Reposted from bdnews24.com
BySheikh Shahariar Zaman
Dhaka, Aug 14 (bdnews24.com)—International Finance Corporation is aiming to lift its investment from $ 250 million to $ 400-600 million this fiscal as it is expanding its operations in Bangladesh when it is starving of FDI.
Improved economic condition and government support for IFC projects have prompted the private sector lending arm of the World Bank Group to increase investment in Bangladesh, Acting IFC Executive Vice-President and CEO Rashad Kaldany told bdnews24.com in an exclusive interview.
“Things have improved substantially in Bangladesh with around 6 percent growth rate for a decade and recently the government has been very responsive to our projects and our activities increased over the last two years,” he said.
IFC’s total portfolio since 2000 stands at $ 250 million but in the last two years it lent about $ 220 million.
The corporation undertook nine projects in 2010-11 while in the last fiscal the number of projects was seven and this year IFC has a target to undertake 12 to 14 projects, Kaldany said.
The Acting IFC Executive Vice-President came to Dhaka on Aug 12 on a regional tour and left Tuesday for Bhutan. He would also visit India.
He was posted in India between 1997 and 2000 and frequently visited Bangladesh at that time.
Power sector
IFC would like to finance three or four power plants in the next two or three years, Kaldany said. “The total capacity of the plants is expected to be 500 to 600 megawatts and one of the projects would get fund in this financial year.”
The corporation financed Khulna power plant project and it was ‘very successful’, he added.
Banking sector is another area where IFC wants to pump in money.
The IFC CEO said: “Last year, we provided liquidity facility to the sector and we are interested to invest in equity in three or four banks.”
IFC is also keen on financing in textiles sector and agriculture business as they help Bangladesh to earn foreign exchange and employ a large number of people, Kaldany said.
“We’re looking for a couple of projects in the textile and readymade garment sector as we lend in foreign currency and it has to be repaid in foreign exchange. That’s why we like to provide loans to those companies which earn foreign exchange.”
Project selection
The chief executive said his corporation considered what impact a project would have in development before picking it for financing.
“Infrastructure, agriculture or social services like hospital have positive impacts and IFC is biased to these types of projects,” he said. “IFC also considers the strength of the sponsors before approving a project.”
About interest rate, he said it offers market-based interest rate as it was not subsidised. “Interest rate depends on strength of the borrowers and features of the project,” he said.
Fund raiser
Kaldany said IFC would like to work with the government to raise funds for private sector development.
“If the government desires to raise fund for the private sector, we’ll not only participate in the fund but will also encourage others to participate in it,” he said.
IFC provided $10 million to Frontier Fund in Bangladesh and it generated $90 million from other investors, he added. The official said now the corporation’s investment was focussed on retail, textiles and battery manufacturing companies in Bangladesh.
About foreign direct investment, he said investors considered many factors before making a decision.
“Market, taxation, judicial system and many other factors influence FDI decision,” he said, “The role of the government is to continue to improve regulatory framework to ensure stability for investors.”
Photo Credit: bdnews24
