ECONOMY: Tatas renew interest in Bangladesh – Bengal missesd out earlier – now to renegotiate ?!!
BY JAYANTA ROY CHOWDHURY
New Delhi, June 2: The Tatas are making fresh overtures to the Bangladesh government, led by Awami League’s Sheikh Hasina, for investing in the country’s telecom and IT sectors.
Four years ago, the group had pulled out of a Rs 10,000-crore proposal to build a steel mill, a fertiliser factory and a power plant. Khaleda Zia of the Bangladesh Nationalist Party was the Prime Minister then.
The Tatas have held talks with Summit Communications of Bangladesh, which has the licence to set up telecom infrastructure there.
Summit Communications’ managing director Arif Ali Islam said, “We held exploratory talks. I cannot reveal the nature of the talks because of confidentiality clauses.”
Summit Communications has the licence to build a telecom transmission, or an optic fibre network, across the country, linking all sub-district towns. The network, which will be used by all operators as well as by the government, has to come up within 10 years. The network could involve investments of over Rs 1,000 crore, analysts said.
Sources in the Bangladesh government said Tata Communications and Tata Consultancy Services had shown interest in the country’s booming IT industry because of low labour rates. No official comments could be obtained.
The software industry in Bangladesh, valued at $3.5 billion, is still small but is growing at a 35 per cent rate annually. Sources in the Tata group confirmed that the company had shown interest in the emerging market and had also sent a team to meet Bangladesh’s telecom regulators.
According to sources, the recently elected Awami League government would welcome the Tatas and want them to expand their investment to other sectors such as automobiles, where they could build a plant to assemble knocked-down cars and trucks. Tata Motors, sources said, is studying the possibility of an assembly unit in Bangladesh as well as sourcing auto parts from there.
“However, we, too, will go by the earlier government’s ruling that we cannot make gas available at cheap rates to any foreign company,” government officials said. The Tatas had demanded cheap gas for its mega steel project. The then Bangladesh government did not agree as it felt the move would reduce the availability for domestic industry and household users.
In 2006, the Tatas said they were suspending work on the $3-billion project because of delays on the part of the government. This was considered to be the single biggest investment in that country.
Bangladesh has found it hard to attract foreign direct investment, which totalled $6 billion since 1971, the year of its independence.
The country had earlier offered Indian investors special economic zones along its border, revamped railway links and the use of Chittagong and Mongla ports.
Indian companies made overseas investments worth around $16 billion in 2008-09 and $18.74 billion the year before. Acquisitions of European steel company Corus and car maker Jaguar Land Rover are among the recent high-profile investments abroad.
Though India is Bangladesh’s largest trading partner, its investments in the neighbouring country has been negligible.
Analysts see investments in textiles, consumer goods, power plants and infrastructure as a possible way to offset the huge trade gap between the two nations. Uttara, Mongla, Narsinghdi in Khulna, Saidpur and Rangpur are enclaves where Indian investment could be localised.
India exports goods worth about $3 billion to its eastern neighbour, while Bangladesh exports just about a tenth of that to India.
This has always been a sore point in the economic relations between the two nations, with Bangladesh demanding better access to Indian markets for its tea, textiles and food products.