Bangladesh Bank’s announcement of a procedure to facilitate external borrowing by industrial enterprises, located in export processing zones, is a step forward to making more capital available for investment.
Previously, there had been no clear procedure or encouragement available for this avenue of finance.
However, much remains to be done to attract foreign direct investment at the levels which the economy needs to secure a sustainable path to long-term growth.
The government’s role is crucial as it controls or inhibits many of the factors which can help attract FDI.
Leading businesses represented at the first meeting of the new Business Advisory Committee have rightly urged the government to do more to improve the supply of gas, water and electricity and to adopt policies which will enable lower lending rates for borrowing funds for investment.
The provision of more land for setting up EPZs, in particular to house modern, compliant RMG factories, is an area in which the government can and must act fast, as state-owned enterprises control a significant amount of under-utilised land, which would benefit from investment and modernisation.
Policymakers must also adopt more open market policies, as these offer the most cost-effective way to stimulate and attract investment, both from within the country and overseas.
Removing double taxation, deregulating the historically counter-productive framework of exchange controls, and easing tariffs, where possible, must not be overlooked. Otherwise, the country’s potential to attract investment will be diminished.