Three senior ministers and an adviser to the prime minister, on Wednesday, highlighted some major bottlenecks they believe must be resolved for Bangladesh to attract a share of the factories relocating from China.
They made the observations at a virtual meeting of an advisory committee to facilitate business – with Commerce Minister Tipu Munshi in the chair.
Senior business leaders who attended the meeting echoed the government policymakers regarding bringing foreign direct investment (FDI) into the country.
"Foreign investors say Bangladesh is a country of three governments – the Bangladesh Bank, the National Board of Revenue and the finance ministry. We have to change this," Foreign Minister AK Abdul Momen told the meeting.
He said official red tape is still a large barrier to foreign investors.
Salman F Rahman, private industry and investment adviser to the prime minister, said it is important to change mindsets to attract foreign investments from companies that will shift from China.
"We have held three to four meetings in the last two weeks. Everyone says good words there. However, in reality, no action is being taken," a frustrated Salman said.
He said investments have already started moving to different countries from China. Indonesia's president has personally phoned different large American companies about the facilities on offer if the companies invest in Indonesia.
"And, we are going on with discussions only," he added.
Mentioning the Foreign Exchange Regulation Act as a big barrier to the foreign investments in Bangladesh, Salman said, "We will not receive any foreign investment until we can solve it. There are lots of problems in our exit policy too."
The outbreak of Covid-19 across the world has exposed that the globe's overdependence on China – for raw materials plus intermediate and finished goods – could be very dangerous for any country.
Accordingly, countries like the US, Canada, UK, European nations, and Japan have decided to relocate their investments from China to other countries. Japan has even offered an over $2 billion incentive for the companies that move out of China.
Indonesia, Vietnam and India are racing to attract such investments to their countries by offering various facilities.
The Business Standard ran a report on the issue on May 14 and since then, Bangladesh has started to get the ball rolling. Yet, things are not moving in a coordinated way.
Industries Minister Nurul Majid Mahmud Humayun said, "We have no time to spend on discussions to get foreign investments. We have to start now. We have to provide them with similar facilities like the local investors."
Md Sirajul Islam, executive chaiman of Bangladesh Investment Development Authority (Bida), said, "From our discussions with foreign investors over the last nine months, we have come to identify two of their major concerns – the long time it takes to get service in Bangladesh and the lack of transparency."
It takes one month to get a trade licence. "We signed an MoU with Dhaka South City Corporation one-and-a-half years ago, stating they would issue trade licences within a day through a one-stop service. But, they are not doing that," he said.
"Eleven government agencies signed onto the one-stop service deal but, of them, only Bida, RJSC, Sonali Bank, and NBR are providing the service," he added.
Paban Chowdhury, executive chairman of the Bangladesh Economic Zones Authority (Beza), said, "We are working with a Japanese private company on conducting a survey to attract investment after the pandemic. The Japanese company will work so that Japanese investment comes to Bangladesh from China."
However, Tipu Munshi, the chair of the meeting, has not lost hope as he finds the government has now had the time to learn what other countries are doing to attract investments.
"The amount of investment, relocating from China, that we will be able to secure depends on how fast we can appear before investors with attractive offers," he said.
Indonesia has declared that it will give up to 20 years of a 100-percent tax holiday for an investment of $2 billion – and up to five years of 50 percent tax holiday for an investment of $7 million. Meanwhile, India has suspended its labour laws for three years.
"So we have to observe what types of facilities Indonesia, Vietnam and India are offering. After analysing those offers, we will prepare our proposals for foreign investors," said the commerce minister.
The minister said they will form a taskforce to look into the issue on how Bangladesh can secure foreign investments relocating from China.
Abu Hena Md Rahmatul Munim, chairman of NBR; Sheikh Fazle Fahim, president of Federation of Bangladesh Chambers of Commerce and Industry; Rubana Huq, president of Bangladesh Garment Manufacturers and Exporters Association; Shafiul Islam Mohiuddin, former president of BFCCI and BGMEA; Masud Bin Momen, secretary to the foreign ministry; Md Abdul Halim, secretary to the industries ministry; and Hosne Ara Begum, managing director of the Bangladesh Hi-Tech Park Authority spoke, among others, at the meeting.