China, UK, Korea, Japan and KSA pose keen interest
Abu Sazzad: The global post virus pandemic has created an opportunity for Bangladesh to gain at least US$ 1 trillion overseas investment in many potential sectors, but there are needed proper policy support, diplomatic efficiency, ease business facilities and easy investment process to materialize the economic recovery prospect, experts seem.
After pandemic, it is indicating that the authorities concerned of the most influential economies are diverting their mind-set to conduct the trade activities from the traditional destinations. At the same time, the renowned multinational companies are searching the potential countries within the developing countries in the South-Asian region. Already, UK, USA, Japan, KSA and EU member countries have shown their keen interest to invest in Bangladesh to attain win-win situation on behalf of their respective countries.
Many experts have underscored the need for undertaking equal treatment policy on China and India that can boost more investment in the country. The extra passion on India is hindering trade and investment in the country; they said adding that the government is favouring India for continuing its governance regime. Actually, China is one of the prominent investor countries for Bangladesh. So far, China and Bangladesh signed 27 memoranda of understanding (MoUs), valued at $24 billion for Bangladesh; Chinese and Bangladeshi companies on the sidelines entered 13 joint ventures (JVs), valued at $13.6 billion.
Recently, the government asked the Chinese government for $6.4 billion for nine infrastructure projects.
The diplomatic efficiency is needed to attract FDI in Bangladesh. Discussions should be intensified at the diplomatic level with the concerned countries. The focus should be on infrastructure development, land registration facilitation, availability of electricity and giving some institutional benefits.
Factories moving from China to Bangladesh
According to data from Bank due to pandemic, factories are moving from China and Bangladesh has huge possibilities to gain Foreign Direct Investment (FDI). Japan is shifting its manufacturing factories from China. Already, India and Vietnam have taken effective initiative for attracting the Japanese manufacturers to invest in their respective countries. Japan is a major international investor with more than US$ 226,500 million Foreign Direct Investment (FDI) outflow in 2019.
Bangladesh should also use the move as an opportunity to direct Japanese investment which will create employment opportunities as well as to revamp economy from the negative effect of the pandemic.
Meanwhile, many European countries rejected Chinese-made testing kits and medical masks. China is the biggest exporter to the Western world, but this time many countries including USA denied to import the Chinese products for meeting its local demand.
Experts said, actually, the European countries negative attitude towards China severely affected investment of developed countries from the country that has created an opportunity for Bangladesh to gain huge investment.
Meanwhile, the US wants to make big investments infrastructure and energy sector. Moreover, US keen to improve institutions through improving governance.
Beside, the Saudi Arabian companies would invest in different sectors of Bangladesh on an increased level.
The effective initiative of the Commerce Ministry, Bangladesh Economic Zone Authority (BEZA) and Bangladesh Investment Development Authority (BIDA) would help attaining higher overseas investment. The public officials of such important agencies will have to adopt the changing global context for facilitating FDI inflow in the country.
Dr Mashiur Rahman, Economic Affairs Adviser to Prime Minister said, Japan is keen to invest in Bangladesh. He has underscored the need for allocating land timely for encouraging more investment. Along with cheap labour facility, proper communication network and port facilities are needed in this connection, he added.
Dr Selim Raihan, Executive Director of South Asian Network on Economic Modeling (SANEM) said Bangladesh has the opportunity to attain huge investment, but he expressed his doubt on the efficiency of the public officials of the concerned agencies. He laid emphasis for ensuring efficient diplomatic dealings with the potential overseas investment countries including Japan, UK and so on.
Many experts said, in Bangladesh in the net FDI inflow to GDP ratio is below at around 1 percent which is 6.3 percent for Vietnam. Already, Indonesia offered 100 percent tax holiday for five years on investment above $7.0 million to $70 million. Thailand announced a package of incentives in September last year, including a 50 percent tax cut for companies to relocate production from China. Malaysia also plans to offer 1 billion Ringgit ($238 million) worth of incentives for five years for multinational firms in high-end technology and manufacturing.
Experts said, Bangladesh need to apply such kind of policies to attract more FDI. However, Bangladesh is neglecting in terms of large foreign investment because of bureaucratic complexities and infrastructural weaknesses.
According to a Daily Industry report, Bangladesh ranked 168th out of 190 countries in the World Bank’s Business Facilitation Index. Beside, Vietnam is in 60th place, Thailand is in 21st place and Indonesia is in 73rd place. Even Myanmar’s position is three steps ahead of Bangladesh’s, 175th. In terms of investment, this is a major reason for the lack of image of the country abroad.
According to a recent another report of Daily Industry, the United Kingdom (UK) recommended for simplifying the investment process for boosting UK investment in the country which would help gaining win-win situation for both countries economy.
In this regard, the British High Commission in Dhaka recently sent a letter to the Bangladesh Investment Board Authority (BIDA) for removing the barriers to investment in the country.
In the letter, the British High Commissioner Robert Chatterton Dickson recommended the BIDA Executive Chairman Md Sirajul Islam for removing some barriers to smoother UK investments in Bangladesh.
The existing companies are eager to increase their investment and a good number of new companies are showing their keen interest to invest in the potential sectors in the country, according to the letter. Robert Chatterton Dickson has underscored the need for undertaking a long-term financial management plan for foreign investors in Bangladesh. Besides, the UK envoy suggested for ensuring hassle-free policy to gain the benefits of the double taxation treaty which is one of the major tactics to attract the foreign investors. Repeated policy changes related with tax is hampering the profits of the foreign companies, discouraging investors to invest in Bangladesh, the letter also mentioned. Apart from this, the letter also mentioned that poor communication, limited access to ports, complexity in tax and legal processing are hindering UK investment.