Toning up the Board of Investment
Wednesday, 24 October 2007
Enayet Rasul
THE pages of newspapers and contents of media these days focus prominently and regularly on the depressed economic scenario of the country. Specially, the poor investment rate is emphasised and how the same is debilitating the economy.
The acceleration of the rate of investments calls for fulfilment of a wide range of requirements. But these conditions are found to be not so unfavourable in Bangladesh. While further improvements or substantial improvements in these conditions, will create greater attractions for potential investors, the reality is that many investors are already keen to invest in this country notwithstanding the odds which are supposed to hazard them.
According to a report in this paper last week, some US$ 12.8 billion is on the pipeline for investments in Bangladesh. The amount is the value of the foreign direct investment (FDI) proposals lying with the BOI which is the gateway to investments in Bangladesh. BOI needs to register these proposals, evaluate them and then take a decision of either approving or rejecting them. Another amount of US$ 1.8 billion in investment proposals have been similarly made to the BOI from the overseas Bangladeshi communities. But very regrettably, the investment proposals are collecting dust while the clamour is noted all around in government circles and among experts and different observers of the Bangladesh economy, that investment activities are drying up.
Local investments in the country are going through a difficult patch from the on going anti-corruption drive. Some local business conglomerates are unhappy and incapable of undertaking fresh investment activities from their present conditions of the internment of their top men. But the situation in respect of foreign investments is not the same.
The consequences of the shortfall in local investments could have been more than compensated by now if the materialising of the foreign investment proposals was taken up with real zest by the BOI. This is not to say that local investments can be neglected. Local investments certainly need to be promoted and the problems standing in the way -- specially one of lacking confidence and other factors hazarding the potential local investors -- must be sorted out at the soonest. But that is another story.
What is sought to be underlined here is the conditions in respect of local investments are no excuses for not acting timely on the huge FDI proposals. Acting on them swiftly can be of much value for the economy when it is starving for investments from any source. The BOI authorities can come up with the argument that some big FDI proposals are controversial and about them only the highest figures in the government would be competent to take decisions. But setting aside a few such major FDI proposals, out of the total FDI proposals of more than US$ 13 billion, at least 7.0 to 8.0 billion dollars of FDI proposals are non controversial. If these non controversial proposals were gradually processed and readied by the BOI as they came along, then the investment operations would not appear so barren as they are today. In that case, the economy would have been the beneficiary of a large inflow of resources into it by now.
Why this did not happen can be explained by the great sloth and ineffectiveness of BOI as an investment promoting organisation. The main failure of the BOI has been following up the investment proposals. The foreign investors make their proposals but then it becomes a matter for the BOI to maintain contacts with the investors and woo them and provide satisfactory services to them in every conceivable ways so that they do not lose their interest.
But BOI does not have inspiring record of persuading or keeping contacts with the foreign investment proposers let alone rendering field level services for them. It is alleged that BOI bureaucrats typically behave as if the onus for such follow up actions and facilitation activities lie entirely with the potential investors. Thus, many FDI proposals fail to move any further ahead from the proposal or expression of interest stage. Stung by criticisms, the BOI has reportedly appointed two officials recently for conducting such follow-ups. But only these two officials are clearly too few to engage in the sort of vigorous liaison that BOI should be maintaining round the clock with so many probable investors to achieve the desired results.
In some cases, the investment possibilities were lost or are getting lost simply because of the persistent delays and purposeful foot-dragging by the BOI officials in negotiating wholeheartedly with the likely investors. Negotiations with prospective foreign investors have been delayed allegedly due to the vested groups' ill motives.
BOI's one stop service for the investors has proved to be a big disappointment for the investors. This wing of BOI was conceived and put into operation to render all services pertaining to investments under one roof so that investors could minimise the time in running from one government department to another or for pushing applications in so many desks in these various departments. But the BOI's vaunted one stop service never turned into even partial reality. Five out of the nine officials from different utility services providing departments who are to be represented in the one stop service of the BOI, never joined their duties. This alone manifests the pitiable situation in this wing of the state-run investment promotion agency.
Thus, reforming, restructuring and revamping of the BOI have been overdue. Without doing of the same, no great changes for the better in the investment scenario can be expected.
