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Foreign direct investment better than foreign aid |
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August 18, 2000
Dhaka (UNB) – Finance Minister Shah AMS Kibria yesterday (Thursday) emphasised on converting dependence on foreign aid to foreign direct investment (FDI) as the new pillar of strengthening the country’s balance of payment (BOP) position. “We should not depend on foreign aid any more, rather should bring dynamism in attracting FDI,” he said while launching the Continental Insurance Limited at a local hotel in the morning. Industries Minister Tofail Ahmed, and chairman of the new insurance company ARM Harun ur Rashid and its managing director MM Murshid also addressed the function. Kibria said that with the cold war gone, there is no realistic reason for increase of foreign aid. “In the cold-war era, even the socialist countries helped the under developed countries to bring them into their fold. But the situation is no longer prevailing.” He said the foreign aid, one of the three main pillars of BOP, has been declining gradually. “Whatever now given is full of conditions, untimely and not to the necessary sector.” The finance minister said the FDI emerged as a new sector of BOP, which is very much dynamic although very little foreign investment took place in Bangladesh in last 20-25 years. The FDI started taking place mainly in the “extraction industries” like gas, power and telecom sectors for quick profit making, he said adding that foreign investment is also coming to other sectors like cement and jute. “We’ll have to maintain proper environment conducive to FDI,” the minister said. He said export earning, considered the first pillar of BOP, stood at US$5.75 billion in last fiscal year and expected to reach US$6 billion soon. Remittance, the second pillar of BOP, stood close to US$2 billion in last fiscal year and expected to grow by 9-12 per cent in the future, he said. About globalisation, Kibria said many people were considering the concept a threat, doubting if the country can face the challenge. “But there is prospect also if we can convert our weakness into strength. Working in a limited area is our weakness,” he said. The Finance Minister said the country has the advantage of a low cost, skilled and easily trainable workforce to face the challenge of globalisation. There is competition among employers in Singapore, Saudi Arabia and other countries to recruit the Bengali workforce due to their skill, he said. “If we can add high productivity with low labour cost, we’ll be able to stand against any competition. We’ll have to work out a proper plan to increase productivity of our workforce.” Kibria said a business-friendly environment has been created within the country, but there is a tough competition outside the country. “You’ll have to think how you’ll stand there,” he told the business community. He said the government has approved many private banks, insurance companies and mutual funds to “serve the nation through financial sector development.” The finance minister urged the insurance companies to build trust among the people through settling claims as per contract. He also called upon them to expand insurance coverage. Industries Minister Tofail Ahmed said like expansion of trade and business in the country, the government took initiative to expand the insurance business. As part of that initiative, the government approved 19 general insurance companies and 11 life assurance companies, he said. “The new insurance companies were approved so that the local entrepreneurs could become competitive.” |