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Dhaka Tribune

Investment climate improves in Bangladesh

Update : 07 Jun 2015, 07:56 PM

Bangladesh has made gradual progress in reducing some investment-related constraints and offered opportunities for investment, especially in energy and power, pharmaceutical, information technology, telecommunications, and infrastructure sectors.

The US Department of State made the observation in its “Investment Climate Statements 2015,” which provide country-specific information and assessments on investment-related laws and other important factors for doing business abroad. 

Investment Climate Statements include examples of countries’ expanding openness to foreign investment and investor protections, as well as relevant market barriers that may deter investment. Topics include host countries’ legal and regulatory systems, dispute resolution, transparency, intellectual property rights, state-owned enterprises, and labor-related issues.

“With over 6% annual growth sustained over the past two and a half decades, a large, young and hard-working workforce, and vibrant private sector, Bangladesh offers opportunities for investment, especially in the energy, power, pharmaceutical, information technology, telecommunications, and infrastructure sectors as well as in labor- intensive industries such as readymade garments, household textiles, and leather processing,” said the investment climate statement dated on May 29.

The statement, which was made available online yesterday, said: “Sustained economic growth, a demographic dividend, and increased reforms of the RMG sector are resulting in substantial interest in investing in Bangladesh.”

There was significant political violence and uncertainty during the first quarter of 2015 following the one-year anniversary of controversial national elections held in January 2014.

While this raised concerns of a short-term, adverse impact on business and investment, growth forecasts for 2015 remain above 6%, it added.

Government policies are generally in favor of increased economic growth, but are hampered by slow and incomplete implementation issues involving the regulatory and rule of law environment, said the statement.

Besides, commenting on the a 16-point action plan outlining next steps as part of a longstanding effort to address in a meaningful way worker rights and safety problems in Bangladesh, the statement said: “If implemented, the plan would provide a basis for the President to consider reinstating Generalized System of Preferences (GSP) trade benefits”.

On June 27, 2013, US President Barak Obama suspended trade facilities for Bangladesh under the GSP scheme over workers rights issue. At the time of the announcement, the US government outlined a 16-point action plan for Bangladesh for the restoration of GSP trade facilities.

Bangladesh actively seeks foreign investment offering a range of investment incentives under its industrial policy and export-oriented growth strategy, with few formal distinctions between foreign and domestic private investors, the investment statement said.

According to Bangladesh Bank, the country received $1.5bn as foreign direct investment (FDI) in the FY 2013-14, up from $990m in the previous year.

Commenting on Bangladesh climate, the US state department said it has made gradual progress in reducing some constraints on investment, but inadequate infrastructure, financial constraints, bureaucratic delays, and corruption continue to hinder foreign investment.

The lack of effective alternative dispute resolution mechanisms and slow judicial processes impede the enforcement of contracts and the resolution of business disputes, it added. 

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