Policy change after comprehensive research
Zahid Hossain Biplob: Raising concern over unpredictable policymaking, foreign investors said that any change in the policy should be based on comprehensive research.
They said any policy change made through wrong analysis could hamper government’s revenue mobilisation while creating unfavourable business climate.
Policy continuation is needed for Bangladesh to boost investment especially the foreign investment, they opined. FICCI president Shehzad Munim said there have been lots of changes, including the introduction of new VAT law in the national budget, and high tax rate remains one of the issues.
He posed a series of questions, “Do we have a comprehensive research that gives us the risk- benefit ratio for informed decision-making? Do we really know whether the approach will deliver any results the following year?” “If not, what needs to be done? Is that based on sound research?”
He said all businesses are used to making short to medium term investment plans.
“If we don’t have the clarity on 3-5 years’ horizon, it’s very difficult to prepare investment proposals for our companies,” he said.
The FICCI president raised the issue of the continuity of officials in the key government positions and said the appointment should be made for at least 3 to 5 years so that medium term planning approach can be incorporated into the system.
Talking about the focus on the potential industries, he said there are many sectors that have enough prospects to grow like the readymade garment.
Giving the example of leather industry, he said Bangladesh fetched around US$ 1.0 billion through shipments of leather goods, but the figure is around US$ 4.0 billion in Vietnam, one of Bangladesh’s main competitors.
“Why are we lagging behind? What are they doing right and what we’re not? That analysis needs to be made,” he added.
Economic affairs adviser to the Prime Minister Dr Mashiur Rahman said Vietnam’s demographic dividend in terms of age started at the same time like Bangladesh, but the Southeast Asian economy is well ahead of Dhaka in terms of quality education and skill development.
“We need to be in a position to compete with these countries through improving skills of our working-age population,” he said.
Giving several examples of the existing tax-related problems, the Prime Minister’s economic adviser said the taxation system has a problem with the tax structure.
“Unless the structure is rationalised with reasonable protection for local industries, the anomalies could continue,” he noted.
FICCI members have been making many recommendations to the government for attracting FDI, she also mentioned.
Foreign investors are also concerned about inconsistency in the government’s policy, she said. She has underscored the need for strengthening the BIDA and ensuring coordination among the government agencies to facilitate the FDI.
International Chamber of Commerce Bangladesh (ICCB) President Mahbubur Rahman said, the government should find out the reasons why the foreign investors were not coming in the country despite having all favourable regulatory regimes.
A strong partnership between the public and the private sectors are needed to solve the problems faced by the foreign investors and for creating better business environment to attract more FDI, he suggested.
Continuation in policy regime is needed to boost confidence of foreign investors, he observed. The number one obstacle in attracting FDI in Bangladesh especially the bureaucratic complexities, said ICCB President.
However experts pointed out that technological innovation, simplification of policy regulations and connecting domestic and foreign investors are keys to attract FDI in Bangladesh. The government should address the taxation complexity to increase the FDI and create attraction among the foreign investors, they said adding frequent change of rules and regulations discourage the foreign investors to invest in Bangladesh.
Considering the necessity of more FDI flow in promoting country’s economy, the experts recommended that the authorities concerned will have to undertake more policy and logistic support for boosting the existing trend of foreign investment.
Experts have underscored the need for improving the supply chain to attract more FDI in the country. An underdeveloped supply chain in the manufacturing sector is the main cause behind low FDI levels in Bangladesh.
The business climate is unfavourable as access to utilities, like electricity, gas, transportation, and waste management are still inadequate and below the expectations of investors, they pointed out. FDI in the energy sector may have a causal relationship with corruption, they claimed.