Kolkata, Dec 14 (IANS) Lack of connectivity could be a “central factor” behind low intra-BIMSTEC investments, a noted Bangladeshi economist said here on Wednesday.
The total foreign direct investment (FDI) inflows into the countries of Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) grew more than five times between 2000 to 2013, but intra-BIMSTEC investment has been low.
“Although total FDI flows into the BIMSTEC countries have increased from $8 billion in 2000 to $46 billion in 2013, after a reaching a peak of $58 billion in 2008, intra-BIMSTEC investment remains low,” a former Governor of Central Bank of Bangladesh said here.
“Lack of connectivity, which may be a central factor in this outcome, also discourages investment by investors from outside the region,” Atiur Rahman, who is also Professor at Dhaka University, said at the Indo-Asia Connectivity for Shared Prosperity conference.
Advocating financial connectivity, Rahman said without it, trade and investment connectivity cannot flourish and be effective for generating prosperity.
“Money certainly matters. Financial connectivity is both the enabler as well as the result of other forms of connectivity,” he said.
BIMSTEC is a regional organisation comprising seven member-states lying in the littoral and adjacent areas of the Bay of Bengal constituting a contiguous regional unity. The member-states are — Bangladesh, Bhutan, India, Nepal, Sri Lanka, and two Southeast Asian countries Myanmar and Thailand.
The Bay of Bengal region is witnessing a lot of innovation in financial connectivity, highlighted Rahman.
“For instance, India has built an impressive digital payments infrastructure. Bhutan has built expertise on sustainable financing of infrastructure projects and public interest partnership. Bangladesh has pioneered a model to enable financial access to last mile and created social safety nets,” the economist said.
He added that the Central Bank of Bangladesh has rolled out a medium- to long-term green transformation fund to help textile and leather sectors become environment friendly.
“Relevant entrepreneurs have welcomed this pro-active role of conservative regulator called the Central Bank. Other countries can take lessons from such facilitating role of central banking,” he added.
Rahman recommended the adoption of a gradual, yet time-bound approach to enhance regional connectivity with the implementation of specific projects where “it is not necessary that all member-countries of the BBIN or the BIMSTEC region need to be always on board.”
BBIN is the Bangladesh, Bhutan, India, Nepal Initiative, a sub regional architecture of countries in South Asia.