Home Bangladesh Why foreigners don’t
like BD for investment
Bangladesh - Biz World - Diplomatic - February 18, 2022

Why foreigners don’t
like BD for investment

Enayet Karim: Bangladesh have inconsistent views on foreign investment. Many opportunities have created for the foreigners to invest in Bangladesh but the services providers are not cordial at all. However, the Bangladesh government has been conducting forums, roadshows and other activities to attract investment. The government has still failed to address a key issue. So where is the immutability of investing in Bangladesh or why invest in Bangladesh than other countries?
For example, for the full year 2020, Bangladesh attracted US$2.58 billion in foreign investment, of which only US$ 960 million was new investment and the rest was revolving investment. In the same year, Bangladesh’s competitors-Indonesia attracted $16.57 billion and Vietnam $18 billion.
Even Corona-hit India has attracted $64 billion in foreign investment.
Over the past decade, Bangladesh has had a good economic and stable political situation. Bangladesh is suitable for investment, but there is no attraction of irreplaceable investment in Bangladesh. There are some major obstacles behind this.
First, the investment approval process is lengthy, resulting in a quick return on investment. Time is important for return on investment. Although Bangladesh has been working to simplify the investment process in recent years, each approval process still takes a long time. Although some Chinese-funded investors have come to Bangladesh to invest enthusiastically, they have returned tired from the long process.
The second is the introduction of agency culture in Bangladesh. The local business community just wants to be an agent, not an investor. When foreign investment comes to Bangladesh and seeks cooperation, they first think about how to act as an agent without any risk and pressure. As a result, the joint venture eventually led to the acquisition of all shares of Chinese capital.
Seeing the behavior of capital and local industries in Bangladesh, the confidence of foreign investors in the local investment environment has greatly decreased. Third, preferential tax policies are not enough. Photovoltaic projects can be taken as an example in the new energy industry.
The Bangladesh government is actively promoting the implementation of green energy and a large number of Chinese enterprises are looking for investment opportunities in building photovoltaic power stations or photovoltaic industrial parks in Bangladesh. But the Bangladesh government has not come up with ‘sincerity’ to simplify the process of submitting and approving proposals and tax incentives for related industries are not as competitive as in the Middle East.
Fourth, supportive infrastructure is not adequate for investment. For example, investment in gas, the current ancillary facilities in Bangladesh such as gas terminal, gas storage and gas transmission are incomplete. So, more investment and infrastructure development is needed in this sector.
Fifth, the field-specific corruption is rampant and, in each approval, process all relevant parties have to guard their minds specifically to achieve their own interests. Large amounts of commissions before investing have made investors reluctant to invest.
Of course, Bangladesh is an important participant in China’s Belt and Road Initiative and China has always attached great importance to economic and trade exchanges with Bangladesh. From July 2020, China will impose a preferential tax rate of zero to 98 percent on products originating in Bangladesh. The main theme is the common development of China and Bangladesh. But how to increase the attraction of Bangladesh towards Chinese investment?
First, the investment approval process should be simplified and an investment-friendly business environment should be established. Helps to ease the difficulties of investing in raising awareness about investment services and activities. The investment forum should focus more on the investor’s point of view rather than the government.
Understand the difficulties and challenges faced by investors in different industries in approving investments. Facilitate the approval process, selection and investment path in Bangladesh market.
Second, local initiatives in Bangladesh should be proactively directed to play a reassuring role.
Promoting joint ventures, promoting risk sharing between foreign investment and local enterprises in Bangladesh, and actively instructing them to build confidence in foreign investment. Third, priority policy planning needs to be done better, so that investors can be assured of income. Actively communicate with potential investors for industries that are in urgent need of launch.
Investors need to understand the policy needs on the basis of being in line with the national interest of Bangladesh.
Fourth, prepare in advance for helpful facilities and intensify anti-corruption efforts.
If Bangladesh makes comparative advantage in the mentioned aspects, foreign investment in Bangladesh will definitely increase and the economy and society will be prosperous and developed.

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