Foreign investment in Bangladesh will reach up to $1 billion in 2006 with international businesses keen to expand and set up new ventures in one of South Asia's poorer countries, the chief investment official has said.
"We are going to get a record amount of foreign investment to achieve our billion dollar target by the end of next year," Mahmudur Rahman, executive chairman of the government's Board of Investment, told reporters on Thursday.
In 2004, foreign cash flowing into the country reached $530 million from $440 million the previous year, despite political instability and natural disasters, he said.
Low production costs
The target for 2005 is $700 million. Asked why more foreign companies were looking to do business in Bangladesh, Rahman said, "We ensure a minimum cost of production."
A country of 140 million people, Bangladesh is a free-market economy that has experienced a more than 5% growth rate in recent years. More than 60% foreign direct investment dominated the country's service sector, Rahman said.
He acknowledged that weak infrastructure is a roadblock for foreign investment. The government plans to tackle the problem by allowing foreigners to develop infrastructure on a 'build-own-transfer' basis.
Under the arrangement, foreign investors would own roads, bridges or terminals for a certain period to make a profit, before transferring control of the projects to Bangladesh's government.
Detailing the investment prospects, he said India's business conglomerate Tata Group plans to invest about $2 billion over the next two years in steel, power and fertilizer plants.
"We are going to get a record amount of foreign investment to achieve our billion dollar target by the end of next year"
Mahmudur Rahman, Board of Investment
The chairman of the group, Ratan Tata, confirmed the proposal last week and said a feasibility study would be finished by the end of March.
Egyptian telecom giant Orascom already has invested $150 million in Bangladesh's mobile phone sector, and another $150 million is expected this year or early 2006, he said.
Dubai-based Abu Dhabi Group plans to pump about $800 million into the country's telecom sector.
The group has also proposed to invest more than $2 billion in the country's burgeoning pharmaceutical and tourism sectors over the next two to three years, Rahman said.
In the natural resources sector, High-Tech International Group of Saudi Arabia is considering a $2 billion deal to set up oil refinery plants in Bangladesh over the next two to three years.
Negotiations are also under way with China Metalogical Construction group to set up a $200 million methanol plant, he said.
US oil company UNOCAL, already a player in Bangladesh's energy industry, is expected to invest more than $40 million this year to develop a natural gas field, Rahman said.