Tuesday, July 25 2006 12:05 Hrs (IST) - World Time -

Dhaka: Bangladesh should consider the economic benefits of the $3 billion investment proposal by India's Tata Group, instead of putting it off due to political expediency, the Asian Development Bank (ADB) has told Dhaka.

"People want to see politicians take decisions, considering the economic benefits of the country, not on political consideration," ADB Country Director Hua Du said here at a meet-the-press programme.

Not deciding on Tata's investment proposal does not make economic sense, said the Dhaka chief of ADB, which is a major international financial institution assisting Bangladesh, The Daily Star newspaper quoted her as saying.

She quoted Finance Minister M. Saifur Rahman as saying in a newspaper that the government would not take any decision before the next elections, while clarifying the government's stance about the Indian industrial giant's investment.

Hua Du said after reviewing Tata's last proposal that the ADB had found the gas price offered by the Indian conglomerate is higher than what the government gets from existing foreign investors in Bangladesh.

This assertion flies in the face of claims made by various Bangladesh agencies, including the Bureau of Investment (BOI) which is handling the proposal, that Tata's offer was lower than the international price.

The proposal was 'suspended' by both sides earlier this month after prolonged negotiations, nearly two years after Tata chief Ratan Tata visited Dhaka and offered to invest $2 billion in gas-related industries like fertiliser, besides steel and other infrastructure industries.

The proposal, revised to $3 billion, ran into some road blocks like a sustained campaign by former officials of Petrobangla, the state-owned oil major, and others raising "national interest" issues.

Tata agreed to suspend the proposal after three ministers of the Khaleda Zia government conveyed that this being the 'election year' the situation was too volatile for an economic decision of this size.

Even while leaving a decision on it for the next government, which would take office after the elections, likely early next year, BOI and other agencies of the Zia government have been engaged in processing the proposal, media reports have indicated.

The proposal is to go before a ministerial team, headed by Industries Minister Motiur Rahman Nizami, who heads the Islamist block in the ruling coalition and is chief of the Jamaat-e-Islami, a party ideologically opposed to India.

Hua Du said that Bangladesh, as the hub of the sub-region and its gateway to global markets, should develop regional economic cooperation with the neighbouring countries, including India, by keeping politics out of any economic decision.

Citing the long-standing political conflict between India and China, Hua Du said despite the discord the two countries are now developing economic relations.

She described the next general election as a 'major internal challenge' for Bangladesh and said it is critical to keep up the reform momentum in the lead-up to the elections.

"A number of challenges continue to pose risks to the macroeconomic performance in the period ahead. These include political transition, weakness in the infrastructure and the under-pricing of energy products," she was quoted by the newspaper as saying.