Domestic investment dull, foreign rather upbeat

The registration of domestic investment proposals continues to be sluggish though foreign and joint-venture proposals show a substantial rise.
The development according to officials and some trade body leaders, belies the anticipated slowdown after the deadly Gulshan café attack.
Bangladesh Investment Development Authority (BIDA) data show the registration of foreign and joint-venture investment proposals on an increase to US$5.564 billion in the first nine months of the current calendar year.
People concerned were of the opinion that the July militant attack on the Holey Artisan Bakery café in the diplomatic zone could not cast any negative impact immediately on foreign-investment inflow since such incident nowadays has become a global phenomenon, not isolated one.
They, however, blamed lack of gas and electricity for the sluggish trend in domestic- investment flow.
Available data show that till September 2016, some 121 investment proposals of foreign and joint-venture nature, worth $5.564 billion, were registered with BIDA. In July-September quarter alone -- immediate after the Gulshan café attack -- investment proposals worth $3.854 billion got through.   
In entire 2015, on the contrary, some 129 proposals worth only $562 million got registered. In 2014 the investment proposals worth $936 million and in 2013 worth $2.621 billion were registered.
In case of domestic investment, data show that during the January-September period of this calendar year, some 1,072 proposals worth Tk 360 billion got registered against 1,408 proposals worth Tk 906 billion last year.
However, BIDA executive member Nabhash Chandra Mandal thinks that domestic investment proposals were not that lower as statistics show, since a handsome portion of joint-venture proposals are from local sources.
"In one sense, local investment has also increased since joint-venture proposals are on the rise. In some cases, you will see the share of local investors is much higher than foreigners' in case of joint-venture investments," he told the FE.
Elaborating on reasons behind higher foreign and joint-venture investment proposals despite apprehension of their slowdown after the militant attack Mr Mandal said such occurrence is not taking place in Bangladesh alone. It has now become a global phenomenon.
He said Bangladesh could tackle the situation very fast and thus foreign investors could keep confidence and did not leave, rather came with fresh investment.
"People take it positively if the situation does not get deteriorated. No such situation occurred again after the café attack, thus foreigners did not leave the country," Mr Mandal went on explaining the turnaround.
He said after the café attack the BIDA authority sat with foreign and local investors to reassure them that necessary steps had been taken to stop recurrence of such incident. That also helped to cool down the sentiments of foreign investors.
Contacted, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Abdul Matlub Ahmad also echoed the views of Mr Mandal, saying that nowadays these types of attacks are taking place across the world.
"From the very first day I was saying that the incident won't put any big impact on investment. Since such occurrence has taken place first time here, we have become nervous but overcome the shock right away," he said.
Mr Ahmad also sees gas and electricity shortages behind the slow-pace domestic investment proposals.
Though the power-generation capacity has reached 15,000 megawatts, the transmission and distribution capacity is still half of that. So, people who are waiting for electricity and gas fail to make investment, he said.
The head of apex trade body suggested that private sector should be allowed in electricity transmission and distribution to get over the problem. "The power-generation capacity could be increased to such level since private sector was allowed in this sector."
Executive Member of the Foreign Investors' Chamber of Commerce & Industry (FICCI) Mohd Nooruddin Chowdhury told the FE that of the investment proposals registered with BIDA under foreign and joint-venture categories, most are for reinvestment.
He said very few fresh foreign investments are registered after the café incident save some in power and gas sectors.
"We need to see how many of the fresh investment proposals came in manufacturing and service sectors," Mr Chowdhury noted.
He said BIDA has to create platform to attract investment, identify global investors and take steps to bring them here.
And, the government needs to find out reasons why many multinational companies (MNCs) are making investment in various Asian countries but not in Bangladesh.
"In many cases the facilities government announces for multinational companies are not given properly. Profit repatriation is one of the major problems for MNCs which discourage them from investing here," Mr Chowdhury said.
He said some three to six more months are needed to realise the impacts of Gulshan café attack on foreign investment. "It will have a significant impact in the long term."
    syful-islam@outlook.com