Initiatives urged to attract direct investments

Experts have called for effective measures to attract foreign investments in Bangladesh to support the country's graduation from the group of least developed countries (LDCs).

The global flows of foreign direct investment (FDI) have been on the decline due to the Covid-19 pandemic and countries will fiercely compete for foreign investment as the world economic recovery starts taking shape, said the experts at the Economic Reporters' Forum (ERF) webinar titled "FDI for Export Diversification and Smooth LDC Graduation" on Saturday.

The ERF organised the event in partnership with the Research and Policy Integration for Development (RAPID) and The Asia Foundation.
Planning Minister MA Mannan spoke at the event chaired by ERF Vice President Shafiqul Alam.
Dr Mohammad Abdur Razzaque, chairman of RAPID and director of the Policy Research Institute (PRI) has presented Keynote paper at the webinar.

President of Metropolitan Chamber of Commerce and Industry (MCCI) Barrister Nihad Kabir, President of Dhaka Chamber of Commerce and Industry (DCCI) Rizwan Rahman, and Managing Director of Apex Footwear Ltd Syed Nasim Manzur spoke at the event as panelists.

Speakers at the event stressed the need for reforming the taxation system alongside tapping the FDI potentials in a wide range of sectors like agro processing, light engineering, non-cotton apparel, home textile, blue economy and education in the country to ensure export diversification and smooth LDC graduation.

They also suggested extending the scope for whitening undisclosed money in the health infrastructure, economic zones, and in other infrastructure sectors alongside the existing sectors to create more employment opportunities.

In his key-note address, Dr Abdur Razzaque said due to the Covid-19 pandemic Bangladesh needed more foreign investment, but the reality is that Bangladesh has less foreign investment than other competing countries.

Citing an example, he said foreign investment in Bangladesh has reached $18 billion, while the amount of FDI in Cambodia is $34 billion dollars and in Vietnam it is $161 billion.

The annual flow of foreign investment in Bangladesh is only 1% of GDP, while in Vietnam it is about 6%. But there is no alternative to investment for economic progress in line with the government's GDP growth target.

He said Bangladesh is going to get existing opportunities in the next five years on the path of transition from a least developed country to a developing country. During this period, effective measures should be taken to maintain duty-free access to exports to major markets.

The government should target the investments that are being relocated from China, added Dr Razzaque.

He said, "The tax-GDP ratio needs to be revamped in Bangladesh while the FDI can create modern job opportunities and bring in new technology and management practices for Bangladesh."

Speaking on the occasion as the chief guest, Planning Minister MA Mannan said it is a fact that the country does not receive that level of FDI which it needs.

In this regard, he said all the concerned agencies need to accomplish their tasks in due time to attract more FDI.

Mannan also suggested overcoming the "cultural context" and moving forward together with a modern attitude.

Speaking as special guest Executive Chairman of Bangladesh Investment Development Authority (BIDA) Sirazul Islam said the BIDA needs to be empowered fully as it still needs to depend on others to facilitate the private sector.

Noting that there is no lack of support from BIDA to create an enabling environment for attracting more FDI, he said the authority has made effective the One Stop Service (OSS) platform to ensure transparent and hassle free service delivery.

Sirazul informed that some 47 services have so far been brought online while the services of some 16 organisations including the BIDA have already come under the OSS platform.

MCCI President Barrister Nihad Kabir said the now defunct Board of Investment (BOI) was earlier regarded as the "Dead Stop Service" or "Full Stop Service," but now the BIDA has somehow managed to overcome that bad reputation. However, there is still a lot to do in this regard.

Expressing her resentment over the treatment of the businessmen in the country, Nihad said if the businessmen are not treated with respect in the country, then the foreign investors would not come to a big extent.

She said Bangladesh has an extremely courageous leader to run the country, but others are not moving ahead with the same pace that the prime minister has.

The MCCI president also suggested targeting the potential sectors, adopting a coherent policy strategy by the BIDA, signing more preferential trade agreements with potential countries, and thus extending all-out support to the BIDA to attract more FDI.

DCCI President Rizwan Rahman underscored the need for reforming the tax rate as it is still high compared to the global and Asian average.

He also suggested extending the provision for whitening undisclosed money in the health infrastructure, tourism and in economic zones alongside the real estate and capital market, otherwise there would be bubbles in the economy.

Rizwan said that there is much more scope for attracting more FDI in the Blue Economy and education sectors of the country.

He said if the non-RMG sectors could be nurtured properly along with the RMG sector, then the country would be able to realise billions of dollars of export earnings.

Mentioning that the Bangladeshi exporters earn $1,089 by exporting 1,000 kg of T-shirts, whereas the Vietnamese exporters earn $2,157 by exporting the same volume, Managing Director of Apex Footwear Ltd Syed Nasim Manzur said the "bargaining power" makes the difference here which needs to be addressed.

He said it is the high time to recapture the Japanese Investment from Myanmar to Bangladesh adding, "This is the chance we must not lose."

The country's leading entrepreneur in the footwear sector alleged that the taxation system in the country is totally taxpayer unfriendly and that new entrepreneurs would not come, while the existing businesses would not flourish unless the taxation system is reformed.

He also suggested ensuring duty free and quota free access in markets like Japan, EU, India and China by not looking forward only to the market of the USA.

Nasim Manzur cited huge FDI and Investment potentials in the country's agro-processed food, light engineering, non-cotton apparel and home textile sectors for which there is a need for necessary tax reforms.

Executive Director of RAPID and Dhaka University Professor of Development Studies Dr M Abu Yusuf and Country Representative of the Asia Foundation Kazi Faisal Bin Seraj gave the welcome addresses, while ERF general secretary SM Rashidul Islam moderated the function through virtual platform.