4:34 pm - Tuesday October 18, 9312

South Asia needs to arrest FDI challenges

Speakers at a programme on Sunday said the South Asian countries have a number of challenges to face to attract foreign direct investment.

They cited lack of infrastructure, poverty, environmental hazards, poor governance, infrastructural gap and lack of regional and global integration are the core issues that are keeping FDI from the South Asia.

The observation was made at a session titled “Promoting Investment in Asia,” held as part of a two-day long ICC International Conference on “Global Economic Recovery: Asian Perspective” at a city hotel.

ICCB-300South Korea’s Youngone Corporation chairman Kihak Sung said the FDI flows to countries which have business friendly laws and regulations and favorable geographical locations, many of which are not available in Bangladesh.

“In Bangladesh, infrastructure is not well as port is congested, and it took 12-14 hours to reach from Dhaka to Chittagong through highway,” said Sung who has been running businesses in Bangladesh from 1980.

He said people have to pay high price for electricity while the gas quality is poor, and even lots of legal complications prevail in Bangladesh.

Johannes Zutt, World Bank’s country director in Bangladesh and Nepal, said issues like poverty, environmental challenges and infrastructural gaps are the key issues that South Asian countries are now facing.

“42% of the world’s poverty live in Asia and the current pace of poverty reduction in South Asia is not fast enough to meet global targets,” he said.

The most dramatic sustainability issues faced by South Asia are related to urbanisation and lack of capacity to manage environmental assets, he said.

Zutt said South Asia will need $2.5tn by 2020 to cover up infrastructural gap.

Ravi Ratnayake, director at trade and investment division of the Economic and Social Commission for Asia and the Pacific (UNESCAP) said the least developed countries are not doing well in drawing FDI due to physical or policy level constraints.

Political stability, good governance, infrastructure and private sector participation are four key important factors for encouraging FDI, he said.

Ahsan H Mansur, executive director at Policy Research Institute, said the South Asian countries lack social and physical infrastructures.

“Public sector investment is needed at infrastructure development to encourage private investments,” he said.

Quoting an Asian Development Bank estimation, he said $8tn will be needed by 2020 only to develop the infrastructure.

“Every Asian country will face political and currency and land risks as there is no risk management.”

He added: “We need to focus on strengthening economic systems, making our capital more reliable, and develop financial bonds to make Asia develop its own potential investment market.”

The session was chaired by Binod K Chaudhary, president of Chaudhary Group, Nepal. Chaudhary is the first billionaire from Nepal.

Myanmar’s deputy minister for commerce Dr Pwint San, under secretary of Nepal’s commerce and supplies ministry Shankar Prasad Poudel, Centre for Policy Dialogue research director Fahmida Khatun and Standard Chartered Bangladesh’s managing director and head of corporate and institutional clients Abrar A Anwar also spoke.

-Dhaka Tribune