Removal of deterrents to FDI stressed

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FE Report
Discussants at a seminar on Wednesday said the country's image crises; corruption and inadequate supply of power and energy need to be addressed immediately to lure both local and foreign direct investment (FDI).
The discussants, both from local and foreign countries, strongly urged the government to eliminate the deterrents to investment and to encourage local and FDI in the country.
They said the FDI generally follows the trend of local investment.
The seminar styled, "High Level Discussion on Bangladesh: The Next Investment Destination," was organised by Metropolitan Chamber of Commerce and Industry (MCCI) at a local hotel.
Dr. Jomo K. Sundaram, Assistant Secretary General for Economic Development, Department of Economic and Social Affairs of the United Nations delivered the key note speech at the seminar.
Matia Chowdhury, Minister for Agriculture, addressed the function as Chief Guest, while Dilip Barua, Minister for Industries as Special Guest.
M. Syeduzzaman, former Finance Minister, conducted the function.
Professor Rehman Sobhan, Chairman, Centre for Policy Dialogue said the local investment has to be increased to attract FDI. He said the relocation of FDI has already started from East Asian countries to Bangladesh in recent times.
Rehman Sobhan urged the government to prioritise and identify sectors like agro-processing and fertiliser for both local and FDI as the scope to develop these two sectors are huge in local and foreign markets.
He said many investors now prefer Motijheel area, where they rush to brokerage houses to invest in share market.
Oddvar Hesjedal, CEO, Grameen Phone Ltd, in his speech said image crises of the country coupled with corruption and bureaucratic tangle are holding back the potential of Bangladesh despite its liberal investment policies.
"Country's image has to be changed to attract FDI in Bangladesh, while bottlenecks like inadequate supply of power and energy and problems with infrastructure should be addressed to lure investors," Hesjedal said at the seminar.
Ashish Bharat Ram, Managing Director, SRF Ltd, India, who invested recently in the country said the government should formulate a land acquisition policy for industrialisation as the land is very expensive in Bangladesh.
Besides, he said poor infrastructure, power crisis and higher operating cost are some of the hurdles that discourage FDI in Bangladesh.
Muhammad Aziz Khan, Chairman, Summit Power Ltd said the FDI is protected here by rule, who termed Bangladesh a good investment destination as every Bangladeshi citizen love foreigners.
He said the country lacks fundamentalism and cheap manpower available here are conducive to any kind of investment.
Aziz, however, said the country is yet to have enough skilled manpower and adequate infrastructure with uninterrupted power and energy supply.
He expressed the hope that the situation would improve soon as the incumbent government is very serious to address the issue on priority basis.
MK Anwar, former agriculture minister and a lawmaker said sometimes FDI crowds out local investors. He suggested the government to minimize the cost of doing business and address power and infrastructure problems.
He urged the government for undertaking study before striking deals on regional connectivity and sub-regional cooperation.
Maidul Islam, a former minister, said the government should address the nagging power and gas problems affecting both local and foreign investors in the country.
Mojibur Rahman, Chairman, Tariff Commission, Sohel Ahmed, former commerce secretary, Ulrik Federspiel, Vice-President, HaldorTopse, Denmark, Salahuddin Kashem Khan, Managing Director, A.K. Khan & Company Ltd, spoke on the occasion, among others.
Sundaram in his speech said there lies no universal rule nor best practice to attract FDI.
"Rather, the government should identify weakness and constraint in the areas of fiscal, governance and infrastructure to lure both local and foreign investment," Sundaram said.
He urged the government to prioritise key sectors having potential to grow for investment and develop performance criteria for selected sectors.
Matia Chowdhury in her speech said the country's private sector is playing a very pivotal and positive role in accelerating economic growth. The trade liberalisation of the country could not slow its economic growth, she added.
"Our projected Gross Domestic Product (GDP) will grow by 8 per cent by 2014 and 10 per cent by 2017 due mainly to our persistent efforts for enhanced investment in the country," Matia told the seminar.
Industries Minister Dilip Barua said Bangladesh is a unique place for investment. The government is giving more incentives and advantages to the foreign as well as local investors, he added.
"We are giving more thrust on knowledge-based hi-tech industries. In this connection I would like to invite you to invest in the prospective industrial sectors of Bangladesh," he called upon the investors.
Our economy is now more open than ever to international trade, with the average MFN tariff rate of 14.97 per cent which is quite low compared to many other countries in the region, Dilip Barua said.
"Over the recent years, Bangladesh has initiated a number of efficient policy frameworks conducive to socio-economic growth, particularly for the growth of investment, trade, commerce, employment and productivity. These include National Industrial Policy 2010, Zones Act 2010, Bangladesh Gas Act, 2010, and the draft Bangladesh National Skills Development policy 2010-2015," Dilip Barua told the seminar in his set speech.
The National Industrial Policy, 2010 aimed at increasing contribution of industrial sector to the national income by 40 per cent and raising employment by 25 per cent by 2021, the industries minister further said.
M. Anis Ud Dowla, President, MCCI, said the major reasons behind low FDI inflows in Bangladesh have been weak governance, administrative malpractices, poor infrastructure, ineffective implementation of the policy framework, and above all, inadequate and erratic supply of power and gas, which still remain to be addressed immediately and effectively.
"Overall investment climate needs to be improved," the MCCI President said.
Our macroeconomic conditions are ranked favourably by major global investment banks and multilateral institutions like Citicorp, Goldman Sachs, JP Morgan, Merrill Lynch and the World Bank, he added.
He said the country's energy infrastructure is small, insufficient and poorly managed. The per capita annual energy consumption in Bangladesh, 148 Kilo Watt Hours, is the lowest in the world, he said.
The business community underscores the need to improve the power infrastructure as a pre-requisite for investment. Domestic investment has remained static largely due to dismal power situation, the MCCI President added.
"Analyses of domestic saving and investment in Bangladesh show that it will require additional investment equivalent to 2 per cent of GDP every year to achieve the targeted GDP growth of 8 per cent by the year 2013 and 10 per cent by the year 2015,"Anis said.
He said the politics in Bangladesh has increasingly become confrontational and uncertain. The problems largely stem from lack of commitments by the political parties to basic norms of democracy, he added.
"No doubt, it is seriously affecting the trade and commerce in the country as well as hampering our image, productivity and competitiveness in the global market. We urge the political parties to sort out the ideological differences and keep the business out of it at all cost," the MCCI President further said.