Energy crisis, decision sloth prompt sharp investment fall

FE Team | Published: May 03, 2010 00:00:00 | Updated: February 01, 2018 00:00:00

Doulot Akter Mala
The country's acute energy crisis and protracted decision making process has led to sharp decline in both local and foreign investment proposals in the current fiscal, officials said.
Foreign Direct Investment (FDI) proposals dropped by 70.47 per cent in the first eight months of the current fiscal compared to the corresponding period last year, according to the data of Board of Investment (BoI).
The BoI has received FDI proposals worth Tk 42.626 billion (42626.747 million) in July-February period which is one-third less than the proposals worth Tk 144.345 billion placed in the same period of the previous fiscal.
Total investment proposals, both foreign and local, worth Tk 168.997 billion were placed with the BoI until February this year against Tk 252.280 billion in the same period last year, BoI data said.
BoI found the total fall in investment proposals at about 33.01 per cent in the eight months compared to the corresponding period.
Officials said the massive fall in private sectors' investment proposals will leave an adverse impact on the actual investment scenario of the country.
They observed that foreign investors have identified the long-drawn decision making process as one of the major obstacles to investment.
"Prolonged tendering process has discouraged a number of investors from investing in the country. A number of investors have expressed their unwillingness to make investment after waiting for a long time with investment proposals," said an official who deals with investment proposals.
Luring investment to power and gas sectors is imperative to easing the present situation, he said stressing giving fast-track approval of investment proposals in this sector.
The scope of investment in gas-well exploration, coal extraction and establishment of new power plants should be prioritised, he added.
Investors often demanded special economic zones for investment in ICT, garments and backward linkage industries, where all required facilities of supply-chain will be available, he said.
The government will have to conduct feasibility study to set up the zones that will be economically viable for investment, he said.
He said if the government remains aloof in this situation, the economy will collapse in a short time.
Dr. Mustafa K Mujeri, director general (DG) of Bangladesh Institute of Development Studies (BIDS), pointed out the existing energy crisis as a major reason of shakiness of investors prompting them to put aside investment proposals for BoI.
"Maybe, investors are yet to regain confidence to take risks of investment. They may still not be sure about their profits or returns on their investment," he said.
It is necessary to build their confidence-level through policy measures, he said adding that negative growth of merchandise export and world recession has broken the confidence level of investors.
Easy preconditions of investment, support to production process and removing procedural complexities should be addressed properly for raising investment, he said.
"Lengthy process of approval often discourages investors. Removal of unusual hindrances is needed to expedite approval of investment proposals," he said.
On giving fast-track approval to investment, Mujeri said all investors have to obey the government's existing rules in making investments, and the government can eliminate unnecessary procedures to invite investment on an urgent basis.
Annisul Huq, president of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), has expressed the view of maintaining transparency in the selection procedure with emphasis on expediting approval of investment proposals.
Power and energy crisis is the basic problem for investors which should be resolved immediately, he said.
Investors are also unwilling to make investment due to inadequate infrastructure and land size, the apex chamber leader said.
Global recession is another major reason for sharp decline in foreign investment proposals, he added.
Local investors need a long-term policy of the government in making investment plans including offering some opportunities like permission for importing diesel, he said.