There is a need for a sharp rise in investment in the country. The private sector investors are not coming forward in this regard as there are complexities in all areas. The prospective investors have to wait for long for gas connection. There are difficulties in getting industrial plots quickly. Other countries give all supports to local entrepreneurs. Arrangements are made for land, gas, electricity and other services. Wage is low in Bangladesh, but the cost of production is high for want of favourable policy for investment.
Dr Zahid Hossain of the World Bank says investment is low in the private sector as bureaucratic complexities are still there. One has to wait for long for getting gas and power connections. There is a lengthy process in land registration and tax payment. Institutional reforms are needed for reducing lengthy procedures. According to him, favourable climate for investment has not been created. India and Vietnam are ahead of Bangladesh in this regard.
Good governance has to be established. There is corruption in giving gas connection. Big industries need boilers but boilers do not work without gas. If they use coal, they will not be competitive. You can not also use furnace oil which is expensive.
Bangladesh is going for import of LNG which will be expensive. Power cannot be supplied according to demand. It was not yet possible to bring down the rate of interest to single digit. But in India and Vietnam, the rate of interest is 6 to 7 per cent. Allotment of land is now the biggest problem.
Raw materials of almost all industries including textiles are to be imported from abroad. Not enough attention is given to value addition. Technical experts are hired from abroad with high salary as local experts are not available. As a result, cost of production becomes high in Bangladesh. In order to increase more investment, the business community has called for introduction of one-stop service. The government, however, says problems of investment are there for a long time. It is trying to address these issues
Dr Mirza Azizul Islam, former Adviser to caretaker government says the present atmosphere is not favourable for investors. That is why there is depression in investment. Power and gas problem is there. Besides bureaucratic complexity, corruption and high interest rate are hampering investment, he pointed out. The government will have to provide policy support to the investors. Dr Salehuddin Ahmed, former Governor of Bangladesh Bank is also holding the same view.
Top industrialists of the country allege foreign investors are getting more advantages than their local counterparts. Foreign investors in export processing zones (EPZ) enjoy more benefits compared to local investors outside. They get tax holiday which is not available to locals. Therefore, locals can not compete with the foreigners, said Abdus Salam Murshedi of the Exporters Association. Other countries have readjusted oil prices several times whereas it was done only once in Bangladesh. On the other hand, gas price was increased. A coordinated policy needs to be taken so that investors get confidence.
Foreign companies operating in Bangladesh have been allowed to issue Taka bonds for mobilising funds from local sources as the central bank relaxed further foreign exchange regulations.This is subject to prior permission of Bangladesh Securities and Exchange Commission (BSEC). The Bangladesh Bank relaxed the guidelines to encourage inflow of foreign direct investment into the country. It will help reduce excess liquidity with the banking system. Foreign investors have also been allowed to invest their funds in local companies through purchasing shares directly with local currency.
If GDP is to be increased to 8 per cent, investment has to be expanded substantially. The existing infrastructure is inadequate. Our investment is only 2.85 per cent of GDP as against 10 per cent in Vietnam. We have to give attention to drilling new wells for gas and to produce electricity with our own coal. On the other hand, corporate tax needs to be reduced in order to encourage businessmen for investment. This will also increase employment.
Competitiveness can not be sustained with cheap labour only. It takes 12 hours to transport goods from Dhaka to Chittagong port. The Railway has to be made more speedier but no work has been done here scientifically. Bangladesh cannot attract foreign investment because of insufficient infrastructure. Transperency and good governance are needed for the development of infrastucture. Investment friendly atmosphere is to be created.
A new organisation Bangladesh industrial Development Authority (BIDA) has been set up. The Chairman of BIDA has said black money may be utilised for investment. According to him, money has no colour. It is suggested that the budget speech of the Finance Minister may contain a chapter on investment. A five-year taxation policy has been demanded by businessmen in order to have continuity of policy. The investment strategy may be formulated in the national budget.
The writer is an economist and columnist.
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