THE pages of newspapers and contents of media these days focus prominently and regularly on the depressed economic scenario of the country. Specially, the poor investment rate is emphasised and how the same is debilitating the economy.
The acceleration of the rate of investments calls for fulfilment of a wide range of requirements. But these conditions are found to be not so unfavourable in Bangladesh. While further improvements or substantial improvements in these conditions, will create greater attractions for potential investors, the reality is that many investors are already keen to invest in this country notwithstanding the odds which are supposed to hazard them.
According to a report in this paper last week, some US$ 12.8 billion is on the pipeline for investments in Bangladesh. The amount is the value of the foreign direct investment (FDI) proposals lying with the BOI which is the gateway to investments in Bangladesh. BOI needs to register these proposals, evaluate them and then take a decision of either approving or rejecting them. Another amount of US$ 1.8 billion in investment proposals have been similarly made to the BOI from the overseas Bangladeshi communities. But very regrettably, the investment proposals are collecting dust while the clamour is noted all around in government circles and among experts and different observers of the Bangladesh economy, that investment activities are drying up.
Local investments in the country are going through a difficult patch from the on going anti-corruption drive. Some local business conglomerates are unhappy and incapable of undertaking fresh investment activities from their present conditions of the internment of their top men. But the situation in respect of foreign investments is not the same.
The consequences of the shortfall in local investments could have been more than compensated by now if the materialising of the foreign investment proposals was taken up with real zest by the BOI. This is not to say that local investments can be neglected. Local investments certainly need to be promoted and the problems standing in the way -- specially one of lacking confidence and other factors hazarding the potential local investors -- must be sorted out at the soonest. But that is another story.
What is sought to be underlined here is the conditions in respect of local investments are no excuses for not acting timely on the huge FDI proposals. Acting on them swiftly can be of much value for the economy when it is starving for investments from any source. The BOI authorities can come up with the argument that some big FDI proposals are controversial and about them only the highest figures in the government would be competent to take decisions. But setting aside a few such major FDI proposals, out of the total FDI proposals of more than US$ 13 billion, at least 7.0 to 8.0 billion dollars of FDI proposals are non controversial. If these non controversial proposals were gradually processed and readied by the BOI as they came along, then the investment operations would not appear so barren as they are today. In that case, the economy would have been the beneficiary of a large inflow of resources into it by now.
Why this did not happen can be explained by the great sloth and ineffectiveness of BOI as an investment promoting organisation. The main failure of the BOI has been following up the investment proposals. The foreign investors make their proposals but then it becomes a matter for the BOI to maintain contacts with the investors and woo them and provide satisfactory services to them in every conceivable ways so that they do not lose their interest.
But BOI does not have inspiring record of persuading or keeping contacts with the foreign investment proposers let alone rendering field level services for them. It is alleged that BOI bureaucrats typically behave as if the onus for such follow up actions and facilitation activities lie entirely with the potential investors. Thus, many FDI proposals fail to move any further ahead from the proposal or expression of interest stage. Stung by criticisms, the BOI has reportedly appointed two officials recently for conducting such follow-ups. But only these two officials are clearly too few to engage in the sort of vigorous liaison that BOI should be maintaining round the clock with so many probable investors to achieve the desired results.
In some cases, the investment possibilities were lost or are getting lost simply because of the persistent delays and purposeful foot-dragging by the BOI officials in negotiating wholeheartedly with the likely investors. Negotiations with prospective foreign investors have been delayed allegedly due to the vested groups' ill motives.
BOI's one stop service for the investors has proved to be a big disappointment for the investors. This wing of BOI was conceived and put into operation to render all services pertaining to investments under one roof so that investors could minimise the time in running from one government department to another or for pushing applications in so many desks in these various departments. But the BOI's vaunted one stop service never turned into even partial reality. Five out of the nine officials from different utility services providing departments who are to be represented in the one stop service of the BOI, never joined their duties. This alone manifests the pitiable situation in this wing of the state-run investment promotion agency.
Thus, reforming, restructuring and revamping of the BOI have been overdue. Without doing of the same, no great changes for the better in the investment scenario can be expected.