The country's major trade bodies of late have been making strong pleas to the policymakers to improve infrastructures and do the needful for reducing the cost of doing businesses in all possible ways.
They have reasons to do so. The rate of private investment has not been in commensurate with the performance of the economy. The government does also admit this fact. The private investment has been almost stagnant in recent years. The size of the foreign investment also has not been notable either, if compared with those of many other developing countries. It is not fair to expect any higher foreign investment when local investors shy away from putting their funds in real sectors of the economy.
But the truth is that time is now ripe for making investment by the private sector. Never before, bank funds have been so cheap in Bangladesh. The banks are offering lending rates that are very much affordable for investors. Yet there is no rush for bank funds, in real terms. There is, of course, a regular flow of clients seeking new loans. But the banks are now exercising caution in the selection of borrowers. No bank would claim that its selection of borrowers is always perfect. The risk relating to a few borrowers turning errant is always there. Even most stringent scrutiny cannot guarantee total success in the selection of borrowers.
The problem with the banks is that not many good borrowers are approaching the banks for funds these days. Many prospective borrowers have decided against investment due to high cost of doing businesses on account of bureaucratic delays, poor infrastructures, shortage of energy, systemic corruption, scarcity of land etc.
Power situation has improved notably in recent times. But the most other problems have been persisting though the policymakers are claiming otherwise.
Of all the factors impeding investment, the scarcity of land is now considered most complex. One can mobilise fund, power and other facilities for opening up a large industry or a power plant or any other major project. But an investor would obviously face a formidable task in choosing a suitable piece of land for it. In all probability, the price of such land would be prohibitive.
The projects, namely, the Garment Palli (village), the coal-fired power plant at Banskhali and Rampal are glaring examples of how non-availability of suitable land and high prices of the same are impeding investment in Bangladesh.
The 'garment palli' project at Gazaria in Munshiganj is almost abandoned and the Chinese investor concerned has expressed unwillingness to buy land because of its exorbitant price. The owners of the land in the designated areas are asking almost twice the market price. Moreover, the lands in question are low-lying and their filling-up would require substantial investment. The incumbent president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has recently expressed his frustration over the non-implementation of the project.
The violent incidents involving a large coal- based power plant project at Banskhali in Chittagong highlight the problems an investor usually faces in finding land for any big project in Bangladesh. Four villagers were killed and many other injured when police opened fire on two large groups of villagers clashing for and against the plant. One group was against the use of their land for the project. The proposed $2.4 billion power plant is being implemented by a local business conglomerate S. Alam Group with assistance from a Chinese company. One more villager was killed last week in a clash between two groups opposing and supporting the use of local land for the 1320 megawatt power plant.
Investors do get land in areas that are not suitable for their projects. Entrepreneurs are required to be cautious while selecting the locations of their plants and projects, in terms of accessibility, availability of utility services, transportation cost, marketing opportunities, security etc. Moreover, cost of land is an important issue.
It is not that the government is not aware of the problems, particularly the one investors have been facing over land availability. The government has power to acquire land for the purpose of development activities. That is why it has come out with the idea of setting up a number of economic zones to accommodate investors from both home and abroad. The process has been going on. Hopefully, investors would make use of these facilities. However, the government has to remove all other impediments to smooth investment.
The incumbent executive vice-chairman of the Bangladesh Investment Development Authority (BIDA) the other day said that the government had set a target of improving Bangladesh's global position in doing-business index to two digits from the current 176th position, ensuring an investment-stimulating environment for both local and foreign investors. It might prove a difficult task. But it is very much achievable if all concerned carry out their respective duties and responsibilities diligently.