The story of a 10 Billion Taka (US$120 million) investment in Bangladesh has made it into the country's headlines, following a visit by Subrata Roy Sahara, chairman of Sahara India Pariwar, one of India's largest business conglomerates. The group is planning to develop a 40 square kilometre ‘tourism city’ housing project situated approximately 50 kilometres from Bangladesh's capital Dhaka. US$ for a township-housing scheme near the capital Dhaka.
Though it is a significant investment commitment for the country, the proposed project has been widely criticized by Bangladeshi bloggers. Armanuzzaman [bn] raised the point at blog.bdnews24.com:
বাংলাদেশে কোন বৈদেশিক বিনিয়োগ নিঃসন্দেহে চমৎকার ব্যাপার। কিন্তু মজার বিষয় হল আবাসন প্রকল্পে বিনিয়োগ কতটা জরুরী। বাংলাদেশের মত ছোট দেশে অসংখ্য দেশী কোম্পানী আবাসন প্রকল্পে বিনিয়োগ করছে।
সবচেয়ে গুরুত্বপূর্ণ যে বিষয়টি এই খাতে বিনিয়োগে প্রডাক্টিভ কিছুই নেই। আবাসন প্রকল্প তৈরী করে পরবর্তীতে তা বিক্রি করে প্রচুর পরিমানে বৈদেশিক মুদ্রা নিয়ে যাবেন।
Foreign investment in Bangladesh is always exciting, but the important point in this proposal is how productive it is to invest in housing projects. In a small country like Bangladesh the housing industry is already saturated by many local investments!
The point to be noted is that this type of investment is not productive for the country (but profitable). The investors will develop housing projects which will be sold at a premium and they will take home a huge profit.
Logo of Sahara Matribhumi Unnayan Corp Ltd.
আজকে সাহারা গ্রুপের প্রধান ব্যক্তি সুব্রত রায় সাহারা হোটেল রূপসী বাংলায় তার বাংলাদেশী কোম্পানির শুভ উদ্বোধন করেছেন। বাংলাদেশে তার ব্যবসায়িক স্বার্থ দেখবেন শেখ সেলিমের সুযোগ্য পুত্র শেখ ফাহিম। এই নিয়োগ আবার আড়ম্বরের সঙ্গে হয়েছে, অনুষ্ঠানে বিজনেস কার্ড তুলে দেয়া হয়েছে ফাহিমের হাতে। এ থেকে বুঝা যাচ্ছে যে এদেশে সাহারা গ্রুপের গতি শুধু চলা শুরু করবে না, রীতিমতো দৌঁড়াবে।
Incidentally Sahara group became sponsors of Bangladesh Cricket Team after offering $9.4 million over four years.
Arif also pointed to the issue of infilling sections of a river to prepare the ground for Sahara Group in the chosen areas. His major concern however, was about the environmental effect to be caused by the proposed tourism draw of the new city located near the protected Sundarbans mangrove forest, as he quoted from the statement of Sahara Group's chief:
বেশিরভাগ পরিবেশবাদী শুধু শুধুই ঝামেলা করেন, তারা সমাধান দেন না। শুধু ঝগড়া করেন। তাই সুন্দরবনে পর্যটন সিটিতে তারা বাধা দিলেও সমস্যা হবে না। কারণ তারা অনেকেই তো দোকান খুলে বসে আছেন।
Blogger Lenin Rahman [bn] commented on Arif's post, showing the decline of housing industry during the worldwide recession. He added:
বর্তমান পৃথিবীতে অর্থনীতিতে সারবত্তাহীন জিডিপি বৃদ্ধির সবচেয়ে সহজ উপায় হলো আবাসন সেক্টরে ইনভেস্টমেন্ট। কিছু কিছু খাবারকে যেমন Empty calorie বলা হয় যেগুলো খেলে ক্যালরি ইনটেকই হয় শুধু কিন্তু কোন পুষ্টিগুন যোগ হয় না। আবাসন সেক্টরে ব্যাপক ইনভেস্টমেন্টে অনেক চাকরী তৈরী হয়, অনেক টাকার আদান-প্রদান ঘটে কিন্তু দেশের অর্থনৈতিক স্বাস্থ্যের কোনো উন্নতি হয় না। একসময় চাহিদা কমা শুরু হলে বেলুন ফেটে পুরো দেশকে দশ বছরের জন্যে কাহিল করে ফেলা। আজকে ৪-৫ বছর ধরে আমেরিকা-ইউরোপের অর্থনীতি রুগ্ন হয়ে আছে কেবল আবাসন সেক্টরের বেলুন ফাটার জন্যেই।
There have also been opinions favoring the investment, though few in number. One netizen commented on the post of Armanuzzaman [bn], that some competition among the local companies would do good:
আপনার কি আমাদের দেশীয় প্রতিষ্ঠান গুলোর সার্ভিস সম্পর্কে সামান্যতম ধারনা আছে । প্লট কেনার কত বৎসর/যুগ পরে প্লট দেওয়ার নিয়ম ৷ দেশের টাকা বিদেশে চলে যাবে এই যুক্তি দিয়ে আমাদের দেশীয় প্রতিষ্ঠান গুলোকে শোষন করার একচেটিয়া অধিকার দেওয়া কি ঠিক ? সত্যি করে বলতে গেলে আমাদের অতি লোভী ব্যবসায়ীরাই আমাদের খাদ্য,ফলমুল,শিক্ষা,চিকিৎসা সহ যাবতীয় ক্ষেত্র সমুহ নষ্ট করেছে ৷ তাই আমাদের বোধ করি উচিৎ নয় দেশীয় শোষক প্রতিষ্ঠান গুলোর পক্ষে যায় এমন কিছু করা৷
