Summit is one the top industrial groups in the country involved in the private sector power and infrastructure business. In 2016 they expanded their business to Singapore under the name of Summit Power International. Recently they have taken up a 240 billion taka project to set up an LNG (liquefied national gas) terminal in Matarbari of Maheshkhali, an LNG-run 2400 MW power plant and several other business projects. In a recent interview with Prothom Alo’s Sujoy Mahajan, Summit Group’s Chairman Muhammad Aziz Khan spoke about investment in the country, expanding business abroad, future plans, the state of business in the country and more.
Prothom Alo: Summit Group has begun business in Singapore. Why leave the Bangladesh to take business overseas?
Aziz Khan: All our businesses are in Bangladesh so it is not true that we are leaving Bangladesh. On the contrary, it is for Bangladesh that we are expanding our business overseas. Ambassadors are sent to various countries all over the world from Bangladesh. The main objective is to promote the image of Bangladesh to the rest of the world and to attract investment. We are expanding our business abroad to promote the reputation of the country and of our company.
We are able to directly highlight how attractive Bangladesh is for investment. It is a matter of pride that we have expanded our business in Singapore with the support of World Bank’s affiliate institution International Finance Corporation (IFC). IFC has invested USD 175 million in our company there. This is capital investment. Outside of that, they have also provided loan of a few million dollars. In other words, it is with the direct assistance of an institution like IFC that we have expanded to Singapore. Our objective is to create bigger projects here with funds from Singapore.
Prothom Alo: So you have started business in Singapore to bring in investment for Bangladesh from an international level?
Muhammad Aziz Khan: Along with arranging funds, another objective is to enhance the image of Bangladesh. The matter of funds is directly related to reputation. We recently constructed a 300MW power plant in Gazipur in a matter of just nine months. This power plant was set up with an investment of around Tk 20 billion in the shortest span of time. This was possible basically because we had the required funds for investment in hand. Nowhere in the world has a power plant been set up in such a short span of time.
Then we have taken initiative to set up a 580MW power plant at Meghnaghat at a cost of around Tk 40 billion. This will be the largest power plant in Bangladesh till date. We hope to start power production from the year 2020. We have also submitted a Tk 240 billion investment proposal to the government to set up an LNG-run 2400 MW power plant in Matarbari, a 300 MW oil-fired power plant, and a 360 thousand metre cube LNG terminal. Capital of Tk 70 billion is required against the Tk 240 billion investment. No way is it possible to finance such a huge investment from within Bangladesh.
Prothom Alo: So it is now easy to arrange funds in Singapore since you have begun business there?
Muhammad Aziz Khan: In the international arena, Singapore has AAA credit rating. Bangladesh’s credit rating is BB minus. So naturally when we talk from Singapore about investment in Bangladesh, we are able to arrange credit and capital at lower interest rates and easy terms from the international market. A company’s name is extremely important when it comes to credit and capital. The company’s reputation has undoubtedly been further enhanced after beginning operations in Singapore. As the chairman of the company, it is my responsibility to take the company’s reputation to further heights. And, side by side, Bangladesh’s reputation will improve too.
Prothom Alo: We hear that Summit Power International, the company you set up in Singapore, is seeking enlistment in the share market there. How far has that effort come along?
Muhammad Aziz Khan: We have obtained the ETL (entitlement to list) from SGX, the Singapore stock exchange. Now we can be enlisted any time we want. However, due to the global tariff wars among the US, China and the European Union, the market people are not being able to focus on fresh shares. That is why, for strategic reasons, we are going slow.
Prothom Alo: There has been a standstill in private sector investment for quite some time in the country. Why is this so?
Muhammad Aziz Khan: It is not true that investment isn’t growing. It is. We are not very far behind neighbouring India, Pakistan or Sri Lanka. In order to increase investment, market demand must first be created. We need to create products that have demand at home and abroad. I believe that if quality saleable products can be manufactured, investment will definitely come. The country’s readymade garment industry is proof of that. Another important factor of investment is increased productivity. If we are to take our GDP growth forward, there is no alternative to increasing labour productivity. This calls for development of mindset an improvement of the quality of education.
Prothom Alo: You say investment is increasing but that has not been manifest in terms of employment. The number of educated unemployed persons is at an all-time high. Investment is increasing, and so in unemployment. Why?
