Investment Scope Should Not Be Bottlenecked

Recently the government has amalgamated the authorities of three forms of investment bodies, which include the Bangladesh Investment Development Authority (BIDA), the Bangladesh Economic Zones Authority (BEZA) and the Public-Private Partnership Authority (PPPA), to form a single entity, called the Investment Development Authority.

In fact, this newly formed high-power govt. body will replace BIDA, widening the scope of investment-related activity in the country. The change of the structure of BIDA is not new in our country, because originally Board of Investment was formed and subsequently converted to BIDA, which is now changed to IDA.

The main purpose of these authorities is to boost investment in the country and encourage inviting foreign investment as well. To what extent investment, both foreign and domestic, has been boosted in the country under the patronage of these authorities is known to the people, but BIDA has gone through changes one after another with higher authority and functionality.

Investment is the most important factor of economic development. We all know that without investment, economic development cannot be achieved. There is a linear relationship between investment and economic growth, as more investment drives higher economic growth or vice versa. Investment may, however, take three different forms, which include public investment, private investment and public-private joint investment. In addition, foreign investment may be part of both, i.e., public and private, as it can be channelled through govt. investment or form a joint venture with private companies. Besides, foreign investment may directly come to the country with establishing their own entity, which is usually termed as a 'foreign enterprise'.

Different kinds of authorities, such as BEZA and PPPA, were established with a view to facilitating the scope, infrastructural support and other amenities to the entrepreneurs and potential investors. More importantly, these authorities were supposed to play a coordinating role and thus ensure one-stop services required for establishing business enterprises so that entrepreneurs and investors are not required to move from desk to desk for getting clearance and approval. BEZA and PPPA were created to facilitate the venture where the govt. and foreign investment were involved. Keeping this in view, special economic zones, viz. Export Processing Zone and Public-Private Economic Zone, have been developed. At the same time, a Special Private Economic Zone has been developed so that entirely private investment can be channelled there. 

Although these authorities were functional and several special economic zones have been developed in many parts of the country, the desired level of investment has not poured into the economy. During the last two years, investment performance in both the public and private sectors has been very dismal. These authorities were almost nonfunctional in facilitating the investment opportunities. Needless to speak, most investment, particularly in the manufacturing and service area, comes from the private sector. Govt. investment comes for infrastructure development, for which the facilitating role is not required from a third entity, because the deal is done under the government’s direct supervision and authority. On the other hand, private investment requires facilitating a role from the government agencies.

Foreign investment is a completely different aspect, because this type of investment is channelled based on need and branding. If there is potentiality, resources and an investment-conducive environment in the country, foreign investment will automatically catch the opportunities. For example, there is significant foreign investment in some Latin American countries, particularly Chile and Peru, because there are enormous mining opportunities in those countries. Now significant investment is moving to some countries where AI-related data centres can be built. Similarly, some foreign investment has been directed to Vietnam and Indonesia because of their investment-friendly environments. Whereas we have neither provided investment opportunities nor ensured an investment-friendly atmosphere, so why will foreign investment be directed to our country? Had we offered some gas exploration sites or AI-related data centre establishment scope, billions of dollars in foreign investment would have poured into our country. Different forms of authorities, viz., BIDA, BEZA and PPAA must have played this type of role but unfortunately could not do that. 

Privately owned special economic zones have made some good headway to encourage the domestic investors to establish businesses in the special economic zone. But bureaucratic bottlenecks are very strong there too. For example, the lease agreement itself is a serious hindrance in establishing businesses in the privately owned special economic zone. The terms and conditions have been so stringently stipulated in the lease agreement that it counters obtaining bank finance. Business establishments built in the privately owned special economic zone can neither be mortgaged nor be charged with banks against obtaining credit facilities from them. It is obvious that nowadays no business can be operated without bank facilities. But the bank will not extend any facility if a change cannot be established on the businesses they finance.

With this bureaucratic bottleneck, investment opportunities cannot be extended. Besides, some new hurdles impeding investment have taken a severe turn. The energy crisis, law and order situation, weakest banking system, lack of fund mobilising scope, mob attack forcing the factories to close, directing buy orders to other countries, lack of govt. incentives, and falling collective demand among the consumers resulting from income loss or unemployment have emerged as great impediments, which are keeping the country’s businessmen and entrepreneurs away from investment decisions. Moreover, political uncertainty and lack of confidence amount to the country’s business community not helping boost the investment in the economy. If such a situation continues for long, the country’s economy may drop below the minimum benchmark from which the economy cannot be revived.

Prior to amalgamating multiple authorities, the burning issues which are severely affecting new investment should have been resolved first. However, forming IDA through amalgamation of BIDA, BEZA and PPPA is now reality, so they should take this task as a new challenge and prove their worth by facilitating investment opportunities and thus removing any sort of red tape, because investment scope should not be bureaucratically bottlenecked.