THE proposal of the Indian business conglomerate Tata Group to invest in Bangladesh is almost a year old. The officials of the Group and the government are now engaged in intense negotiations with the former trying to get as much as concessions prior to taking the final decision. That is nothing unfair on the part of an investor. But granting concessions beyond the existing rules by the government could stir up a hornet's nest. Many local businesses and foreign investors operating in the country have already made their position quite clear that there should not be any discrimination so far as incentives are concerned.
The Tata investment proposal, the largest ever in the history of Bangladesh, has evoked a lot of interest both at home and abroad. Many potential foreign investors are watching keenly the ongoing negotiations between the Tata and the government that on quite a few occasions ran into trouble. Some of the incentives demanded by the Tata on land, gas, tax, power tariff, lease of coalmine etc., were found to be difficult for the government to accept. The government, apparently, is in a dilemma over the Tata's 3.0 billion dollar investment proposal; it neither does want the Tata to withdraw its investment proposal nor can afford all the concessions demanded by the Indian business giant. In such a situation the report prepared by an Asian Development Bank (ADB) consultant on the economic impact of Tata's investment proposal could prove handy for the government.
The ADB report pointed out the huge positive impact of the Tata's investment proposal would leave on local and foreign investment in Bangladesh. The report has advised the government to continue negotiations with the Tata by exercising utmost caution without granting any concession beyond the existing rules. It said any extra incentive might irk the existing foreign investors, particularly those operating in the industrials parks. The government, too, is aware of the result of going beyond the limit while dealing with foreign investors. The Karnaphuli Fertiliser Company (KAFCO) is a glaring example. The nation is still paying heavily for a wrong deal made by the government of H.M. Ershad.
There is no denying that Tata's investment proposal is very important for Bangladesh since it is likely to usher in a new era in foreign investment. When Tata had approached the government last year with its proposal to invest in steel, fertiliser and power plants in Bangladesh, a good number of renowned business groups from abroad followed it. They are now waiting in the wings and their investment decisions, it seems, would be greatly influenced by the outcome of the negotiations with Tata. The government, it is hoped, would be able to handle the delicate situation successfully without compromising the national interest. Everyone wants big investments to come from abroad to Bangladesh. But that should not be at the cost of the nation. What is more important is that the government should not feel itself shaky in granting the right kind of incentives to Tata because the latter's origin. It is economics -- not politics -- that should be at the top of the government agenda while negotiating with any foreign investor. Though the flow of foreign investment has increased during the last couple of years, the amount is still very low compared to that of many Asian countries that are offering better incentives to the foreign investors. Bangladesh, if necessary, should review its incentive package taking into consideration what others are offering to lure foreign investors.