Top investment banker calls for major overhaul in development spending

FE Team | Published: May 24, 2009 00:00:00 | Updated: February 01, 2018 00:00:00

FE Report
Bangladesh should adopt a public-private partnership (PPP)-based infrastructure investment programme in the upcoming annual budget, replacing the 'failed' ADP-based approach, a top investment banker said Saturday.
Ifty Islam, managing partner of Asian Tiger Capital and an ex-top banker with Citicorp and Duetsche Bank, said the infrastructure spending through Annual Development Progamme (ADP) has successively failed to deliver the expected results.
"As a result, the size of the ADP has declined by half in relation to the Gross Domestic Product (GDP) in recent years," Mr. Islam said in his key-note paper, suggesting the replacement of ADP by PPP.
"ADP based investment programme should be limited to areas where private sector investment is difficult to attract. Any further decline in public sector investment is not acceptable, given the state of infrastructure in Bangladesh," he added.
The government announced earlier this month that the upcoming budget would have block allocation for the PPP alongside development and revenue expenditure to foster concerted efforts of the public and private sectors.
It said that a private authority would oversee the 'public-private partnership' projects in the FY 2009-10 budget with its chief to be appointed from the private sector,
Mr. Islam recommended the establishment of a US$ 1 billion PPP based investment fund to catalize US$ 4.5 billion total investment in the infrastructure sector and the establishment of a PPP cell at the Ministry of Finance or Prime Minister's office.
"If properly implemented and leveraged, this may potentially generate four to five percent of GDP in infrastructure investment which is well above what could be done through the current ADP arrangement," he said.
He suggested finalisation of the coal policy "as soon as possible" and installtion of more rental power plants to overcome the short term power crisis.
He was speaking at a seminar on "Global Recession and Bangladesh: Issues, Impact and Solutions" organised by the IBA Alumni Association. State minister for housing and public works Abdul Mannan Khan was the chief guest.
Speakers stressed accelerating agricultural production and domestic demand to help the economy maintain its resilience amid a sharp global downturn.
"Our goal is put agriculture at the heart of the country's development. The government has successfully controlled the prices of seeds, fertilizer and pesticides to help out the farmers", Abdul Mannan Khan said.
He said the government has already ensured uninterrupted supply of electricity for irrigation during the dry season even amid a crippling power crisis.
Chairman of Bangladesh Krishi Bank Mr. Khondkar Ibrahim Khaled in his speech put the stress on the role of diplomacy in safeguarding the flow of remittance from major destinations of expatriate laborers.
Stressing the implication of public private partnership, President of IBA Alumni Association Mr. Nazmul Hassan MP in his speech said, "Private sector should come forward in collaborating with the public sector".
Managing Director of Apex Adelchi Footwear Limited Syed Nasim Manjur and Director of DriVen Partnership Mr. Mridul Chowdhury, among others, also spoke on the occasion.