Better connectivity key to more foreign investment

The country needs to develop strong internal connectivity to attract investment, particularly from firms in East Asia, and be a part of the global value chain, economists said yesterday.

“Big ports, big airports, good urban transport and highway systems, you definitely need them. Connectivity is important,” said Fukunari Kimura, chief economist of the Economic Research Institute for ASEAN and East Asia.

He went on to suggest for a better Board of Investment, better investment promotion policy and better harmonisation of domestic institutional arrangement.

Kimura's comments came at a discussion styled 'Look East Policy: Bangladesh Perspectives' at the Bangladesh Institute of Development Studies.

BIDS and Japan External Trade Organisation jointly organised the event, chaired by Rehman Sobhan, chairman of Centre for Policy Dialogue.

Ahsan H Mansur, executive director of the Policy Research Institute, said the capital from Asia that went to the West's financial market is coming back, particularly to East Asia, which has the technology and a growing market.

Today, the highest number of Rolls Royce are sold in China and not in the US, he said.

Four of the world's five largest economies would be in Asia in the not-too-distant future. Japan will remain, while Indonesia will join China and India, he said.

“We cannot ignore them from our economic dynamics. As of now, we trade very little with Southeast Asia -- it cannot be that way in future as well. And except for China, we do very little trade with East Asia. That also needs to change.”

Mansur said the government has to go full-throttle to make sure that the initiatives taken by the Chinese and Japanese governments materialise.

“If we really want to join what we call the value chain of East Asia, we have to bring in East Asian companies to Bangladesh.” Sobhan said the economy is moving from an aid-dependent model to a capital and FDI-dependent one.

Citing Prime Minister Sheikh Hasina's earlier trips to China and Japan, he said these countries are being identified as the principal sources of capital.

But much will depend on how attractive Bangladesh makes itself as an investment destination to them, he said, while calling for developing internal connectivity.

He said improved connectivity with the port, reduced turnaround time at the ports, uninterrupted electricity supply and land availability is important to attract FDI.

“Simplistic notions of participating in the globalisation will not really address the more basic problems.”

Mohammad Yunus, senior research fellow of BIDS, stressed the need for building strong connectivity with the South Asian sub-region and the East Asian countries via Myanmar.

“Connectivity will be the fundamental issue. We need to have strong connectivity and skilled manpower if Bangladesh is to integrate to the global value chain.”

Munshi Faiz Ahmad, chairman of the Bangladesh Institute of International and Strategic Studies, said the country has many partners and it has enough space to accommodate them. Binayak Sen, research director of BIDS, said the country should also take lessons from the domestic experiences of East Asian countries.

“By talking on a 'Look East' policy, we are only focusing on external capital flows and transfer of technology. We are not talking about the domestic experiences of the Eastern countries. So we need to go more holistically.”