These sentiments come from the mistrust of people due to several unresolved problems between both the countries (see for instance 1, 2, 3). Only time will tell whether the investment planned will become a boon or bane for Bangladesh.
18 comments
Our so called developers are nothing but thugs. They lease private residential plots at their convenient terms and create a huge fund mortgaging those lease properties at scheduled banks. In the name of development they occupy municipal roads for years to dump their construction materials again at the cost of ruining the environment and causing untold public sufferings. In other others they become millionaires overnight by constructing substandard buildings at the cost of immense public sufferings and environmental degradation. Sahara concept, as we have found from Ambi valley and other projects, is totally different. If they pursue Bangladesh projects with the same letter and spirit, we have nothing to worry. Rather our housing sector will have a new lease of life and create a new trend and service sector SOP. However, EIS must be conducted independently by us and incorporated in their project feasibility calculations including IRR.
Thanks for your comment in a different light. But what do you think about this opinion “in the housing sector, huge employment opportunity can be created, huge monetary transactions take place (creating a bubble), but the economical growth of a country does not happen.” – it has been a strong point of view from the people who criticizes. I wish you have a good defense to answer this.
Housing is one of the most, if not the most important subsector, of the of a given developed economy as it contributes most( in excess of 75%) to the GDP of that economy. Although service sector is not so labor intensive as that of the manufacturing or more appropriately the industrial sector, housing and hospitality subsectors are very labor intensive. The so called bubble effect is more pronounced in developed economies for the industrial sector continues to shrink, in terms of percentage contribution to GDP, in these economies because of very high wage structure rendering the whole manufacturing sector increasingly uncompetitive. The onus then squarely lies with the service sector in general and housing and hospitality subsectors in particular to achieve the required GDP growth to avoid recession. And political gains can be achieved by the incumbent through providing affordable housing to very politically sensitive middle and lower middle class. The greedy banks take this opportunity to mint money by overselling the mortgaged documents and create artificial share prices regime. At one point the whole mortgage instruments collapse and people lose their properties and become almost broke. The bank bosses in the meantime earn millions of ‘bubble’ money rendering even the large banks to collapse. People suffer more as billions of dollars are pumped into those collapsing banks from the public exchequer. In developing countries like ours, investment in housing sector brings posterity to general public by providing ample jobs and creating positive effects on at least 52 subsectors supporting housing. Development of this sector is physically visible and thus politically gainful for the incumbent as well. And ‘bubble effect’ on developing economies do not occur. Thus Sahara should be welcome in Bangladesh.
