Welcome to the Presentation On Public Private Partnership Policy, Performance and Prospects of Bangladesh. By : Dr. Mohammad Mahbubur Rahman Secretary Ministry of Communications Government of the People's Republic of Bangladesh.
Public Private Partnership Policy, Performance and Prospects of Bangladesh. Bangladesh is a democratic, liberal, moderate and culturally homogeneous country. The Government pursues an open and free economic policy and this has been demonstrated by the country s signing and adhering to all the international charters, protocols and conventions concerning free trade and investments.
Scenario of Bangladesh Δ Land area : 148,401 sq km Δ Estimated population : 152 million (Rural : 76% and Urban 24%) Δ Percapita income : US$ 470 Δ GDP growth : 6.5 (average) Δ Population growth rate : 1.57 percent
National Economy The national economy is dominated by five sectors and they are contributing to our national economy (GDP). * Agriculture : 21% * Manufacting : 16% * Trade : 13% * Transport : 11% * Civil Construction : 8%
Government s increased support to private sector since 1990s through sound macro-economic management and a sustained use of public resource to support technological process in agriculture, rural infrastructure, health and education combined with progressive policies to ensure community participation and strong partnerships with non government organizations (NGOs) to deliver grassroots public services. Bangladesh has made a strong start in meeting the Millennium Development Goals (MDGs). Poverty reduction is the main target of the Government and all projects/ programmes are poverty reduction oriented.
Investment Status Δ Investment in Public/Private Sectors : During 2005, investment as percentage of GDP rose 25.9% to reflecting an increase in private investment of offsetting lower public investment. Public sector investment as percentage of GDP dropped from 7.4% in 1992 to 6.1% in 2005. Private sector investment increased from 15.6% in 1992 to 18.3% in 2005. Δ Foreign Direct Investment (FDI): 498 million US$ in 2005. Textile : 28% Chemical : 12% Service : 17% Glass & Ceramic : 10% Agro-based : 13% Engineering : 8% Remaining : 12% FDI is expected to increase manifold in the next five year
The Government have been pursuing different types of partnership with the private sector as a means of gaining access to additional resources, as well as capitalize on the private sector s efficiency and ability to innovate. Government is encouraging Public Private Partnership to strengthen its economy and to change the lot of the people. Reasons for PPP Δ Access to private resources Δ Better efficiency of the private sector Δ Access to advanced to chorology and management.
Involvement in PPP * Government * Private sector Project Initiator Financier - Public/Private sponsors - Equity financiers - Multi-lateral institutions Expert (engineers, consultants, Contractors, operators etc) * Project company Customers/Community involvement.
Bangladesh offers generous opportunities for investment under its liberalised private sector-led growth strategy. All sectors are open for private investment, except a few like defence and strategic concern areas. Incentives : A variety of tax incentives are provided, e.g., a 10-year tax holiday for enterprises in the EPZs, accelerated depreciation for enterprises not eligible for a tax holiday, and income tax exemption for 15 years for power sector projects.
Foreign Exchange Control : Bangladesh currency 'Taka' is convertible for current external transactions. Individuals/ firms resident in Bangladesh may conduct all current external transactions, including trade and investment related transaction, through banks in Bangladesh authorised to deal in foreign exchange (Authorised Dealers) without prior approval of the Central Bank. The Foreign Investment Act, 1980 guarantees the right of repatriation of invested capital, profits, capital gains, post-tax dividends, and approved royalties and fees. Foreign firms are able to repatriate funds.
Legal Framework for Foreign Investment Investment in Bangladesh is well protected by law and by practice. Major laws affecting foreign investment are provided by the Foreign Private Investment Act of 1980. The Industrial Policy of 1991, the Bangladesh Export Processing Zones Authority Act of 1980 and the Companies Act of 1994. The policy framework for foreign investment in Bangladesh is based on 'The Foreign Private Investment (Promotion & Protection) Act of 1980 which ensures legal protection to foreign investment in Bangladesh against nationalisation and expropriation. It also guarantees non-discriminatory treatment between foreign and local investment, and repatriation of proceeds from sales of shares and profit.
International Agreements: Bangladesh is a signatory to MIGA (Multilateral Investment Guarantee Agency), OPIC (Overseas Private Investment Corporation) of USA, ICSID (International Centre for Settlement of Investment Disputes) and a member of the WIPO (World Intellectual Property Organization) permanent committee on development cooperation related to industrial property.
Bilateral Agreements: The Foreign Investment Act, 1980 includes a guarantee of national treatment. National treatment is also provided in bilateral treaties for the promotion and protection of foreign investment. Bangladesh has concluded bilateral agreements for avoidance of double taxation and investment treaties for promotion and protection of investment with forty (40) countries.
Dispute Settlement Bangladesh is a signatory to the International Convention for the Settlement of Disputes (ICSID) and it acceded (on May 6, 1992) to the United Nations Convention for the Recognition and Enforcement of Foreign Arbitral Awards. Bilateral investment treaties provide procedures for referring irresolvable investment disputes to ICSID for third-party settlement.
Private Sector infrastructure Guidelines : Bangladesh has officially notified the private infrastructual guideline by Gazettee notification in 2004 to promote private sector participation. The contribution of public sector in total investment is gradually decreasing and the contribution of private sector investment is gradually increasing. Investment in public sector though reduced slightly as percentage of GDP, the total public expenditure has increased. The investment percentage of GDP are :
Investment as percent of GDP Financial Year Total Investment Public Private 2000-01 23.09 7.25 15.84 2001-02 23.15 6.37 16.78 2002-03 23.41 6.20 17.21 2003-04 24.02 6.19 17.83 2004-05 24.53 6.21 18.23 2005-06 24.97 6.30 18.37
Graph : Investment as percent of GDP 30 25 20 15 10 5 0 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
In a Public-Private Partnership (PPP) project the development; engineering, financing, procurement, construction and operation are to be carried out jointly or public sector investor through schemes, Such as Build Own Transfer (BOT), Build, own and operation (BOO) and other modes.
Problems and Issues Redefine the relationship between public & private involvement in infrastructure projects; Encourage closer cooperation between public and private sector. Promotional actions to be launched by government for PPP to attract private sector. Creation of One-Stop-Service for PPP Strengthen Board of Investment (BOI) to attract, involve and facilitate the PPP.
The Government is trying to attract private sector in infrastructure projects like Highways, Expressways, including mass-transit, flyovers, bus terminal, Airport terminal, aviation sector, ports, Railway rural infrastructure & services etc. Bangladesh is a prospective market for foreign investors, since the opportunities are abundant; and the legal, administrative and fiscal conditions are supportive. The concerned Ministries, agencies, as well as the Chambers of Commerce & Industry will extend all kinds of support and cooperation to assist foreign/private investors to participate in various construction/infrastructure development projects in Bangladesh. The Government is going to approve the Multi Modal Transport Policy where there is a clear cut directives to encourage and facilitate private sector to invest in the infrastructure sectors in a bigger way.
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