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, reports UNB.
"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 the news agency in an interview at the ADB office in the city.
Yoshino, 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.
It is important to explore how to bring private sector in order to construct infrastructure, he said. "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 and 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 more attention on insurance, pension funds, and other savings, saying that it is very important for Bangladesh to start increasing savings-short-, medium- and long-term-to address infrastructural investment needs.
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, Vietnam, 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 about Japanese experience of development-what would be the key. I said circulating domestic investments," he explained how China walked towards development path.