To improve the investment climate in the country, speakers on Saturday suggested undertaking policy actions and reforms on key areas of business and economy.
They specified a string of areas for reforms. They are–access to finance, regulations, expediting pace of mega infrastructure projects, simplification of tax regime, foreign direct investment (FDI) policies and export diversification.
They made the suggestions at a webinar, titled “Implications of COVID-19 on FDI inflow to Bangladesh: Challenges and Way Forward”, which was organized by the Dhaka Chamber of Commerce and Industry (DCCI).
DCCI President Shams Mahmud moderated the webinar while Private Industry and Investment Adviser to the Prime Minister Salman Fazlur Rahman was the chief guest.
Executive Chairman of the Bangladesh Economic Zones Authority (BEZA) Paban Chowdhury, Ambassador of Japan to Bangladesh ITO Naoki were special guests at the programme..
Chairman of Policy Exchange Dr. M Masrur Reaz presented the keynote paper.
The FDI to GDP ratio of Bangladesh is 1.2% which is less than India, Sri Lanka, Vietnam and Cambodia. Out of total FDI stock, the country received the highest $3.8 billion FDI in gas and petroleum sector where the USA is the largest investor with $ 3.60 billion followed by the UK, South Korea, the Netherlands, China and Japan.
According to the World Investment Report 2020, Global FDI flow is projected to decrease by 40% in 2020 to $1 trillion from $1.54 trillion in 2019 due to COVID-19.
Shams Mahmud said due to the COVID-19 pandemic, developing economies like Bangladesh were expected to witness the sharp fall in FDI. In the post-pandemic period, to attract FDI inflow, he suggested strengthening local backward linkage, adopting timely policy reforms and strengthening inter-agency coordination.
He invited the US and Japanese investors to invest in conventional manufacturing sector, service sector and diverse infrastructure works.
Citing a UNCTAD report, Dr. M Masrur Reaz said global FDI would plunge 40% in 2020 and another 5% to 10% would drop in 2021.
To improve investment climate Masrur Reaz suggested undertaking policy actions and reforms on access to finance, regulations, accelerating mega infrastructure projects, tax regime, FDI policy and export diversification.
Ambassador of Japan to Bangladesh ITO Naoki said Japanese were interested in investing in Bangladesh. In 2019 Japanese FDI to Asia was USD 57 billion but Bangladesh’s share was just 0.09%.
In the regional connectivity and under Big B initiative, Japan’s collaboration would continue, he said.
He also said simplification of taxation; customs clearance and foreign exchange reforms were the critical issues to woo FDI.
Paban Chowdhury said foreign investors as well as joint ventures in the agro processing food sector in EZs would get 20% cash incentive.
He also said the country needed more ports with a Private Port Policy.
Salman Fazlur Rahman said reduction of tax would encourage them to invest. The government needed to widen the tax net to ease the burden on the existing tax payers.
“Almost in all top levels of the government the realization has come that we need to change the mindset for reform. Now this mindset needs to go down to the field level officers who actually play the major role in implementation stage”, he said.
“We will reform the bankruptcy law and companies act soon. The tax regime will also be re-designed soon compared with other countries. Our market capitalization to GDP ratio is also low,” he added.
Deputy Managing Director, Abdul Monem Limited ASM Mainuddin Monem said land registration was an worth addressing issue. He emphasized for better coordination among BIDA, BEZA and the land ministry. He urged for a congenial policy regime and ensuring a level playing field for private EZ owners.
