<i>Unctad report and Bangladesh reality </i>

As Unctad released its World Investment Report for this year, a few curious things emerged.
The first -- Bangladesh scored quite low as a foreign direct investment catcher in South Asia, even much lower than Pakistan. And the second, the comments of the Board of Investment executive chairman who found not energy but red tape as a determining factor for investment decisions.
It was a shock that foreign investors still prefer Pakistan as their destination rather than Bangladesh. In Pakistan, suicide bombings no more elicit any shocked look from observers, as it does not for Afghanistan or Iraq either. Pakistan is today torn by sectarian strife. Whether it will be run over by the Taliban any time soon is a current speculation, and world leaders are rather more concerned with what will happen to its nuclear arms --whether those will fall into the hands of militants.
Bangladesh, in comparison, offers a far greater safe place for investment. It did not suffer from a terrible anti-insurgency fight like Sri Lanka did, and for which Sri Lanka's FDI flow also dipped sharply. The remnants of the militant bands in Bangladesh are on the run and the government is firmly committed to fight extremism. Bangladesh's economic health is also quite stable in the region, and it has made reasonably commendable advancement in social index. And yet we scored low -- we need to think hard about it.
Why countries like Pakistan and Nigeria -- you would find it hard to book a ticket to Lagos because of passenger pressure -- are still preferred by investors, needs to be looked into carefully. It is the policies, opportunity to make money, and image that matter most.
When Bangladesh passed a new telco law that threatens stringent punishments such as Tk 300 crore fines (which is much higher than the capital of many telcos), and arrest without bail for delinquency -- it sends the wrong signal to investors across the board. And a country's image is built up on such signals put together.
Then there are the Board of Investment chief's comments. Since he took over as the board's boss, Dr SA Samad has been repeatedly denying the fact that energy crisis is a big deterring factor for investment. It may be a conscious denial from him, since he once sat at the energy ministry, and knows very well what a crucial role energy -- both electricity and gas -- plays in investment. He also must have realised that the Awami League-led government in fact wasted its first one and a half years regarding the energy front, and that energy will emerge as a crucial issue for Awami League in the next election about three and a half years away.
Any entrepreneurs' gathering, be it formal or informal, is replete with talks of how their businesses are suffering due to load shedding and gas crisis. An investor, who runs a big dyeing factory in Gazipur, was recounting only last night how judicious he was to have his factory shut down because of gas crisis.
"I am lucky. I paid off my bank liabilities earlier, and so it was an easy decision to shut," he said.
The person sitting next to him claimed he is even luckier. His factory's gas supply came through the same line as that of a BNP leader's. The BNP man's connection was snapped as he defaulted on bills. That boosted gas pressure for his sari factory which is now running at full steam. Others around him are not that lucky, he said.
So, downplaying a problem would not help the situation, as the BoI chief is trying to do. Rather it might send wrong signals to policymakers, and the government's efforts in solving the energy crisis might slacken.
The second comment the BoI chief made is even more curious. He said bureaucracy is the major problem for investment. True. But then the question comes, what the government has done to reduce red tape? The Regulatory Reforms Commission has been let to die only because it was conceptualised and formed during the caretaker government. And so is the fate of the Better Business Forum. The recommendations these two platforms made remain largely unimplemented. Finance Minister AMA Muhith, in his first budget, after the Awami League-led government came to power, promised that a new body would be formed to push through regulatory reforms.
That promise is forgotten today.