TATA HALTS BANGLADESH INVESTMENT
Tata had planned to build a power plant, steel mill and fertilizer factory
Indian industrial giant Tata has said it is suspending work on a $3bn investment in Bangladesh because of delays by the government.
Tata planned to build a power plant, steel mill and fertiliser factory in the country, making it the single biggest investment in Bangladesh.
On Sunday, senior Bangladesh ministers said general elections due in January made it hard to accept the proposals.
A government spokesman said they hoped Tata would return to Bangladesh.
The announcement by Tata was made after a meeting between its negotiators and officials of Bangladesh's Board of Investment.
"We are extremely disappointed and frustrated... we thought the projects were good for the country's economy, for the people and the balance of payment," Alan Rosling, executive director of Tata Sons, told journalists in Dhaka.
He said they had discussed the issue with senior ministers and key officials for the past two days.
"All of them appreciated our proposals, but they could not go beyond politics," Mr Rosling is quoted as saying by Reuters.
Politics
The BBC's Waliur Rahman in Dhaka says the government is hesitant about reaching an agreement on a big investment plan ahead of the elections.
Reports say some politicians and economists have said that Bangladesh should not rush to accept Tata's proposals because they may eventually go against Bangladesh's interests.
But ministers say the delay is not due to any "anti-India" bias.
Bangladesh has however found it hard to attract money - total foreign direct investment (FDI) in Bangladesh since 1972 has totalled $3bn.
The World Economic Forum (WEF) said in a 2004 report that Bangladesh was one of the most uncompetitive places to do business.
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Thanks arihant for posting the above BBC link on TATA investment in BD. When the news of US$3 billion TATA investment proposal was floated, I was overwhelmed with joy, because it would create wealth, employ thousands and REDUCE balance of trade with India.
After reading this news probably in Hindustan Times (Internet edition), I wrote them a letter welcoming the TATA projects, which they have published. However, after deeply thinking about the essence of these projects I was awakened with the worry of hollowing out effects of these projects on the economy of BD.
You have to read my opinion here in a very logical mind and you have to accept that I am writing it in an open mind and not as a ploy to do India bashing. Why should there be a hollowing effect when TATA was supposed to invest in factories, produce power, steel and fertilizer?
I have no adverse opinion about the power sector, but I disagree that the steel mills and fertilizer factory would have benefitted BD. Please note the following:
1) Steel Mills : TATA did not want to build fully integrated steel mills, where iron ores are smelted in the furnace at 1600*c to produce steel, the steel ingots are then transported to a varieties of shops like, bar shop, plate shop, angle shop, channel shop etc. Instead, TATA just wanted to EXPORT the steel ingots to India.
More value added goods that are produced in the shops I have noted above are then to be done in India. So, TATA wanted to build only that facility that burns the BD natural gas, but did not want to build those shops that produce more value-added finish goods.
2) Fertilizer Factory : Outwardly innocent as steel mills, fertilizer was also to be produced with the use of BD natural gas, and then the whole lot was to be exported to India. This fertilizer would have helped India to produce more rice and wheat, but at the expense of BD's own agriculture.
Urea is an ammonia-based fertilizer and its raw material is natural gas or CH4. In the processing plants, nitrogen is caught from the air and carbon is removed from CH4. By multiple stage processing the CH4 is converted into NH3 then to NH4. this is the liquid form of urea.
BD gets more benefits if it uses the entire urea output in its own farmland. A 500,000 ton use of urea would produce an extra 2,500,000 ton of rice under optimum conditions. So, when TATA exports 1/2 million ton urea to India, our production loss is 2.5 million ton of food. Can someone do the arithmatics to find out the market values of 1/2 million ton urea and 2.5 million ton of rice.
Considering all those points above, now I do not regret that the GoB has technically rejected the TATA investment proposal. In fact, we do not need TATA types of projects in BD, because it would not help our own economy.
Tata had planned to build a power plant, steel mill and fertilizer factory
Indian industrial giant Tata has said it is suspending work on a $3bn investment in Bangladesh because of delays by the government.
Tata planned to build a power plant, steel mill and fertiliser factory in the country, making it the single biggest investment in Bangladesh.
On Sunday, senior Bangladesh ministers said general elections due in January made it hard to accept the proposals.
A government spokesman said they hoped Tata would return to Bangladesh.
The announcement by Tata was made after a meeting between its negotiators and officials of Bangladesh's Board of Investment.
"We are extremely disappointed and frustrated... we thought the projects were good for the country's economy, for the people and the balance of payment," Alan Rosling, executive director of Tata Sons, told journalists in Dhaka.
He said they had discussed the issue with senior ministers and key officials for the past two days.
"All of them appreciated our proposals, but they could not go beyond politics," Mr Rosling is quoted as saying by Reuters.
Politics
The BBC's Waliur Rahman in Dhaka says the government is hesitant about reaching an agreement on a big investment plan ahead of the elections.
Reports say some politicians and economists have said that Bangladesh should not rush to accept Tata's proposals because they may eventually go against Bangladesh's interests.
But ministers say the delay is not due to any "anti-India" bias.
Bangladesh has however found it hard to attract money - total foreign direct investment (FDI) in Bangladesh since 1972 has totalled $3bn.
The World Economic Forum (WEF) said in a 2004 report that Bangladesh was one of the most uncompetitive places to do business.
============================================
Thanks arihant for posting the above BBC link on TATA investment in BD. When the news of US$3 billion TATA investment proposal was floated, I was overwhelmed with joy, because it would create wealth, employ thousands and REDUCE balance of trade with India.
After reading this news probably in Hindustan Times (Internet edition), I wrote them a letter welcoming the TATA projects, which they have published. However, after deeply thinking about the essence of these projects I was awakened with the worry of hollowing out effects of these projects on the economy of BD.
You have to read my opinion here in a very logical mind and you have to accept that I am writing it in an open mind and not as a ploy to do India bashing. Why should there be a hollowing effect when TATA was supposed to invest in factories, produce power, steel and fertilizer?
I have no adverse opinion about the power sector, but I disagree that the steel mills and fertilizer factory would have benefitted BD. Please note the following:
1) Steel Mills : TATA did not want to build fully integrated steel mills, where iron ores are smelted in the furnace at 1600*c to produce steel, the steel ingots are then transported to a varieties of shops like, bar shop, plate shop, angle shop, channel shop etc. Instead, TATA just wanted to EXPORT the steel ingots to India.
More value added goods that are produced in the shops I have noted above are then to be done in India. So, TATA wanted to build only that facility that burns the BD natural gas, but did not want to build those shops that produce more value-added finish goods.
2) Fertilizer Factory : Outwardly innocent as steel mills, fertilizer was also to be produced with the use of BD natural gas, and then the whole lot was to be exported to India. This fertilizer would have helped India to produce more rice and wheat, but at the expense of BD's own agriculture.
Urea is an ammonia-based fertilizer and its raw material is natural gas or CH4. In the processing plants, nitrogen is caught from the air and carbon is removed from CH4. By multiple stage processing the CH4 is converted into NH3 then to NH4. this is the liquid form of urea.
BD gets more benefits if it uses the entire urea output in its own farmland. A 500,000 ton use of urea would produce an extra 2,500,000 ton of rice under optimum conditions. So, when TATA exports 1/2 million ton urea to India, our production loss is 2.5 million ton of food. Can someone do the arithmatics to find out the market values of 1/2 million ton urea and 2.5 million ton of rice.
Considering all those points above, now I do not regret that the GoB has technically rejected the TATA investment proposal. In fact, we do not need TATA types of projects in BD, because it would not help our own economy.