Born four years apart in a period spanning the late eighties and the early nineties, two state entities -- the Board of Investment (BoI) and the Privatisation Board, which later was upgraded and renamed as the Privatisation Commission (PC) -- are set to be merged into one new organisation with a new name, the Bangladesh Investment Development Authority (BIDA).
The council of ministers in its regular meeting early this week approved the draft bill to this effect.
The basic reason behind taking the move for creation of BIDA, reportedly, is the failure of both BOI and the PC to meet their respective policy objectives.
Experimentation through bifurcation and merger of the public sector organisations is nothing new in Bangladesh. This has been done either for 'reducing' workload or for 'ensuring better and efficient service delivery'.
The BoI was created with the objective of offering efficient and prompt services to both local and foreign investors and the PC for expeditious privatisation of state-owned enterprises (SoEs) that proved to be more of a burden than an asset worth owning.
Their merger does show that none of the two has been able to live up to the expectation of the policymakers. Country's private sector, too, has not said anything commendable ever about either of the two.
The poor performance of BoI, PC and some other organisations have prompted many to ponder whether these are created by the government only to accommodate some ruling party stalwarts or top bureaucrats of its liking.
Undeniably, the setting up of an organisation like the BoI does not necessarily ensure any higher inflow of FDI. The foreign investors are a choosy lot. They, of course, want the official processing of investment-related work to be smooth and trouble-free. But that is not enough. The investors prefer countries that, among others, offer attractive policy package, cheap labour, improved infrastructure, skilled manpower, less corruption and political stability.
Bangladesh has cheap labour. But it does have lots of weaknesses in the areas mentioned above. Yet there are certain areas where relevant investors might prefer Bangladesh over many other countries. But interest of such investors gets diluted if they encounter problems while carrying out necessary official work. The role of BoI has been very important in this particular area. But the BoI, allegedly, has disappointed many by its indifference.
According to the latest UN Conference on Trade and Development (UNCTAD) report, foreign direct investment (FDI) declined by around 5.0 per cent in 2014 over that of the previous year. More importantly, inflow of new fund was not that much since about $1.0 billion out of the total FDI of $1.3 billion came in the form of reinvestment. The foreign companies operating in the country reinvested the sum out of their profits. The FDI inflow in the case of Thailand was $13 billion in 2014 and more than $14 billion in the previous year.
The BoI, according to media reports, except for organising a few workshops at home and road-shows abroad, has not done anything substantive in recent years to attract foreign investment. Businesses blame the BoI for being a bureaucratic outfit rather than an investment-friendly entity.
On the other hand, the performance of the PC has been even more frustrating. Only one SoE was privatised and another had offloaded its shares during past four years. Can the PC, headed by a chairman enjoying the status of a state-minister and supported by staff strength of 70, justify its existence with this kind of performance?
However, it would be unfair to blame the PC alone for such performance. There exists a powerful quarter within the government which is opposed to disinvestment of SoEs. Even they are trying to revive a few closed loss-making SoEs, including a jute mill.
One gets an impression from the statement made by the cabinet secretary following approval of the draft bill by the council of ministers last Monday that the proposed BIDA would have enhanced authority and greater responsibility to spur investment and energise the divestment process.
But will merger or renaming help motivate the officials and employees of BoI and PC, who would also man the office of the BIDA after merger, to offer efficient and prompt services to the investors, local and foreign?
With other factors that usually influence the decision-making by the prospective investors remaining unchanged, it would be unrealistic to expect any big boost in investment. And as far as the performance of the proposed BIDA is concerned, one would have to wait for sometime.
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