Depreciate Taka to sustain foreign investment: Evergreen CEO

Evergreen Products Group Limited's chairman and chief executive officer Felix Y.C. Chang is the top investor in the Uttara Export Processing Zone (EPZ), Nilphamari. EPZ insiders say that Felix has fallen in love with Bangladesh as his business has expanded, so his recruitment of local workers has gone significantly beyond the EPZ. Recently, he shared his thoughts with The Business Standard about investment facilities in Bangladesh. He also raised some issues that need to be addressed to attract more foreign investment.

TBS: According to the Uttara EPZ authorities, you are the pioneer who lobbied with friends to come and invest. What is the advantage of investing in the EPZ?

Felix: People of northern Bangladesh are friendly and hardworking. There is enough of a labour force to employ. Additionally, the government and the EPZ authority are very supportive.

TBS: So far, you have invested more than Tk1,000 crore. What are your future plans?  

Felix: If I receive more benefits, I will invest more. There are lots of challenges; investors are suffering by themselves.

One problem is transportation. The roads are very narrow and accidents occur regularly. It takes a long time to bring merchandise to the factory.

Secondly, the port system is slow and sea shipment times are long. The sea port facilities are not fast like in China. I will give you an example: shipping time from China to Los Angeles, USA takes just 14 days, whereas in Bangladesh, if you ship merchandise, it takes five-to-six weeks to reach LA. This is a long time. The shipping charge is also high compared to that of other Asian countries like China and Indonesia.

The raw material is expensive, we need to import everything. Airways are also not user-friendly for cargo. When we ship merchandise here, the cargo is not well covered. Due to rain, everything gets wet. However, in China, transport facilities are very good.

We still invest in Bangladesh because we like the people, and we get cheap labour too.

However, wage increases are hurting investors. You know, investors are see the availability of cheap labour in Bangladesh as an advantage, we can earn only 10 percent from sales – no more – because the delivery time of Bangladesh takes long. We need to quote a lower price to our customers – if salaries increase, they will consume all our profits. 

Investors in Cambodia, Indonesia and Vietnam pay cheaper shipping charges for faster shipping times than Bangladesh. If we increase the price due to salary and other expenditures, then the orders will be withdrawn. If the minimum wage is raised then investors will lose their interest in this country.

TBS: If the government addresses the issues like transportation and taxing policy, would you feel comfortable in paying an increased salary to workers?

Felix: This is the issue that the government should address immediately. Workers' salaries – high or low – are not dependent on me. They are dependent on buyers. They are dependent on supply-and-demand. Workers' salaries should be market-driven.

I am suggesting the currency be depreciated. If the currency is depreciated by five-to-eight percent, this will help us run our factory. 

Depreciation is necessary in Bangladesh because I have heard from my friends that they are suffering huge difficulties in paying their workers.

In the 1990s, China executed a big devaluation of 30 percent. Nowadays, China has become one of the top economies in the world. Hence, the depreciation of one's currency is not a bad thing all the time.

TBS: Are you facing any other challenges?

Felix: Nilphamari is far from Dhaka and Chattogram. We need tax-free car facilities. The government should consider this. Investors may have access to tax-free cars as per their investment. Like, one tax-free car for Tk100 crore investment. Two tax-free cars for Tk200 crore investment, etcetera.

Meanwhile, tax holidays are a must to attract foreign investment. The Bangladesh Government has put a slab-wise tax exemption. This is not good for investors, because it does not bring about benefits for foreign investors. If there is tax-holiday, investors can earn more profit and then, they can reinvest the money in this country. The Bangladesh government should now attract more investors to the country.

You know, every investor is a smart investor. When they invest from the US, to China and Singapore, they all undertake tax planning. So, if a tax holiday is given by the government, it will help investors earn the money as dividend taxes for their own country and then they can reinvest the rest of money in Bangladesh.

Indonesia is the next potential country for investors. Its currency is cheaper and it has a population of 250 million – more people than Bangladesh has. So, Indonesia can offer cheaper labour. If investors go to Indonesia, there is more entertainment too. There are different types of restaurants and karaoke etcetera. However, in Bangladesh there are few options. Foreign investors seldom feel comfortable here.

We are international investors. We have smart money. Whoever is smart and wherever the situation is smart, smart money will always go there. However, I must admit that the Honourable Prime Minister of Bangladesh is doing a great job in protecting foreign investors. She has taken a lot of good steps in this regard too. The government is tackling the Covid-19 situation very efficiently, bearing in mind the effect on the economy in the near future – which is also praise- worthy. I wish her success and pray that Bangladesh can overcome this crisis rapidly.