IT seems to be a common practice to publicise with fanfare any loans or probable inward foreign investments without weighing their merit. Our people are seldom told that all loans, grants or inward foreign investments may not necessarily be in our national interest. Most of the developed countries of today had their painfully difficult time to solve their problems, plan their future and take initiatives to implement that with wise and educated policies -- deferring consumerism in favour of savings, investment and calculated hardship under visionary leadership. Technological development has brought about material development, better global communication and propagation of information, which in turn, have

spread lust for the modern

amenities and their life style. The wiser leadership of ambitious

nations tried to build the capacity of their people to make what they need and also to earn enough to pay for their unavoidable import.

The west developed their technological capability quite ahead of other countries which they colonised and extracted resources from. They used unequal trade treaties, conventions, multilateral and bilateral agreements and illusionary offers, etc., to woo the weaker and, in many cases, resourceful countries to their terms mostly for exploitation. There is no use lamenting for the unforgettable past, but we can capitalise on some educative experience and also take advantage of modern knowledge and technology as a late comer to develop ourselves faster by leapfrogging and keeping watchful eyes on WTO, IMF, World Bank, OECD, WIPO (World Intellectual Property Organisation), many UN or other international agencies or bodies, among others which are hardly expected to be fair with the weak backward countries.

When some newly industrialising countries started to produce some rather low tech products, the industrialised countries started to impose anti-dumping or countervailing duties on the import from such countries according to their selfdesigned laws to remedy their economic woes or to extract concessions. It is again the industrialised countries which produce capital machinery needed by the development aspirant countries. They offer them conditional aid package to sell those and to maintain economic health of their own companies. Many developing countries without wise and visionary leadership tend to succumb to allurement and conditionality, and happen to sacrifice their self-reliant development potential. Bangladesh is a typical case, though sometimes it makes some apparent, superficial quip to the contrary. Even if some people would not like to accept our backward move, the present reality after long 34 years of our independence cannot manifest any thing else. The reasons are not hard to find.

Again these are the countries which can generate enough surplus fund and resources to invest in the prospective developing countries. They, naturally want to make it sure that they are allowed to invest in any business of their choice with as much of advantage as possible. They manoeuvre their policy and force devaluation of the currency of the investment destination countries, raise their interest rate, discourage their adoption of deficit financing, liberalise import, remove restrictive measures, and cut down necessary subsidy -- just opposed to what they practiced during their industrialisation and development period as their effective development policy instruments. Can we blame them in this age of competition for their use of all available exploitation tools -- intimidation, sanction, political influence, loan, grant, investment, allurement, antidumping measures, allegation of intellectual property law violation, warning against protectionism and what not? We must understand our position and be prepared to lessen our vulnerability, accepting all calculated hardship as and when situation warrants.

There is fanfare about Indian company, TATA's preliminary expression of intent to make an investment in Bangladesh to the tune of US$ 2.0 billion to 2.5 billion in phases. There already comes out such exaggerated statement as: government eyes US$ 1 billion a year out of the investment. Common wisdom can simply find it ridiculous. If our smart accounting experts put the price of gas, and coal, if any, for the proposed 1000MW power plant (estimated cost being US$ 700 million), annual 1-million ton fertilizer plant (costing about US$600 million), annual 2.4 million ton steel mill (costing about US$600 million) and coal exploration and other unspecified investment of about US$500 million, the government can earn some substantial amount. It is not an earning from the invest-

ment in real sense.

The gas-based power plant is an independent project which the government or even a consortium of local private companies can set up if the government really wants and takes bold and rational initiatives. There is no justification in allowing outsiders to handle our utility service, and for that matter any service sector. We are running a number of fertilizer plants since as early as 1956. Wrong contract for KAFCO also taught us a lesson. Moreover we are neither in a hurry nor have any technological advantage of allowing TATA to build a new fertilizer plant. Given finance, we are better capable of building a fertilizer plant ourselves with import of some essential parts. Finance is not a problem for a state, if government means it. It is difficult to understand what makes some people in the government so enthusiastic to consider it in the package. The question of investment in tourism industries, such as hotel, motel, etc., by any country which may create a source of cultural pollution does not arise. We are not at all in a hurry. We can very well do it ourselves. Coal exploration job can be taken up by JAPEX, if necessary, taking help of foreign consultants. The question of power generation may be observed for sometime based on the ongoing coal extraction project.

