He said foreign investment is not a charity. An investor will come to a foreign country only if he expects a rate of return higher than that he or she could get in his own country. The calculation of a foreign investor includes a variety of risks, systemic, industry-specific, and political and exchange rate risks.

"We should aim at providing a stable exchange rate," the adviser said, adding that "macroeconomic stability, especially low interest rates and inflation make investment more attractive."

"However, as policy, the government should not provide a hedge against business or industry specific risks".

Citing an example he explained, "If an oil and gas company invests in Bangladesh, it should not seek coverage against the fluctuating world price of oil, nor should it seek a guaranteed sale...... these are inherent business risks that an investor must take to see profits."

The adviser made the comments at a luncheon meeting of the Foreign Investors Chamber of Commerce and Industry (Ficci) held at a hotel in Dhaka. Masih Ul Karim, president of Ficci, diplomats of different embassies in Dhaka and members of Ficci were present at the function.

It is not necessary the level of political or legal risks that determined the level of foreign investment, Iftekhar Chowdhury said. If this was the case, "the conventional wisdom would presuppose China would receive a small amount of Foreign Direct Investment (FDI), given the political and especially the legal risks in the country.

However this was not the case and the higher level of labour productivity part of explanation. China's fixed and predictable exchange rate is perhaps gives us another explanation, he continued.

"But as businessmen and foreign investors there is no such thing as risk-free investment. Foreign investors must receive a return equal or higher than his investment at home, after taking into account all possible risks," the adviser said.

While asked about Tata's potential billion-dollar investment in Bangladesh, he said the government is examining whether the project is in the public interest and this was why it was taking time. "But we are working on it. We are trying," he said.

The adviser said foreign investment can help a country by reducing the knowledge and technology gap.

The Ficci president said the power shortage still remains a critical impediment to the country's development.

Continuity of policies, speeder decision making without manipulation, consistent energy supply, reduction of corruption and hidden costs are the main challenges in encouraging foreign investment to Bangladesh.