Bangladesh needs to rapidly develop its transmission infrastructure to attract Chinese investment, according to the Centre for Policy Dialogue (CPD).

Without this, Chinese businesses may hesitate to invest in renewable energy projects, despite the potential benefits, said the think-tank.

The CPD suggested that adopting a short-term Build-Operate-Transfer (BOT) model could help address infrastructure challenges in order to meet Chinese investors' expectations.

The CPD made the suggestions during a dialogue titled "Overseas investment in the renewable energy sector: how to attract Chinese investment in Bangladesh?" held at Lakeshore Hotel in Dhaka today.

"There are some key risks that persist, including currency risks due to local currency volatility, permit risks from bureaucratic hurdles, and financing risks related to securing affordable funding," CPD Research Director Khondaker Golam Moazzem said in a keynote paper, highlighting several key challenges.

"Additional challenges include land acquisition issues, social acceptance, grid limitations, and off-taker credit risks, all impacting project feasibility."

A major concern for Chinese investors is the Bangladesh government's insistence on resolving disputes domestically, which contradicts international norms that favour neutral, third-party arbitration, he said.

Also, the ongoing foreign reserve crisis and the lack of guaranteed initiatives for foreign investors have raised concerns about the ability to repatriate returns in US dollars, Moazzem added.