Inter-ministerial meeting tomorrow to review contract farming in Africa

FE Team | Published: June 13, 2011 00:00:00 | Updated: February 01, 2018 00:00:00

Syful Islam
The Ministry of Finance (MoF) has said some 'critical' factors including balance of payment, investment security, and restriction on capital account should be considered before the go-ahead for contract farming in Africa, officials said. It has sought opinion from its banking division and the central bank as well on this issue. Officials said the Ministry of Agriculture has convened an inter-ministerial meeting tomorrow (Tuesday) to decide on whether contract farming in African countries by Bangladeshi private sector should be allowed. After reviewing the opinion of banking division and the central bank, the MoF said that the current balance of payment is "not in favour of transferring foreign currency abroad from Bangladesh." "In Bangladesh, the capital account is not convertible and that's why there is no scope of transferring money from here. Besides, under the present Foreign Exchange Regulation Act of 1974 there is no provision of investment abroad, which has to be considered," it said in a memo prepared for the meeting. The memo said if policymakers take decision of allowing contract farming in Africa, investment, legal, and regulatory framework has to be prepared. "The existing Foreign Exchange Regulation Act of 1974 has to be amended and a focal ministry has to be fixed to carry out the tasks related to contract farming." It said the bilateral agreement has to be signed between the two governments. "The criteria of possible investors, source of capital, and upper limit of investment has to be set." The memo noted that the government would have to sign deal with the private sector investors. "In that case, security of investment, guarantee of profit repatriation, payback period of investment and return on investment have to be included in the agreement." It said the government would not be liable if the investment outside the country faces any risk. "Employment of Bangladeshi workers in the farms and remitting their earned money has to be mentioned in the agreement with the private sector. The memo advocated for ensuring favourable legal framework in the farming countries' for importing the produces in Bangladesh or exporting those in third countries. According to the central bank statistics, the foreign exchange reserve came down to $10.41 billion this year from over $11 billion in 2010 due to import pressure and low growth of remittances. During the first nine months of the current fiscal year the balance of payment of the country has gone down by $529 million. Remittance flow is also experiencing a significant fall due to political crisis in Middle Eastern countries and returning of a good number of workers from Libya. In April 2011 Bangladeshi working abroad sent home $976.14 million, down by $126.84 million from $1.103 billion in March this year.Several Bangladeshi business groups including Nitol-Niloy Group have expressed interest in farming in African vast lands.