UN Resident Coordinator in Bangladesh Jorgen Lissner warned that if the problems of the foreign investors were not urgently addressed, they may stop further business expansion or even quit for a better place.

He pointed out that investors seek security of property and quick customs clearance, visa issuance, work permit and other services.

Referring to a survey conducted by the Japanese Commerce and Industries Association that paints a grim picture of investment climate in Bangladesh, he said the government cannot afford to take the allegations lightly.

"The complaints may be wrong for a particular case, but the perception of the problems is not wrong. Corruption, bureaucracy and law and order are the perennial problems in Bangladesh standing in the way of welcoming foreign investors," Lissner said.

He was speaking at the launch of the World Investment Report 2003 prepared by the United Nations Conference on Trade and Development (Unctad) in Dhaka.

The Unctad report showed that although FDI flow to South Asia increased from $4 billion in 2001 to $4.6 billion in 2002, it continued to decline in Bangladesh. During the last calendar year, Bangladesh received $45 million in FDI, which was $79 million in 2001, Unctad said. Bangladesh witnessed the highest FDI flow of $280 million in 2000.

But the report included an FDI census of the Board of Investment (BoI) which showed FDI inflows in 2002 at $328.22 million, including $179.90 million in equity capital, $78.44 million in reinvested earnings and $69.87 million in intra-company loans.

Pointing to debates over FDI figures between the Bangladesh Bank and BoI, Lissner said the government organisations should be much more responsible in their services. He said the debate exposes the quality of service available in Bangladesh.

Recalling his personal experience, Lissner said his phone connection was snapped several times for no fault of him.

The BoI has a one-stop-service desk at Zia International Airport to help foreign investors, but most visiting entrepreneurs are ignorant about the service as BoI has not disseminated information about the desk.

"Ignorant about the service, many investors are seen lining up in long queues, waiting for customs and immigration clearance in rooms without air-conditions. Such an experience creates a bad image about the country, which eventually affects FDI flow," Lissner said.

He said maybe one-third of the bad image is untrue, but it cannot be ruled out that corruption, poor law and order and bureaucracy are breeding image problems, hampering FDI.

Coming back to the Japanese survey, he said friendly and suggestive complaints should be received positively to remedy the situation. He urged the prime minister to direct agencies concerned to take immediate measures to improve the investment environment.

Lissner said political unrest is driving away investors. Terming the tenures of caretaker governments an example of good governance, he expressed his conviction that Bangladesh can improve governance.

Asked what steps the government would take in response to the Japanese investors' allegations, BoI Executive Chairman Mahmudur Rahman said the government will hold an interministerial meeting soon to look into the problems.

About the decline in FDI flow, he said domestic demand and market competitiveness are the key to roping in investors. Domestic market is growing and if the cost of production can be kept competitive, Bangladesh will see an increase in FDI, he said.

About the statistical puzzle, he said the Bangladesh Bank should follow the Unctad method to calculate FDI flow. Although Lafarge Cement alone made a $46 million equity investment through Credit Agricole Indosuez on May 18, the Bangladesh Bank recorded only $17.50 million FDI during January-June, 2002, he said.

Foreign Investors' Chamber of Commerce and Industry President Wali Bhuiyan, expressing his sarcasm over the current slide in order, said: "What better investment destination a country can be where a businessman cannot be traced even after 40 days of his abduction?"

Mustafa Kamal Mujeri, visiting fellow of the Bangladesh Institute of Development Studies, presented the annual investment report.