Muhammad Aziz Khan: There are certain factors when it comes to employment. This includes education, quality of education, an education compatible to the times. We lag far behind when it come to relevant education. Education must meet the demands of the times, of the society. We have fallen seriously short in this regard. On one hand the industrialists are unable to find qualified people, and on the other hand, educated persons are not getting jobs of their choice. Industry-related education must be increased in Bangladesh.
Prothom Alo: Given ground reality in the country, what would you see as the obstacles to investment here?
Muhammad Aziz Khan: Bangladesh is growing more and more investor-friendly by the day. Despite that, many business-related laws, rules and regulations have not been updated and rendered business-friendly. There is a lack of laws in certain cases. For example, the government has created opportunity for power production in the private sector, but not for transmission and distribution. This creates problems. And then there are no appropriate laws regarding the LNG business. This is a problem for investment.
Prothom Alo: Many entrepreneurs and industrialists say that one can’t do well in business in this country unless you are on good terms with the government. What do you say?
Muhammad Aziz Khan: Is there any country in the world where your business can flourish without maintaining good terms with the government? Any democratically elected government is formed at the behest of the people. So any responsible person should maintain good relations with that government. As a responsible businessman, I have been involved in work with many organisations under the government. If you are to work speedily in Bangladesh, you have to maintain good relations with the government.
Prothom Alo: Power prices are being regularly hiked, pushing up the cost of living and of industrial production. What do you have to say about this?
Muhammad Aziz Khan: Power is the most important factor when it comes to development in Bangladesh. There is less natural gas in the country in the case of power generation. That is why LNG and heavy fuel oil or HFO must be imported. So power production costs depend in the international market price of these fuels. However, I feel the increase in power tariff should be devised in keeping with the per capita income. If necessary, the government can provide subsidy in this sector. The manner in which per capital income is increasing, the price of power is bound to go up.
Prothom Alo: Experts say that the cost of electricity is increasing due to quick rental power plants. Do you agree?
Muhammad Aziz Khan: The very term ‘quick rental’ is wrong. These should be called peaking power plants. These plants will supply power at peak hours. The highest demand for power in Bangladesh is from the evening till midnight. Heavy fuel oil-fired power plants are the best solution to this. Gas-fired combined cycle or base load power plants are good or other times. The Power Development Board at present runs the power demand and supply system on merit order dispose basis. So it is not wholly true that the prices of power have increased because of quick rental power plants.
Prothom Alo: Now that you have expanded overseas, what is your future vision for Summit Group?
Aziz Khan: The strongest foundation for any big plan is to think big. We are trying to broaden our thoughts and assist those with us to expand their realm of thought too. I believe our colleagues have international level competence. That is why we could venture abroad. And with the development of the country, my vision is expanding too. Bangladesh’s social-economic progress is a matter of pride. That is why we have taken up the investment initiative of Tk 240 billion. We want to make that Tk 2.4 trillion in 10 years’ time. And our objective is to provide every house in Bangladesh with electricity and fibre optic facilities, and every exporter and importer access to the best port facilities.
Prothom Alo: How many types of businesses does Summit Group have at present. Do you have businesses in any other country abroad, other than Singapore?
Aziz Khan: We have investments in power, fibre optics, ports and port-related business, LNG an more. Other than Singapore, we operate two inland water ports in West Bengal and Patna of India. We got this through international tender. We hope to start the Garden Reach terminal in West Bengal in June next year. If that and be done, import and export goods from Bangladesh can speedily and at low cost be transported through Benapole.
Prothom Alo: What is your vision about Bangladesh?
Aziz Khan: I dream of an inclusive, poverty-free Bangladesh, filled with peace and love, where people will live in harmony. I want to work to bring the disadvantaged poor people above the poverty line. I plan to set up a 10 billion taka foundation with my personal funds over the two or three years. The foundation will fund the organisations in Bangladesh that work for peace, equality and harmony.
Summit Group at a glance
- Began operations 1985
- Businesses: Power, energy, fibre optics, ports, etc
- Annual turnover: Tk 50 billion approx.
- Employment: 3000
- Registered with the local stock exchange: 2 companies
- Began operations in Singapore: July 2016
* This interview has been rewritten in English by Ayesha Kabir