The Centre for Policy Dialogue (CPD) on Thursday outlined key measures Bangladesh should adopt to attract Chinese investment in its renewable energy sector. These include offering tax incentives, reducing import duties, and streamlining documentation processes.
Bangladesh needs to create a more business-friendly environment to attract Chinese foreign investment. CPD recommended that the government establish a fund to mitigate foreign exchange risks and increase Chinese investment in this sector.
Experts also mentioned that Bangladesh is still in the early stages of developing its renewable energy sector. The country can draw inspiration from China's success.
Bangladesh is undergoing an energy transition under the interim government, and significant investment is required in the renewable energy sector. They said China is a global leader in renewable energy, so Chinese investment could be a substantial funding source.
The recommendations were presented by Khondaker Golam Moazzem, research director at CPD, during an event in Dhaka, where experts discussed strategies to increase Chinese involvement, particularly in solar energy projects.
The event, organized in collaboration with the Bangladesh-China Renewable Energy Forum, brought together policymakers, industry leaders, and financial experts to discuss strategies to draw overseas investment into renewable energy, particularly solar power projects.
Moazzem’s presentation, titled "Overseas Investment in the Renewable Energy Sector: How to Attract Chinese Investment in Bangladesh?" emphasized the need for green bonds and public-private joint ventures to fund renewable energy initiatives.
He pointed out that Bangladesh's interim government recently cancelled 37 renewable power plants approved under the previous government, creating a fresh opportunity for Chinese investment.
CPD also noted that Bangladesh’s government has decided to establish 10 grid-connected solar power plants through private sector initiatives, which could serve as a significant test case for Chinese involvement.
Bangladesh has set ambitious targets to meet 40% of its energy needs through renewable sources by 2041.
Achieving this will require an estimated investment of $1.5 to $1.71 billion, the CPD reported.
China, the world’s largest investor in renewable energy, has already invested around $676 billion in clean energy in 2023 alone -- accounting for 38% of the global total. This positions China as a crucial partner in helping Bangladesh meet its energy goals.
Fahmida Khatun, executive director, CPD, moderated the event.
NBR Chairman Abdur Rahman Khan said that his first plan is to bring back discipline in the tax administration sector and to eliminate all controversial rules and regulations.
“We must reduce tax expenditure first through setting priorities. It is accepted that renewable energy is a must now, and it is the safest and also cheaper,” he added.
He also said that Bangladesh is a small country with 170 million people making it difficult to find space for solar farms.
However, renewable energy is not only solar power, it can be wind power or offshore power too.
Tax is not the main problem for a business, but the policy consistency is the major challenge for business.
“I assure the investors that we will try our best to maintain consistency and data accuracy. We will consistently offer tax incentives that we are providing in the future also,” he added.
The next generation is the hope and they are very serious about the change.
He also urged the investors that if they face any problems, they can inform them promptly through the GRS system where anyone can make complaints and track the status of their complaints.
“We will do everything to address the challenges faced by our Chinese investors,” he added.
Chowdhury Liakat Ali, director of Bangladesh Bank, said the bank's scheme for the promotion of sustainable, green, and climate finance is mainly focusing on renewable energy and energy efficiency.
The central bank charges 1% to the banks and NBFIs, where they charge 5% from borrowers. Bangladesh Bank formed a sustainable finance department with a clear mandate to promote green and sustainable energy and ensure environmental and social risk management.
Md Ariful Hoque, director general, Bangladesh Investment Development Authority (BIDA); Syeda Afzalun Nessa, head of sustainability, HSBC; Md Shahidur Rahman, country manager, Jinko Solar Bangladesh; Shafiqul Alam, lead energy analyst, Institute for Energy Economics and Financial Analysis (IEEFA); and Gan Peng, chairman, Chint Solar (Bangladesh) Co Ltd also spoke at the event.