TATA does have long experience in steel making, including recent experience of modernisation of steel industries under Indian government policy. India has iron ore and other necessary minerals which they also partly export to Japan. Though steel mill is a polluting industry, we may go for sophistication and best proven technology for efficiency, product quality and protection of environment. Bangladesh must not sell land, but necessary land may be rented out initially for 15 years or so renewable every 4 or 5 years. The advance rent may be a part of equity share of Bangla-

desh. Before allowing the investment in the steel plant all the technical and commercial conditions must be resolved to avoid future complication with an investor from our good neighbourly country. A reasonable formula for pricing of raw materials, gas or coal, finished products, minimum and maximum volume of export and local sale, plant machinery procurement, installation, operational manpower, testing and research facilities, labour dispute, etc. must be agreed upon beforehand. The investor shall furnish all technical and commercial information related to the project to the BOI (Board of Investment) or other relevant authorities in Bangladesh as per their requirements and as per existing and probable future laws of Bangladesh. Any investment from any country must automatically qualify Bangladeshi companies to invest in those countries.

Contrary to general belief, Japan, South Korea, and of course, India carefully resisted inward foreign investment as long as they did not acquire sufficient technological capability and financial strength to comfortably compete with the foreign investment that accompanied advance technology, particularly, production technology. They preferred direct purchase of technology, patent and know-how to direct foreign inward investment. They are now themselves making heavy investment outward.

When still under SCAP(Supreme Commander of Allied Power) occupation in 1949, Japan took a loan of US$40.2 million from World Bank for power plants and later for some steel plants. This was bitterly criticised in the Diet (Japanese Parliament) as a national dishonour. In contrast, there are people in this country who boast of getting a larger loan commitment even if under humiliating terms. This is a reflection of the extent of our commitment to this nation. We are taking loans to close our industries one after another at the prescription of lending agencies which never lent

money for rehabilitating them. They want immunity against any damage their ill advice may cause to Bangladesh. Irresponsibly enough we are converting back to real estates the very site where industries were built some 40 or 50 years ago. Industries do face economic problems at times because of a number of reasons. They are supposed to be rehabilitated not grounded to real estate. The world knows how Rolls Royce, Lockheed, Chrysler, Fairchild and many other well-known companies were rehabilitated. Japan banks disposed of US$80 billion of bad debts with taxpayer money to save the banking system and indebted industries.

We seek help even from Thailand for making some flyovers or overhead roads in Dhaka at cost of about US$400 million. Is it not a shame to our civil engineers, a member of whom is well known for design of skyscrapers in the USA? The policymakers must learn to trust in the ability of their people and let them accept technological challenge. Taking loan, awarding contract on turn-key basis allegedly for some kickback cannot be a development approach. We are already paying interest of about Tk. 950 crore a year on foreign loan. We are prematurely trying to raise pay of the public servants, which may need an additional amount of about Tk.6,200 crore. Is it not wiser to set aside this amount for low-interest or interest-free investment in public and private sector industries which shall generate revenue for government to raise pay later? As the industries shall need educated and skilled manpower, government can reduce its manpower, make them pay tax and raise pay as efficiency increases. Meanwhile, the government may ask the international lending agencies such as World Bank, IMF and ADB to arrange write-off of our external debts as many developed countries promised in various international forums.

We must restraint investment in service sector and keep the cost of service low enough. The utility service may partly be owned by service users. Rational control of the mobile phone service alone can save upto US $1 billion to 1.5 billion a year in foreign exchange. Lowering of Bank interest rate to 4 per cent or below shall save the government about Tk.4,000 crore a year in local interest payment. For reference, Bank interest rate is kept low at 3.25 per cent in South Korea, 3.57 per cent in Germany, 2.75 per cent in the USA, and 0.1 per cent in Japan to boost economy. Restriction on unnecessary import such as new costly automobile, say larger than 1600 cc., allowing import of at least upto ten-year old vehicles, used industrial machinery and facilities, and restriction on import of various non-essential items, and rational use of expatriate remittance of US$ 3 billion plus can also ease pressure on foreign exchange. We must rationalise our taxation system to make tax equitable and payable by almost all on consolidated income allowing deduction for dependents and students.

We need to boldly mould our monetary and fiscal policies with prudence and fairness and quickly enough for results and come out of euphoria of so-called loan and undesirable inward foreign investment. The earlier we act, the better it will be for the nation, which has been desired for the last decades.

Mustafizur Rahman, PhD is Chairman, Institute of Development Strategy, Dhaka.The views expressed are of the author's own, and not necessarily of the organisation he represents.