Dhaka, April 26: Soaring land prices and hassles in land acquisition deter inflows of foreign investment and the expansion of local businesses as well, according to two international organisations.
The land issue has made the country's development challenges more critical as Bangladesh faces two other major challenges -- how to upgrade infrastructure and ensure a large and skilled workforce.
"Availability of land for the public and private sector projects is emerging as a major challenge," said Asian Development Bank in a report published this month.
Also, Moody's Investors Services that rated Bangladesh Ba3 for 2011 last week found land acquisition remains problematic and the registry is in need of reforms.
"These impede the quicker realisation of larger inflows of foreign direct investment," said Moody's 2011 sovereign report on Bangladesh.
Bangladesh has received only $697 million of foreign direct investments (FDI) during the first 10 months of 2010 against registrations for $3.05 billion during the year, according to Board of Investment (BoI). In 2009, FDI inflow into Bangladesh was $700 million. Inadequate land and industrial plots and a lack of utilities are the major reasons behind the slump in the FDI inflows.
Local businessmen are also feeling the pinch of the soaring land prices.
A private commercial bank has bought a piece of land (21 katha) in Gulshan at Tk 150 crore last year to set up its headquarters.
"Land has become priceless in Gulshan. Sellers demand around Tk 10 crore a katha," said a businessman, claiming that it was Tk 3 crore a year ago.
The situation is more or less the same in the industrial areas, such as on the Dhaka-Mymensingh or Dhaka-Narsingdi roads.
Iftekhar Uddin Farhad who runs an export-oriented ceramics factory on Dhaka-Mymensingh road under Gazipur district said now a bigha of land is being sold at Tk 1 crore - Tk 1.5 crore, which was just Tk 30 lakh a year ago.
"Acquisition is more critical than the price. One has to deal with local extortionists and politicians in addition to corrupt land officials," said Farhad.
A study led by economist Dr Abul Barkat in 2007 found that growing population, rising per capita income and high rate of income growth have intensified the competition for accumulating the fixed asset (land) in Bangladesh.
The study also said massive migration from rural to urban areas has been putting immense pressure not only on urban facilities, but also poses a threat to proper use of the land. Inflows of remittances have also contributed to a soaring land price in recent years.
Banks' speculative financing also made the land price costlier in the past few years. Moody's Investors Services also found that the central bank at the end of 2010 curbed bank lending for speculative land purchases.
AK Azad, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), urged the government to address the land price issue to avoid negative impacts on industrialisation.
"Higher land prices affect the overall production costs," said Azad.
He said businessmen and remitters buy land speculating manifolds return from the fixed asset with no risk.
"The government should ban the use of black money into land and impose higher tax to contain the price," said Azad.
According to government documents and individual researchers, over 150 million people live in around 14 million hectares of areas in Bangladesh. Per capita land is less than 25 decimal and out of which, only 15 decimal is farm land.
Source: The Daily Star
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