urge parliamentary scrutiny of the state within a state of the Khakis, especially the dreaded spy agency (DGFI). The interference of the Khakis into state politics will once again jeopardize institutionalization of elective democracy, good governance and secularism. The rogues fear social justice activists, critics, politicians and journalists too - Joy Manush!
Thursday, July 21, 2011
Bangladesh protests distract, but power is concern
Photo: Activists protest against contract with U.S. energy firm on gas contract
Dhaka, Reuters: Protests in Bangladesh against a US energy firm's gas contract will not scare big investors or force the government to scrap the deal, but they are a distraction from the real, structural problems braking the South Asian nation's development.
Strikes and street demonstrations are commonplace in Bangladesh, but in July, ConocoPhillips was targeted for an oil and gas exploration deal it signed, raising questions about whether the investment climate is turning more hostile to foreigners.
M. Tamim, a professor of petroleum and mineral resources at the Bangladesh University of Engineering and Technology, went as far as saying the unrest "may leave a deep scar on overall foreign investment in the country", but behind the noise, investors are far more worried about structural problems.
"The reason for public concern is mainly because of the lack of knowledge about the contract agreed with ConocoPhillips," said Alia Yousuf, head of emerging markets debt at London-based ACPI Investments. "There isn't a dislike for foreign investment in the country, it is more a concern for the government's ability to secure energy self sufficiency for Bangladesh."
Power cuts are chronic, demand far outstrips supply. Reliable electricity is top of everyone's wish list and some say that rather than challenging foreign investment in the sector, it needs to be encouraged.
"It is important (that) the government takes measures so that ConocoPhillips and other foreign companies are able to participate in the development of the country's energy sector," said Muhammad Aziz Khan, chairman of Bangladeshi conglomerate Summit Group.
Through Summit Power , a joint venture with General Electric, his firm will build three power plants in a $1.1 billion (Dh4.4bn) deal signed in May.
US firms are keen to invest in the country, said an official with the American Chamber of Commerce in Bangladesh, but "they have been discouraged by obstacles such as severe shortages of power and energy, poor roads, communications and ports facilities. Now a new phenomenon has been added -- long spells of strikes, violence on the streets and deteriorating law and order."
Still, even the pessimistic do not see big business pulling out, and the protests should not be read as a sign that there is sufficient political pressure building to force the government to review the gas deal.
"I believe the recent protest against ConocoPhillips will not have any impact on its decision and that it will go ahead with its exploration plan in Bangladesh," said Bangladesh University's Tamim. "Our major political parties are in the same boat about the importance of investment by foreign firms in the oil and gas sector."
LESS CONVERSATION, MORE ACTION
Overall foreign direct investment rose 30 percent year on year to $913 million in 2010, according to Bangladeshi central bank figures. No data was available for 2011, but the pace of inflow dropped in the second half of last year and the dominant trend in global markets this year is away from assets seen as risky.
In this environment, those with money to spend may be deterred from doing so in Bangladesh by the threat of trouble.
"Disruptive actions such as general strikes coupled with other protests leading to political uncertainty keeps investors at bay, or makes them wait until the government can assure a healthy (investment) climate," said an international banker in Dhaka, speaking on condition of anonymity.
Others say anyone considering putting their money into a high-potential but specialist market like Bangladesh -- named a few years ago by Goldman Sachs as one of the 'Next 11' developing economies to watch -- is well aware of the risks.
"Foreign investors always invest with a long-term view and perspectives, and they also keep in mind the political risks or environment in developing countries like Bangladesh," said Tawfiq-e-Elahi Chowdhury, energy adviser to the prime minister.
"I don't think ConocoPhillips will be scared by protests staged by small groups in this country."
Still, would-be investors in China, South Korea and Japan are being put off not by politics, but lack of power.
"Politics is not a big issue for investors because that's priced in," said ACPI's Yousuf. "But infrastructure and shortage of power is the biggest issue, and that actually does stop investment."
At street level, Bangladeshis want the lights to work more than they fret about the source of the cash that makes it happen.
"We don't need a debate on deals with foreign companies," said Shahidur Rahman, an official at a privately owned bank. "We want the gas and electricity problems solved without further delay. Governments come and go but the problems remain."