To increase the capacity of the power sector in the country, the Unlima Maghnaghat Power Plant Limited had planned to build a 450 MW power plant privately at Meghnaghat in Narayanganj. In this gas-based power plant, the company registered with the Bangladesh Investment Development Authority (BIDA) to invest BDT 263 billion. In the fiscal of 2021-22, this was the second-highest investment announcement registered in BIDA. Except for the land development work, no visible progress has been seen in the three years since the announcement.
According
to the concerned sources, due to the lack of sufficient gas resources to run
the power plant, dollar shortages to import machinery and high interest rate
against the huge amount of investment, the company is running on a ‘go slow
policy’.
Md
Shohag, the administrative officer of Unlima said Bonik Barta that various
economic crises are the cause behind the slow pace of the work. Also, obtaining
gas is the first priority for the construction of the power plant, and
initiatives will be taken to open Letter of Credit (LC) for importing
machinery, he added.
In
the last three fiscal years (from 2021-22 to 2023-24) the number of new
investment proposal registrations has decreased significantly. Even new
investment commitments did not come that much during this time from the top
investors. The dollar crisis, high interest rates and improper investment
environment have become major obstacles the investors mentioned in the way of
implementing their announced projects.
According
to BIDA, a total investment of BDT 2480 billion has been announced in various
local industries from the fiscal year 2021-22 to February 2023-24. Most of this
came in the financial year 2021-22, which is BDT 1258.66 billion. After that,
in the financial year 2022-23, the investment was announced to the tune of 838.53
billion. And in the eight months from July to February of the fiscal year
2023-24, investment has been registered at 388.22 billion. According to this,
the investment in the fiscal year 2022-23 has decreased by more than 33 percent
compared to the fiscal year 2021-22. The investment proposals have come into
less than half in the eight months of 2023-24 FY than the previous FY.
Concerned
people related to this sector claimed banks’ liquidity crunch and high interest
rates have strained the financing process for the investors. Also, due to
dollar crisis, to manage the foreign currency required for the import of
machinery and raw materials in the industrial sector has almost become
impossible.
Mahbubul
Alam, President of the Federation of Bangladesh Chambers of Commerce and
Industry (FBCCI) said to Bonik Barta, “The investment environment should be
more investment friendly. Uninterrupted gas and electricity services should be
provided in the economic zone. One-Stop service must be ensured.”
The
nation's maximum loan interest rate was set at 9 percent in April 2020.
Bangladesh Bank removed the maximum interest limit at the start of the current
fiscal year. Every month since then, the interest rate has gone up. The
interest rate on loans increased to 13.55 percent in April. Bangladesh Bank
thereafter fully implemented a market-based interest rate. A lot of banks
currently charge 16–17 percent interest on loans.
The
Economists believed that the existing obstacles like corruption, bribery and
duel crisis are making the investment environment in the country more critical.
Dr Fahmid Khatun, the executive director of Center for Policy Dialogue (CPD)
said to Bonik Barta, “For 10 years, private sector investment has been limited
to 23-24 percent to take it above 27 percent within just a year is impossible.”
Questioning
how can investment increase in such a negative situation she added, “Government
is taking all the money from the bank for functioning. Besides, corruption and
bribery are increasing in business management. Countless problems are arising
in the infrastructure of big projects.
Bashundhara
Group registered the largest investment in BIDA in FY 2021-22. According to
that announcement, the group is supposed to invest 757.66 billion in
Bashundhara Gold Refinery Limited. This was the biggest investment announcement
in the last three fiscal years. Besides, the group announced an investment of BDT
128.51 billion in Bashundhara Sports Complex Limited. Bashundhara Group has
registered an investment of BDT 886.17 billion in two projects. Officials of
the company could not give any specific information about the progress of the
project and the possible time for the start of production.
An
investment of BDT 107.86 billion for the construction of LNG terminal in the
country had announced by the Summit Group. The investment proposal for this
terminal with a daily supply capacity of 600 million cubic feet was registered
in the BIDA in the FY 2021-22. The terminal is to be constructed at Maheshkhali
in Cox's Bazar. The government has reached with an agreement with the Summit
Group. According to a reliable source, no work has started at the field level
of the project yet.
