The Finance Division has put the Beza land acquisition project for the Japanese Economic Zone on the backburner although this is where the Japanese companies are supposed to invest in
The government is trying to bring Japanese investment, which is shifting from China now, to Bangladesh.
For this task, a Japanese company has been hired as a consultant.
The government is also preparing to announce incentives to attract Japanese companies in China to invest in Bangladesh.
But the Finance Division under the Ministry of Finance has put the Bangladesh Economic Zones Authority's (Beza) "Land Acquisition for Setting up Japanese Economic Zone at Araihazar in Narayanganj Project" in the "low priority" list although this is where the Japanese companies are supposed to invest in.
Not only this project, but the Finance Division has also marked six of the eight ongoing Beza projects as "low priority" ones.
The Prime Minister's Office (PMO) and Beza are unhappy with the finance ministry for lopsidedly putting these important projects on the low priority list. The PMO has asked the ministry to revise the list quickly.
Beza Executive Chairman Paban Chowdhury has also sent a letter to Finance Secretary Abdur Rouf Talukder in this regard.
Asked about the issue, Paban Chowdhury told The Business Standard on May 28, "I already wrote to the prime minister's Principal Secretary Dr Ahmad Kaikaus and Finance Secretary Abdur Rouf Talukder to change the priorities set by the finance ministry for the ongoing Beza projects."
"Hopefully, the projects will be shifted from the low priority list to the high priority one."
As Covid-19 spread across the country, revenue earnings dropped and extra funds had to be allocated to different sectors.
In order to cut the cost of ongoing development projects, the Finance Division divided the projects into high, medium and low priority ones. "The implementation of high priority projects will continue," it said.
Medium priority projects can only spend fund on areas where it is urgent, while the low priority projects will require prior approval of the Finance Division to get funds or to make an expenditure.
Due to the Covid-19 crisis, several countries, including the United States, the European Union member states, and Japan are announcing to divert their investments from China to other countries, Beza officials said.
After moving out of China, different companies are setting up factories in India, Indonesia and Vietnam.
To attract these investments, Indonesia has announced tax holiday benefits, while India has suspended most labour laws for three years.
The commerce ministry has decided to form a task force to weigh up the benefits that can be offered to bring a part of Japanese investment to Bangladesh from China.
The Ministry of Foreign Affairs has made a list of Japanese companies that have investments in China.
If the Japanese companies get interested to invest in Bangladesh, a large part of it will be made in the Japanese Economic Zone being developed in Narayanganj.
Land acquisition for this economic zone is likely to be delayed if the finance ministry puts it on the list of low priority projects. So Beza officials are fearing that Japanese investment here could slip by with that.
"Bangladesh is ranked 168th out of 190 countries in the 'Ease of Doing Business Index.' The country lacks infrastructure and a skilled workforce. The corporate tax rate here is also comparatively higher," said a Beza official.
"Bangladesh is in a somewhat advantageous position only in setting up economic zones to attract foreign investment. If these projects are kept on the low priority lists, there is a risk of more delay in getting the approval of the finance ministry in fund release and expenditure. Also, there is a chance of further falling behind in terms of attracting foreign investment."
In his letter, Paban Chowdhury wrote, "Land acquisition for setting up economic zones at Araihazar and Mirsarai and the land acquisition project for setting up the Indian Economic Zone in Mirsarai have to be completed within the stipulated time.
"Also, the land acquisition project for setting up an Indian Economic Zone in Mirsarai is scheduled to be completed in June 2020. Plus, the World Bank will finance a new project based on the progress of 'Bangladesh Economic Zones Development Project (Phase-I)' and 'Support to Capacity Building of Beza.' Implementation of these projects is ongoing."
Considering these issues, Paban Chowdhury requested the finance division to move at least these four projects from the low priority list to the high priority one.
The Finance Division and Beza have kept "Development of Infrastructure for Japanese Economic Zone at Araihazar" and "Setting up Indian Economic Zone at Mirsarai" projects in the medium priority list.