Thanks Ziaush Shams for your analytical comment. However, few questions developed in my mind and I can’t but ask you them:
1. Housing’s contribution to GDP 75%, can you provide any reference of that?
2. Do you think housing scheme through foreign investment other than government initiative will really be built for middle or lower middle class?
You have a very narrow view of economic development. Townships will always break the vicious circle of today’s housing industry. The current housing companies are simply over inflating the property price and impacting the cost of living to a great extent. Townships are a great solution to ease out that problem. Its a long term business, not a short term money making machine. High property price does have an impact on cost of living and inflation; and can be mitigated through townships only. I think, Sahara’s thought of investment is interesting and we might get affordable houses for every classes of the society if the projects are accomplished successfully. Infact, the current housing companies are creating bubbles. Township will abolish all the so called ‘thugs’ from the market. Only big companies with the ability to invest in large townships will sustain. This will certainly have a good impact on economy and will lower the chance of housing bubble. :)
Anything that is not contributory to the economic growth shold not be encouraged.
Well, after ziaush shams’s comment below, it seems this particular investment has some positive effects on the manufacturing sector that may play a role in GDP growth.
With due respect, I don’t agree with Mushfiq Wahed. Local housing companies are over inflating the property price, true, but when this foreign housing company will start buying land, the price would be more higher. If it is given from government land, it will destroy water bodies and river causing definite environmental disaster.
Bubble effects arising out of sub prime housing mortgage instruments are developed country phenomena. The last American housing bubble, as we all know, made many a thousand house owners homeless at the expense of making greedy bank CEO’s and top bosses multi millionaires. Some renowned American banks and financial houses got broke in the process. And billions of tax payers’ money had to be poured in to salvage some banks and save the house owners from total annihilation. The American government had no choice but to intervene as the middle and low middle class house-owners are very politically sensitive. In developing countries like ours , it is very unlikely that the bubble effect will accrue out of housing sector massive investments. Rather it (investment in the housing sector) will have positive effects on even the manufacturing sector, which expands in terms of percentage contribution to GDP in developing economies whereas just the opposite happens in developed economies in terms of percentage contribution to GDP, not to speak of profound effects on the other subsectors of the service sector. Since our economy is expanding at a decent rate, but not good enough to have profound impact in reducing our poverty level, we should encourage Sahara proposed labor intensive township or urban conglomerate projects. And we tell you, development process will accelerate, due to this. increasing peoples’ income and having no ‘bubble effects’ on the economy. And most importantly the pace of economic development will accelerate.
Thanks, I am really convinced. Do you think finding land for Sahara would be an issue? We have the public conflicts of Arial beel while government selected for new airport, keeping people’s protest in mind, 40 sq km barren land seems not easy to find.
There are several confused ideas floating about in this conversation.
There is no comparison between the American “housing bubble” disaster, which is a case of aggressive loan giving to homeowners by greedy banks and mortgage companies, and the nasty thugs of Dhaka city’s property developers, though in both cases ordinary folks got swindled.
I do not know whether the foreign company is proposing to ‘buy’ land. The real estate developers in Dhaka city do not ‘buy’ land for their hugely profitable, irresponsible, ugly, environment-polluting, illegal structures with no attention to the city’s overall planning or zoning, or other utility providers like WASA, DPDS, Titas Gas, etc whom they bribe systematically. They simply swindle the land from the owners luring them with false promises of “happiness forever.” My family has been a victim of scheming developers.
The idea of a “township,” on the other hand, promises integrated community living, and not just a mindless ugly tower of so called ‘luxury flats”. Environment-friendly provisions of renewable energy should necessarily be one of the components.
I am deadly against the destruction of the precious wetland in Arial Beel and the proposed airport.
