Bangladesh needs to mobilise domestic investment alongside increasing it in infrastructure with ‘spillover tax revenues’ not relying too much on overseas money as infrastructural needs in Bangladesh remain enormous, says a global development expert.
“Infrastructure needs in Bangladesh are huge. If you rely too much on overseas money, that will hurt the development,” Naoyuki Yoshino, Dean of the Asian Development Bank Institute (ADBI), told UNB in an interview at the ADB office here.
The expert, also Professor Emeritus at Keio University, Japan, said the public money and money from the international lending agencies are not enough considering the huge infrastructural needs in Bangladesh.
“I see traffic jam in Dhaka is getting heavier. That means you have lack of infrastructure and transportation,” he said adding that it is important to explore how to bring private sector in order to construct infrastructure. “And the key is how to increase the rate of return from the investment.”
Prof Yoshino who leads the ADBI, the world’s second best government-affiliated think tank, said many construction companies are interested in constructing railways, highways but they do not care about development of surrounding areas and inclusiveness.
“They’ve to realise that lots of poor people are living in surrounding areas and think of how to provide finance to them and help them start their own small business, shops, restaurants,” he mentioned.
Prof Yoshino encouraged Bangladesh to give attention more on insurance, pension funds, and other savings saying it is very important for Bangladesh to start increasing savings – short-, medium- and long-term to address infrastructural investment needs.
Hometown Investment Trust (HIT) Funds
He also thinks his popular idea – ‘Hometown Investment Trust (HIT)’ funds – a stable way to supply risk capital, can be applied in Bangladesh supporting poor people around big infrastructure projects – roads, railways and highways – through funds.
In Japan, Hometown Investment Trust (HIT) funds were created as a new source of financing to support solar and wind power. The basic objective of HIT funds is to connect local investors with projects in their own locality in which they have personal knowledge and interest.
“If Hometown Fund can be provided, poor people can start their own business along new roads and highways. This is also good for inclusive growth,” said the expert.
By means of HIT funds, many Japanese investors have put small amounts of money toward the construction of wind power and solar power projects.
The HIT funds have spread from Japan to Cambodia, Viet Nam, Peru, and Mongolia and they are also attracting attention from the Government of Thailand, and Malaysia’s central bank.
Since infrastructure requires long-term investment, the chief executive officer of the ADBI said insurance and pension funds will be good sources of money in Bangladesh.
“In 1991-1992, I was invited by China. They asked me many things and wanted to know Japanese experience of development – what would be the key. I said circulating domestic investments,” he explained how China walked towards development path.
Prof Yoshino said China followed his suggestions and they became successful. And Bangladesh is different from Japan and China. “You’ve to bring little changes, if necessary, to make my proposals suitable for Bangladesh.”
For further development of Bangladesh, Prof Yoshino said Bangladesh has to establish income equality providing opportunities for all. “You also need to provide quality education to have skilled workforce apart from diversity of wealth,” he added.
The expert said education should be made free of cost gradually in line with the growth of the economy. Citing Broadcasting University in Japan, Prof Yoshino said education can be provided through mobile phone and even poor people in remote areas of Bangladesh can listen to excellent lectures. “You only need mobile phone and internet apart from hiring experienced persons to deliver lecture. It’s not expensive.”
On boosting Bangladesh’s export, he said Bangladesh can export more products to neighbouring countries but it needs to understand what kind of products the market demands.
“It depends on demand and supply. But you need quality products. You have to look at what kinds of products are needed in surrounding countries. What kind of products they need and what kind of products Bangladesh can supply,” he said.
Prof Yoshino also said, “If you’ve quality products you can sell those around the world. It can be a small product like a pen.”