Private sector participation in infrastructure building
Wednesday, 13 August 2008
THE expansion of the economy of the country is vitally dependent on the rate of investments that needs to be progressively on the higher and higher side to help accelerate its growth performance. A variety of infrastructures available does largely influence the rate of investment. The greater the number of infrastructures and their diverse nature, the stronger are the possibilities that investors in different fields will find the overall investment climate to be conducive. Among many factors that determine the rate of investments in a country, the presence of an assortment of infrastructures of dependable quality and their growing number assure the investors that they can rely on such infrastructures to establish their various enterprises and run them successfully.
But this very important criterion for drawing investments, infrastructures, are far short of the need in Bangladesh. Infrastructure capita per stock, according to recent report by a multilateral capital donor agency, grew at only 1.2 per cent annually in the decade of the nineties in Bangladesh and this rate was far below the requirement. Infrastructure building has been hardly any better also in the present decade. This heightens the need for more focused attention to this issue by the policy planners and the taking of better integrated measures for the mobilisation of funds to step up the rate of building infrastructures.
The most urgent area in respect of infrastructure building is in the power sector. Power is indispensable for any kind of enterprising. Currently there is a very big mismatch between power production and its use in the country. Furthermore, the outlook appears no brighter in the near future for power production although power is the life-blood of an economy. Production of a substantial amount of additional power every year is direly needed in order to match the growing demand for power in the economy or to facilitate or support new investment activities. In this backdrop, investments in the power sector appear to be nowhere near the need. Public sector activities in power projects are stagnating. Bureaucratic impediments and the tussle between different lobby groups have not made it possible to help promote private investments much in this sector. The problems here do need to be addressed decisively and fast for new power generation units to be established rapidly throughout the country to help bolster economic activities and accelerate growth performance.
Apart from power, there are needs for substantial investment in ports, information technology(IT)-supporting facilities, transportation and other areas. But infrastructure building in these areas was put on hold by lack of clear-cut policies of the government. It was, therefore, heartening to note that government sometime ago made known the guidelines for private sector investment in infrastructures. Government is traditionally looked upon as the major builder of infrastructures in Bangladesh whereas the experiences of many fast developing economies do suggest that much better results can be obtained by involving the private sector in building infrastructures. Many such countries could overcome the fund shortages of their governments in building infrastructures by admitting the private sector into this area.
Private investments in infrastructures can be motivated by allowing the private operators to own and operate them or to transfer ownership and operating rights progressively to the government after some years when they have recovered their investments and also made good profits from running them. It is, thus, imperative that government in Bangladesh make it much smoother and gainful for private investments in infrastructures to get the very impressive results. A framework for the private sector's participation in infrastructure building is available. This should be now buttressed by prompt and effective policy supports of the government under the framework.
But this very important criterion for drawing investments, infrastructures, are far short of the need in Bangladesh. Infrastructure capita per stock, according to recent report by a multilateral capital donor agency, grew at only 1.2 per cent annually in the decade of the nineties in Bangladesh and this rate was far below the requirement. Infrastructure building has been hardly any better also in the present decade. This heightens the need for more focused attention to this issue by the policy planners and the taking of better integrated measures for the mobilisation of funds to step up the rate of building infrastructures.
The most urgent area in respect of infrastructure building is in the power sector. Power is indispensable for any kind of enterprising. Currently there is a very big mismatch between power production and its use in the country. Furthermore, the outlook appears no brighter in the near future for power production although power is the life-blood of an economy. Production of a substantial amount of additional power every year is direly needed in order to match the growing demand for power in the economy or to facilitate or support new investment activities. In this backdrop, investments in the power sector appear to be nowhere near the need. Public sector activities in power projects are stagnating. Bureaucratic impediments and the tussle between different lobby groups have not made it possible to help promote private investments much in this sector. The problems here do need to be addressed decisively and fast for new power generation units to be established rapidly throughout the country to help bolster economic activities and accelerate growth performance.
Apart from power, there are needs for substantial investment in ports, information technology(IT)-supporting facilities, transportation and other areas. But infrastructure building in these areas was put on hold by lack of clear-cut policies of the government. It was, therefore, heartening to note that government sometime ago made known the guidelines for private sector investment in infrastructures. Government is traditionally looked upon as the major builder of infrastructures in Bangladesh whereas the experiences of many fast developing economies do suggest that much better results can be obtained by involving the private sector in building infrastructures. Many such countries could overcome the fund shortages of their governments in building infrastructures by admitting the private sector into this area.
Private investments in infrastructures can be motivated by allowing the private operators to own and operate them or to transfer ownership and operating rights progressively to the government after some years when they have recovered their investments and also made good profits from running them. It is, thus, imperative that government in Bangladesh make it much smoother and gainful for private investments in infrastructures to get the very impressive results. A framework for the private sector's participation in infrastructure building is available. This should be now buttressed by prompt and effective policy supports of the government under the framework.