Poor infrastructure holds back FDI

THE government should improve the condition of infrastructures and the supply of energy and power to the industrial units to attract more foreign direct investment (FDI) to generate employment, say economists and industry insiders.
The country has been witnessing a poor inflow of foreign investment over the years for the problems in infrastructure and power, they said.
They urge the government to improve efficiency at Chittagong Port and upgrade the Dhaka-Chittagong highway to four lanes from two lanes.
The poor condition of FDI inflow in Bangladesh is visible in the World Investment Report 2011 of the United Nations Conference on Trade and Development (Unctad) released by Board of Investment (BoI) in July.
According to data, Bangladesh has taken the 114th position in 2010 in the world investment scenario. Last year, it took the 120th position.
The country improved its ranking among 141 countries in the global inflow of foreign investment by attracting $913.32 million in 2010, according to the report. In 2009, Bangladesh took in $700.16 million.
FDI grew by 30 percent in 2010 from 2009, data showed. During this time, India received foreign investment worth $24,640 million, Pakistan $2,016 million and Sri Lanka $478 million.
Along with weak infrastructures and an inadequate supply of gas and power, problems of communications, law and order and judicial systems are also responsible for the poor inflow of foreign investment in the country, said Amjad Khan Chowdhury, president of Metropolitan Chamber of Commerce and Industry (MCCI).
“We have to create an environment that attracts the local investors. If the local investors can do well, the FDI will follow automatically.”
He said the availability of land for industrial purposes is also a major concern for the country.
Khandaker Golam Moazzem, senior research fellow of Centre for Policy Dialogue (CPD), said FDI is coming in telecoms, energy and power and in textiles currently.
In the telecoms and energy and power sectors, many are reinvesting money in Bangladesh. These are sectors where infrastructures are not vital, but formulating business friendly policies and the right environment are important.
“We need dynamic industrial policies so that the investors feel encouraged to invest in Bangladesh,” he said.
The government should resolve the disputes regarding gas exploration from offshore blocs with the neighbouring countries so that the foreign investors can drill gas easily, he said.
The government should set priorities in the distribution of gas and power to the industrial units, he added.
The government should also speed up long-term plans, along with short-term ones, to improve gas and power supplies, he said.
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