Land dearth hits FDI
Shortage of land is hindering foreign direct investment (FDI) in the country, Finance Minister AMA Muhith said yesterday.
He also said investors' taking bank loans for setting up power plants may create further credit deficit in the private sector.
“Lots of foreign investors are knocking at the door, but we are not in a position to provide them with land,” he told a two-day IGC South Asia Growth Conference 2012 that began at Sonargaon Hotel in the capital yesterday.
Muhith made the comment at a forum where local and international researchers gathered to discuss ways of overcoming growth barriers in South Asian countries based on research and experience of the western countries that have no scarcity of land.
The conference was jointly organised by the International Growth Centre (IGC) and the Economic Research Group, Dhaka.
Although the country received a record $1.3 billion FDI in 2011-12, it was still poor compared to other countries, Muhith told the conference.
The amount is 24.42 percent higher than that in the previous year. The country received $910.33 million FDI in 2010.
It may be mentioned that FDI gets tax relief in Bangladesh.
Muhith admitted that poor infrastructure and energy crisis are responsible for poor FDI, and said the land issue was becoming very crucial to this end. The government is trying to find a solution to this problem by establishing seven special economic zones.
But that too seems to be a problem.
“Hours after the announcement of the setting up of economic zones, prices of land at those sites go up,” said the minister. “Fixing [the price] is not a good proposition.”
Muhith, however, opposed tax relief for foreign investors for an indefinite period. “How long will you provide them with the benefit [tax relief]?”
He also hailed NGOs, especially Grameen Bank and Brac, for their "tremendous contribution" to poverty reduction.
The finance minister said researches help government in policymaking, and added that the readymade garment sector was a research-based industry in Bangladesh.
“High quality researches help policymakers to take decisions," said noted economist Prof Wahiduddin Mahmud. He added the conference would discuss how the South Asian countries could boost their growth banking on research-based knowledge.
On the land issue, Prime Minister Sheikh Hasina's economic affairs adviser Mashiur Rahman said the issue was difficult to solve.
The country needed both arable and industrial land, he said. He noted that the agriculture sector was the net loser here as it was losing land to the industrial sector.
Mark Rosenzweig of Yale University, Prof Tony Venables of Oxford University and Prof Robin Burgess of London School of Economics also spoke on the occasion.