Bangladesh will offer additional incentives against foreign investments in power, energy, transport, and logistics as more development in these sectors to sustain the country's economic growth, said high-ups in the government.
The government is even ready to share some risks relating to the investment by forming joint-ventures, they said while speaking at two parallel discussions on the closing day of the International Investment Summit 2021 held at Radisson Blu hotel in the capital on Monday.
Dr Tawfiq-e-Elahi Chowdhury, adviser to the prime minister on power, energy and mineral resources affairs, chaired the second session of the day entitled "Power and Energy: Charge Ahead" while the first session was styled "Transport and Logistics: The Right Move."
The adviser requested global oil and gas companies to invest in the country's shallow and deep sea.
"We have already announced some incentives for deep and shallow sea exploration. But I would like to offer more incentives to the prospective international oil and gas companies to invest in this sector," he said, adding, "We could even share some risks by investing through joint ventures."
Dr Tawfiq-e-Elahi made the announcement in response to Eric M Walker, president of Chevron Bangladesh, who said off-shore exploration is highly expensive for the IOCs and involves some risk factors.
The session was moderated by Imran Karim, president of the Bangladesh Independent Power Producers' Association (Bippa).
Nasrul Hamid, state minister for power, energy and mineral resources, presented the keynote in the session where he said the government is prioritising investment in the renewable energy sector to secure a sustainable future.
"In pursuing so, the government is inviting more investment in base load power generation projects that would ensure less carbon emission," he said.
To increase the use of renewable energy, the government is planning to import power and energy from neighbouring countries through cross-border networks, said the minister, adding the government is going to sign a contract with Nepal within a few months to import 700MW hydro power.
The International Finance Corporation (IFC) promised to cooperate with Bangladesh in cross-border energy trading, he informed the summit.
Joining the session virtually, Isabel Chatterton, regional head of industry, infrastructure and natural resources (Asia Pacific) at the IFC, said her organisation is looking to play a major role in power trading between India and Bangladesh.
Welcoming the government decision to ditch upcoming coal projects and move to renewable energy, she said the country should explore alternative solar projects as land scarcity is the main problem in conventional solar projects here.
Terming Bangladesh as the "best destination for investment," Muhammed Aziz Khan, chairman of Summit Group, said, "Summit Group has invested around $3 billion in the infrastructure sector and is planning to invest another $5 billion."
"Return on investment in Bangladesh is reasonable and there is no risk related to return. Summit Group is committed to invest more in the infrastructure sector, particularly in the energy transition to greener energy."
Aziz Khan opined that Bangladesh deserves "A" in the currency rating. "It is a failure of the credit rating agencies to maintain Bangladesh in "BB-" status as the economic condition of the country is better compared to almost all other countries in the world. We have $45 billion of reserves and the currency is as stable as that of European Union countries or as that of the Japanese currency," he said.
Vipul Tuli, chief executive officer (South Asia) of Sembcorp; Edimon Ginting, country director at Asian Development Bank; and Ayad Al Amri, executive director (Gas to Power Business Development) of Acwa Power, among others, also spoke at the session.
Earlier in the day's first session on transport and logistics, speakers said the transport and logistics sector in Bangladesh will require $300 billion in investment over the next 10 years.
Mentioning that a lot of private investment will be needed in the sector, they urged to form a regulatory body for this purpose.
At present, 20 agencies and 9 ministries are providing logistical support, which will be coordinated by the regulatory body, they explained.
Abul Kasem Khan, co-chair at the Logistics Infrastructure Development Working Committee, Bangladesh (LIDWC), presented the keynote at the session.
He said developing countries invest 9-10% of their GDP to improve their logistics environment and that success stories of China, India, and Vietnam stand out as best practices in logistics.
Stressing the need for forming a regulatory body, Abul Kasem Khan said having a regular body would be good to ensure coordination.
"Our infrastructure is not as good as it needs to be in a middle-income country. The Padma Bridge, Dhaka Metro Rail, Bay Terminal, 3rd Terminal at Hazrat Shahjalal International Airport, Dhaka Expressway, Matarbari Deep Sea Port – all these projects must be completed quickly."
"The size of our GDP is $400 billion and we need to invest 6%-7% of it in transport and logistics. And if 6% is invested, the amount of investment would be $24 billion. Even if a minimum of $20 billion is invested a year, $300 billion would be needed in the next 10 years. Therefore, it is necessary to make a plan on infrastructure for the next 10 years."
It is necessary to let stakeholders know how much money is required in which area, he said adding this will encourage investors to invest in the specified areas.
Abul Kasem Khan said the government is investing $7 billion in infrastructure development every year. Therefore, to meet the target of $20 billion annual investment, the remaining $13 billion in investment that the country's infrastructure sector needs every year has to come from the private sector. Domestic and foreign investors have the opportunity to invest here, he observed.
Khalid Mahmud Chowdhury MP, state minister for shipping, said the logistics sector includes all of transportation, warehouse and storage, third party logistics including freight forwards and pots.
Given Bangladesh's aim to become an upper middle-income country by 2031 and a developed country by 2041, the government believes that annual investment in infrastructure and logistics needs to increase from current 2%-3% to 8%-10% of the GDP, he said.
"The government supports investment by the private sector and also encourages the public-private partnership (PPP) mode of investment. Additionally, the government is reforming regulations to make them more investor-friendly."
Joining the session virtually, Wan Chee Foong, regional CEO Middle East South Asia & Head of Group Business Development, PSA International Pte Ltd, Singapore, said Bangladesh needs to calculate what is needed in the next 10 years.
The authorities need to plan how much investment will come from where, he said adding, "A legal formwork needs to be created. All means of communication, including roads and river ways must be used. A logistics master plan needs to be formulated. A logistics ecosystem needs to be created."
He assured of extending all possible assistance to the government in this regard.
Victoria Rigby Delmon, infrastructure upstream lead, Asia and Pacific, International Finance Corporation (IFC), who also joined virtually, said the transport and logistics system would be upgraded with technology.
She opined that the Bangladesh government needs to complete its large projects quickly and that the Bay Terminal needs to be built fast.
A logistics master plan is required to bring in foreign investment, she added.
Rear Admiral M Shahjahan, chairman of the Chattogram Port Authority (CPA); Syed Ershad Ahmed, president of the American Chamber of Commerce in Bangladesh (AmCham); Mahbubul Alam, president of the Chittagong Chamber of Commerce & Industry (CCCI), among others, spoke at the session, moderated by Mohammad Naquib Uddin khan, president of the Bangladesh Supply Chain Management Society.
The Business Standard was a media partner of the international investment summit, organised by the Bangladesh Investment Development Authority.