Private Sector Participation in Infrastructure Development: A Non-Resident Infrastructure Fund in Bangladesh

Abstract

Infrastructure is considered as the engine of growth for an economy with possibilities of high return for the investors. However, in Bangladesh the infrastructure sector has been suffering a lot due to fund shortage. Bangladesh is one of the highest remittance recipient countries in the world, but the current saving schemes of the country are not enough to attract the non-resident Bangladeshis (NRB). In this situation, an NRB Infrastructure Fund (NIF) can be established, where NRBs will invest in private infrastructure projects like toll roads, private power plant, land and seaport etc. In 2004, the Government prepared the Private Sector Infrastructure Guidelines (PSIG) that emphasized formation of NRB funds for infrastructure sectors. Except for three general mutual funds for NRB under Investment Corporation of Bangladesh (ICB), there has been no other initiative. The viability of the fund remains far below the expectations. This paper proposes an NRB fund for private infrastructure development with option to trade the shares in the local market. The fund will be used for a longer period of time in the company in compliance with the infrastructure project parameters. The paper also provides some technical and commercial proposals for forming such a fund in the country and examines its impacts on the economy as a whole.