Md. Joynal Abdin
The Independent, 14 February 2014
Bangladesh is a country with enormous potentials to grow faster than any other least developed countries (LDCs) of the world. Its strategic geographic location made it an attractive destination for the ancient merchants up to the modern multinationals. Bangladesh is located at the middle points of two fastest growing economic superpowers, China and India. These two countries have about 2.6 billion populations with quickly increasing purchasing power. Bangladesh has a domestic market of about 15 million consumers. It would be very much cost effective to produce a product in Bangladesh and market into India and China under SAARC and other international duty free arrangements. Besides, these all Bangladeshi products (other than armaments) enjoy complete duty and quota free access to developed countries like EU, Japan, Canada and Australia. Bangladesh is a signatory to the Multilateral Investment Guarantee Agency (MIGA); Overseas Private Investment Corporation (OPIC), USA; International Center for Settlement of Investment Disputes (ICSID); World Intellectual Property Organization (WIPO). It has bilateral agreements to avoid double taxation with 28 countries.
Foreign investment in Bangladesh is 100% safe and secured by the Foreign Private Investment (Promotion & Protection) Act 1980. We have a large number of young and energetic populations with about 59.3% economically active people. According to a recent study conducted by the Japan External Trade Organization (JETRO) factors of production like land, labour, fuel, vehicles, rental and hiring skilled management people etc. are very much competitive here in Bangladesh in comparison with 29 cities and region of Asia. Comparing cities are Seoul, Beijing, Shanghai, Guangzhou, Dalian, Shenyang, Quingdao, Shenzhen, Hong Kong, Taipei, Singapore, Bangkok, Kuala Lumpur, Jakarta, Batam, Manila, Cebu, Hanoi, HO Chi Minh City, Da Nang, Yangon, New Delhi, Mumbai, Bangalore, Chennai, Karachi, Colombo, Dhaka and Yokohama. Bangladesh is offering hassle free remittance of earning by foreign professionals, repatriation facilities of dividend and capital at exit of foreign investors, permanent resident permits on investing US$ 75,000 and citizenship on investing US$ 500,000. Five years tax holidays package for investment at Dhaka and Chittagong divisions and seven years tax holiday’s package for investment at other divisions of the country. There are eight functioning Export Processing Zones (EPZs) namely Adamjee, Chittagong, Comilla, Dhaka, Ishwardi, Karnaphuli, Mongla, and Uttara–EPZ with all sorts of infrastructural, managerial, utilities and other relevant facilities. Already investors from 32 countries invested in these EPZ’s and operating business successfully.
BEPZA is a trustworthy name to facilitate any FDI into the EPZ area. Bangladesh has a diversified potential sectors like agro-based and agro-processing industry, human resource export, ship building, renewable energy, tourism, basic chemicals/dye and chemicals, ICT and ICT based service, readymade garments industry, active pharmaceuticals ingredient industry and radio pharmaceuticals industry, herbal medicinal plant, radio-active (diffusion) application industry (e.g. developing quality of decaying polymer/preservation of food/disinfecting medicinal equipment), development of polymer industry, jute and jute products, leather and leather products, hospital and clinic, light engineering industry, plastic industry, furniture, handicrafts, energy-efficient appliances/manufacturing of electronic goods/ development of electronic materials, frozen fish industry, tea industry, home textiles, ceramics, tissue grafting and biotechnology, jewellery, toy, container service, warehouse/cold storage, innovative and import substitute industry and cosmetics and toiletries etc. industrial sectors for local/foreign investment. Among the above list the electronics and electricals; software-development; light engineering and metal-working; agro-processing/agri-business/plantation agriculture/ specialist farming/tissue-culture; Leather-making and leather goods; knitwear and ready-made garments; plastics and other synthetics; healthcare & diagnostics; educational services; pharmaceuticals/ cosmetics/toiletries; designer, aesthetically-challenging, personal wear and effects, etc. could be the most promising sectors for investment. Time comes up to analyze with all these attractive facilities how much FDI does Bangladesh get in last five years? What is the trend of local investment at the same period? It is to be noted here that FDI inflow to Bangladesh has traditionally been lower, even compared with other South Asian countries. Considering FY 1996-97 as the base year, the statistics reveals that FY 2011-12 might be a net FDI receipt of USD 806.52 million. Statistics shows that Bangladesh received $1.29 billion inward FDI in 2012. After FY 2008-09, FDI as a percentage of GDP started to decline sharply. In FY 2010-11, the amount of FDI and GDP were Tk. 55.45 billion and Tk. 7874.95 billion respectively against Tk. 63.16 billion and Tk. 6943.24 billion of FY 2009-10. FDI as a percentage of GDP started to decline means our economy is growing based in local investment. It has both positive and negative effects. Therefore we could only state that, FDI brings technical knowledge, technological advancement and managerial excellence into a country.