LabAid
Group announced the construction of a cancer hospital in the country in the
2021-22 FY under private sector investment. The company announced a total
investment of BDT 7.35 billion in the construction of this hospital. Out of this,
the group planned to invest BDT 5 billion in a cancer hospital in Dhaka and the
rest of the money to establish cancer centers in six divisions of the country.
LabAid
authorities said it is known that the company has invested BDT 2 billion in
construction of building for cancer hospital and BDT 1.8 billion in importing
equipment. Although the hospital needs to import more necessary equipment and
raw materials, the institution is now unable to invest the remaining BDT 1.2
billion due to the dollar crisis and LC complications. Due to complications in
getting money from the bank, the LabAid is also anxious about whether it will
be possible to set up a departmental center outside Dhaka.
Dr
A M Shamim, Managing Director of LabAid Group said to Bonik Barta, “When investment
for the cancer hospital was made, the BDT was worth BDT 85 against the dollar
in the country. Bank interest rates were also much lower than now. Government
is taking more money from banks now. So the bank is not able to pay us. The
remaining BDT 1.2 million investment in cancer hospital is getting complicated.
Departmental centers may not be possible now. Because BDT 300-400 million are
needed to bring a Linnet machine for therapy. But the bank is not able to do
LC.”
Under
BIDA's jurisdiction, the third largest investment proposal for the fiscal year
2021-22 came from Dhaka Fly Airlines Limited, with an investment declaration of
BDT 179.86 billion. Among the other top companies, Unba Paper Industry Limited
proposed BDT 99.41 billion, Best Services Limited BDT 91.73 billion, Health
Care Formulation Limited BDT 84.13 billion, and Ikram Industry Limited BDT 83.67
billion. Another company on the list, Remark HB Limited, had an investment
proposal of BDT 114.48 billion, but they could not materialize the investment.
Ashraful
Ambia, Managing Director of Remark HB Limited said to Bonik Barta, “The overall
pace of investment has slowed down as the capital equipment could not be imported
due to devaluation of Taka against the dollar, and LC complications.”
In
Bangladesh private companies depend on banks to establish. So, they take
long-term loans from banks. But recently, many of the investors are unable to
repay these loans.
According
to Bangladesh Bank, large industrial enterprises in the country received term loan
financing of BDT 546.25 billion from banks in 2021. This amount increased
slightly to BDT 560.33 billion in 2022. Similarly, in these two years, the
amount of these loans repaid was BDT 464.13 billion and BDT 499.86 billion,
respectively. However, due to borrowers not repaying the loans on time, the
amount of overdue loans has also been rising. As of June 2022, the amount of
overdue loans among the total term loans was BDT 509.28 billion, which
increased to BDT 595.9 billion by June 2023. This means a large portion of the
loans taken by industrial enterprises is becoming overdue.
According
to the Finance Division, in the just-concluded fiscal year 2023-24, the amount
of private sector investment was 23.51 percent of GDP which was 24.18 percent in
the previous fiscal year. The government has set a target to increase it to
27.34 percent of GDP in the current fiscal year 2024-25. According to
provisional figures, the size of the GDP at current prices in the last fiscal
year was BDT 50480 billion. Based on this calculation, an additional BDT 1930
billion will be needed to increase private sector investment in the current
fiscal year.
Dr
Selim Raihan, Executive Director of the South Asian Network on Economic Modeling
(SANEM), told Bonik Barta, “If the consumption rate decreases, market demand
will shrink. As a result, investors will reduce their investment propensity
because they plan their investments based on the domestic market. And now there
is an economic crisis. Investment did not increase significantly during good
times over the last decade. Thinking about increasing investment during a
crisis is unrealistic.”
When asked about the overall situation, former Planning Minister MA Mannan told Bonik Barta, “When business decreases on one side, it increases on another, so overall balance is maintained. The economy is now on an upward trend. There is no shortage of money and goods in the market. Business people are also saying that the budget is good, and a lot of investment is now happening in various sectors in the rural areas as well.”