the work programme has progressed. Whatever the fate of the plan, it is believed that PPP can be the most effective vehicle for funding infrastructure. Globally, PPPs are credited for its inherent virtues, pertaining particularly to infrastructure building. These are briefly:
• Under the right circumstances, PPPs can mobilise additional sources of funding and financing for infrastructure;
• By subjecting potential projects to the test of attracting private finance, PPPs can enhance project selection;
• The incentives of the private sector can be aligned with the interests of the contracting authority throughout the entire life cycle of the project, including the implementation phase. This alignment occurs by tying-in the private operator's revenue to a set of pre-agreed performance indicators and by requiring the latter to invest significant, long-term capital.
In the light of the experiences of other countries, the gains from PPPs may be explored and utilised for infrastructure funding.
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