The new Asian Infrastructure Investment Bank (AIIB) is expected to meet the long-term financial needs of small economies like Bangladesh, helping them to improve infrastructure, a United Nations official said.
"To address the major challenge of financial shortage in developing the infrastructure, the China-led bank will be helpful not only for Bangladesh, but also other smaller economies," said Dr Ravi Ratnayake, a director with Trade and Investment Division of the United Nations Economic and Social Commission for Asia and the Pacific (UN-ESCAP), in an interview.
Twenty-one Asian countries, including Bangladesh, signed a memorandum of understanding (MoU) this month in Beijing to launch the US$100 billion alternative multilateral lender.
Mr Ratnayake was in Dhaka to attend the just concluded ICC international conference on "Global Economic Recovery: Asian Perspective", arranged by International Chamber of Commerce-Bangladesh (ICC-B).
The UN official also said that despite much need for development of infrastructure, "We don't have enough financing for the small countries like Bangladesh."
"China has a lot of surplus; they (big economies) are not investing here as there is a huge gap of intermediary in this regard; they are not connected; as such "there is huge financing gap in infrastructural development."
"AIIB is being developed in such a way to meet special needs of the regions. Bangladesh should play an active role in the initiative. The country can use this facility to develop its infrastructure. It is very good move for not only China but also the whole region including Bangladesh," he said.
Mr Ratnayake said that the upshot of the ICC international conclave in Dhaka would help overcome the problems, particularly in spurring trade, investment and economic growth in Asia, while benefitting from the global crisis.
"This (ICC conference) is a great opportunity to share expertise and experiences of different countries on what good practices facilitate some of them to successfully face the recession and why some others were adversely affected," he said.
Exchange of the experiences at the international event would also be useful to facilitate to 'attract and retain' foreign investments, especially in countries like Bangladesh, Mr Ratnayake said.
"Investment is the engine of growth. In developing countries, it (investment) is needed to continue growth; but in order to attract and retain investment, Bangladesh needs to create a business-friendly environment, helping investors to do their business conveniently and easily," he told the FE. "Otherwise, they will not come; and even if they come, they will run away."
Mr Ratnayake also said, "One of the major factors for Bangladesh to attract investment is infrastructure. Various other factors are also there such as political stability, business environment, skilled labour etc."
He identified roads, ports, energy, electricity, gas as critical factors to get increased investments.
Citing the example of Thailand, he said the southeast Asian nation is a major destination of investment because it has well-developed infrastructure.
Referring to Bangladesh's strength in human resources, he said the country should go for development of skilled human resource by giving proper training, education to especially young people in technical and other related areas.
"That will be a great incentive to attract FDI," he added.
"Political instability is a big impediment to attract the investors. This is what the investors always look at when they choose the destination of investment," he said.
Citing Bangladesh's political instability as an "unfortunate setback" to attract FDI, he said the situation is being improved.
He noted that the investors also look at the regulatory policy, investment, business rules and regulations in making their investment in any countries.
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