After the successful budget dialogue, Youth Policy Forum hosted a dialogue in collaboration with LightCastle Partners on Thursday on the steps necessary to facilitate trade and investments in response to the economic downturn following Covid-19.
The session was moderated by Yasin Ahmed, Head of Advocacy and Outreach at Youth Policy Forum. The speakers included The Bangladeshi Ambassador to The Netherlands , Riaz Hamidullah, and Dr M Masrur Reaz, Chairman of Policy Exchange and former Country Coordinator, Trade & Competitiveness Global Practice Unit at the World Bank.
Ambassador Hamidullah initiated the discussion by providing a holistic rundown of the existing impediments to export growth and FDI. The speakers highlighted the need for Safe Manufacturing and Responsible Business as the global trend is gradually shifting towards greater recognition of health safety standards.
Dr Reaz opined that the exports and FDI are intrinsically linked, and emphasized on the need to focus on particular sectors for growth. He cited a research conducted by the World Bank where three sectors e.g. leather & footwear, plastics and electronics and electrical goods were identified as the highest potential sectors for export diversification in Bangladesh. Developing these sectors will help bring in FDI through sectoral investment promotion. Dr Reaz stated that private investment in Bangladesh has been stagnant for the last few years, and the export basket currently consists of less than 1% of new products and new markets.
Both of the speakers identified the bottlenecks in investment opportunities in Bangladesh - lack of accessibility of land and electricity, bureaucratic red tape coupled with high tariff rate and slow pace of contract enforcement all affect the possible growth of this emerging sector in Bangladesh. In Dr Reaz's view, "Bangladesh has never had a system to identify, facilitate and provide after-care to FDI companies, it has been mostly on an adhoc basis."
Addressing the need to focus on our existing investors, Ambassador Hamidullah said, "We need to engage more and appreciate the investors who are already in Bangladesh, weighing their perspectives and perceptions". He added that new investors should be taken in confidence by instilling trust and comfort in them. "Anyone can be a potential investor. Convincing them to invest in your country is a matter of art and science".
A focus on SMEs was stressed as a point of focus for developing future industries. Ambassador Hamidullah touched on the idea of identifying the SMEs that show promise, and facilitating regional or sub-regional market integration alongside financial incentives to help these industries grow. This model has worked in Sri Lanka, and can be transposed to Bangladesh as well. He further stated that Sri Lanka has a trade body called the "Export Development Board", which focuses on the development of exports to then identify prospective sectors in the "National Export Strategy". They unite every stakeholder, such as the various chambers of commerce, to discuss the necessary strategies required to optimize exports for the country. According to Ambassador Hamidullah, it is necessary for Bangladesh to emphasise on export 'development' similar to the best practice of Sri Lanka.
Addressing the need for utilizing specialised skill sets and experts, Dr Reaz suggested that "BIDA is primarily staffed by government officials who are experienced administrators, however they are rarely trained and experienced in specialised investment promotion work such as sectoral benchmarking, value-proposition development, financial and legal aspects. This constrains systematic, specialised investment promotion work on the part of BIDA." He informed that an "Institutional Strengthening Road Map" for Bangladesh Investment Development Authority was underway, which will enable BIDA to attain service from experts with a specialised skill set in different relevant fields.
Both the speakers were optimistic that Bangladesh has the potential to be a good investment destination, provided that the impediments are addressed and acted upon. As part of its new initiative, Youth Policy Forum is set to commence its next dialogue series "FDI: For the Many" from July to identify, evaluate and recommend on possibilities of FDI in Bangladesh.