We can dream for a ideal “township” project, but sahara’s township as seen through it’s website http://www.aambyvalleycity.com/ and google hunt, targets rich people only. Gulshan, Banani, Baridhara, etc over-crowded with so many commercial entities, and no more worth-living to many that it became a very smart moment to build a complete township in different location. And I fear this will never be built for ordinary folks.
Yes, Mr Kowshik Ahmed; getting 40 sq. km. of virgin land and the manner in which this stretch of land, which is essentially a piece of Nature-induced rural landscape, should be transformed into a Man-induced urban landscape (called cultural landscape in the literature of regional and urban planning) will and should be the core issues. These projects are highly cost effective even after discounting environmental and ecological costs from internal rate of returns (IRR) accrued from the project feasibility studies of structural planshi. This happens as net present value (NPV) of the transformed cultural landscape increases by as much as 400% depending on the housing and hospitality demand of that country. Planned cultural landscapes of this kind on a sustainable basis accelerates GDP growth as well.
It seems planned cultural landscaping is the condition. I have seen so many housing getting approved with distorting feasibility findings. Will there be any planning what plan really means?
You are right Mr. Kowshik Ahmed. Housing is a very important subsector of the service sector. But it cannot generate value addition in excess of 25% of GDP on its own in any economy, be it developed or developing. It was a printing mistake. Actually service sector as a whole contributes in excess of 75% to GDP in developed economy, not the housing subsector. Sorry for this printing mistake.
About the other observation, I shall attend to it later for I am little preoccupied at this moment. Thanks for your observations.
I understand. Thanks for the clarification. I will be waiting to hear more from you on this housing project. So far we saw nothing really built for lower middle class and poor who spend 50% of their monthly income for accommodation.
With regards to facilitating housing for low income groups, all the stake holders, be it in the private or non-private sectors, should ideally work together under the guidelines chalked out by official land and urban development commissions/ agencies. Private investments, local and foreign, cannot fulfill this task on its own. In our country all the stake holders have failed miserably. In the public sector, DIT turned Rajuk and CDA have had served the purpose of providing housing plots to privileged class in general and bureaucrats (including DIT and CDA clerks) in particular. And the process of allocation has had been neither fair nor transparent. Not to talk about meeting the needs of lower income or working class people, who need provisions of shelter most. And the political decisions to meet the needs of the most needy have had been lacking. In the private sector, the situation is even worse. First, investment by the local private sectors is miniscule compared to the need of people and ,second, they (the so called developers) have damaged the environment to a great extent and siphoned off money from private land owners and grabbed wet lands left and right causing grave environmental degradation , both to the region and the urban landscapes.
Foreign investments in ‘ urban landscape development projects’ in the name of ‘township’ or ‘satellite towns’ may meet some of the demands of the upper middle and middle class people. But adequate care should be taken to oversee whether environmental parameters are not distorted to the extent of causing irreversible damage to the ecology and environment of the project area and the surroundings. As far as I know Sahara is a branded international enterprise. They may not want any dent to their reputation by embarking upon a substandard venture in our country for Bangladesh may provide them with ample opportunities to enhance their reputation and set higher standard of SOP. May I, Mr Kowshik Ahmed, in this connection inform you that the rate of urbanization in our country is one of the highest in the world and in the next thirty years or so ‘the Dhaka-Chitogong Corridor’ will turn into a huge contiguous urban landscape which we call ‘Megalopolis’. If this is done in a planned way, the nodes of Comilla, Brahmanbaria, Laksham, Feni and Maizdi , in the ensuing huge urban system , will function as vibrant central places making our country one of the most productive and dynamic economies of the world. This megalopolis may also encompass the nodes of greater Dhaka , Mymensingh and Faridpur districts as well. To achieve this, a master Regional Plan with detailed land use planning must be worked out by our relevant authorities and Govt should act as a facilitator not as a developer. If we incorporate the housing needs of our working class into this Plan, most of the needs may be fulfilled without much investment from the public sector. If needed, matching grants may be given to developers as incentives. If not done on a planned manner, this Megalopolis will all turn into a huge concrete jungle causing untold miseries to our all class of people and the economy will be in shambles.