The FDI has dropped by 36% in Bangladesh last year, according to UNCTAD’s World Investment Report 2010. It further said that foreign investment in telecoms sector has nosedived by 60% at the same time. Such abysmal consequence is the result of a sequential blunder at the policy front.
Foreign investment was explicitly prohibited in the ILTDS policy in 2007. It has also banned the expatriate Bangladeshi citizens from investing in the international long distance businesses violating their constitutional rights. The regulator has auctioned WiMax licenses in 2008 but it deliberately withheld the 3G licenses to favor the former.
The present government started functioning in January 2009. Yet there is no sign of 3G licenses. Meanwhile, the 2G licenses’ renewal in 2011 has become top priority for the mobile operators. The government remains secretive about the way it will renew the 2G licenses. The mobile industry, which is almost entirely composed of foreign investors, has, therefore, predictably stopped investing under such prolonged uncertainty looming over their livelihood.
The situation has further aggravated when the telecoms law was amended and the ministry has acquired all regulatory authority last week. This suicidal bill is waiting for the presidential consent, which is a matter of mere formality in the Westminster system. Among other odds, this amendment empowers the government to change any term of the licenses without consulting the telecoms operators.
Yet the Board of Investment’s chief wonders, “It is utterly surprising that FDI goes to Vietnam and other LDCs, having less attractive fiscal incentives than those Bangladesh offers.” True investors, regardless foreign or local, don’t want fiscal incentives in the developing economies. All they want is a stable policy, which is crucial to make the business plan. Fortunately the BoI chief, who directly reports to the prime minister, also admitted, “When foreign investors meet me, they point at bureaucracy as the biggest hurdle to investment in Bangladesh.”
He should effectively convey this alarming news to his boss ASAP.
1 Comment