Bangladesh economic review 2013 shows that, the amount of total investment from 2008-2009 FY to 2012-2013 FY is raising BDT 1498.4 bn, 1695.1 bn, 2003.8 bn, 2436.9 bn and 2786.1 bn respectively. The same statistics show that current growth rate of government investment is higher than that of the private sector investment. Does it mean that the private sector has limited capacity to investment? Many expert opinions say that private sector is taking time to take decision regarding investment due to current political instability, unrest and violence in the country.
Without a stable compromising democratic environment it’s quite difficult to ensure expected return on investment. Therefore both local and foreign investors are observing the situation before investing into Bangladesh. Cost of wages and other factor of production in many developing countries including China, India, Singapore, Korea, etc. are rising rapidly.
As a result investors are considering relocation of factories into a suitable destination. Bangladesh could be the best option if we could overcome few barriers of investment existing in Bangladesh economy. The first and most important barrier of investment in Bangladesh is the violent political condition. Our political parties are fighting with each other to ensure their party interest either to remain in power or go into power. Their current behaviour states that they are doing politics for increasing their wealth by hook or by crook. Political parties are trying to remain in / go into power by themselves without proper mandate of the general people.
Absence of dialogue and compromising tendency between the parties made the situation more complex. Without a stable and truly democratic condition investment climate will not be improved. Foreign investors will not come forward rather rate of repatriation will be increased. At the same time local investors will go for invest their money abroad by any channel. Corruption is the second most important barrier of investment into Bangladesh. The recent corruption cases of Hall Mark, Bismillah, Destiny, etc. may destroy the strength of the economy. Bureaucratic complexity to get regulatory permissions and required certification are frustrating the small and medium entrepreneurs. Large entrepreneurs could manage the bureaucracy through political pressure or offering bribe but small and medium entrepreneurs are getting trouble in this condition. Law and order enforcing agencies, regulatory agencies including police and customs have to be pro-business. Currently small business are being hampered by the dishonest members of those agencies.
Government has to be proactive to overcome other barriers of investment like irregular/inadequate supply of power, higher rate of interest on bank loans in comparison with our major competitor countries, inadequate availability of raw materials, absence of clear-cut government policies regarding many sectoral and cross-sectoral issues, shortage of skilled technicians and workers, limited research and development facilities, poor physical infrastructure and high transportation costs, unavailability of information about market opportunities and requirements, etc. Finally, we have to remember that Bangladesh is competing in a global system of free market economy. It has to negotiate and maintain a congenial relationship with its major and potential export destination countries to ensure smooth flow of export. Remittance is the second highest source of earning foreign currency into Bangladesh.
It is another most important role of our government to maintain a friendly relationship with major and potential manpower importing countries to ensure proper placement of our human resources into those markets. There are a number of business sectors in Bangladesh waiting to take off like the readymade garment sector. Each of those sectors can earn another USD 20 bn for us very shortly. Therefore we would like to request the government and other political leaders to look forward into the enormous economic potentials of Bangladesh rather than remaining/getting into the power only.