Political instability, volatile regulatory framework major hurdles to FDI growth

FE Team | Published: May 25, 2013 00:00:00 | Updated: February 01, 2018 00:00:00

FE Report Businesses Friday identified political instability and unpredictable macro as well as micro regulatory framework as the major impediments to the country's foreign direct investment (FDI) growth. They also said despite willingness, a good number of foreign investors are shying away to some other countries due to the unstable political situation in Bangladesh, which is already affected with many other problems. The observations came at a seminar on enhancing investment climate, organised on the sidelines of a three-day single country exposition titled Showcase Malaysia 2013. It began at Pan Pacific Sonargaon Hotel in the city Thursday, sponsored by Robi-Axiata. Bangladesh-Malaysia Chamber of Commerce and Industry (BMCCI) in collaboration with High Commission of Malaysia in Bangladesh, Malaysia External Trade Development Corporation (MATRADE), Bangladesh High Commission in Malaysia and Malaysia South-South Association (MASSA) organised the programme. "Three months back a high-powered delegation of the Chinese chambers came to the city, and there was a three-day strike on the day they arrived. They took the decision of going back to their country on that very night, and never came back," said Sabur Khan, president of the Dhaka Chamber of Commerce and Industry (DCCI). Referring to an upcoming business conference that the DCCI has arranged on the chamber premises, he said this is for the first time four under secretaries of the United States of America will come to Bangladesh at a time. About 40 companies are determined to come to Bangladesh with prior caution about the political leaders and their activities. But after seeing the whole environment and political tsunami here they may become frustrated and go to Myanmar. "I heard that there is a strike on Sunday, and I'm urging the US Embassy to approach our political leaders. I'm issuing a press release to request the opposition to withdraw their programme. But no political party listens to us," he said. "It's a very bad signal for the 40 US companies coming to Bangladesh to attend the conference," he added. Vice-president of Robi Axiata Shahedul Alam presented the keynote paper titled 'Potential of Telecom Sector and Investment Climate in Bangladesh' at the seminar, chaired by Sabur Khan. Among others, BMCCI president Syed Nurul Islam and chief corporate affairs officer of Airtel Bangladesh Ashraful H Chowdhury were also present. Referring to various natural and man-made disasters combined with the political turmoil, Syed Nurul Islam said as a businessperson of Bangladesh he is tired of the investment climate here, and has had real bad experience over the last 27 years. Speakers said despite a vibrant private sector FDI is always required for any economy for more added benefits, like - development of infrastructure, skilled manpower, expertise and technology. Good governance and simplified business procedure are required to enable the foreign investment environment here, said the speakers, adding there is always criticism of Bangladesh for red-tapism and cumbersome decision making process. They said unlike many other sectors, business community is too much divided here, for which the politicians take advantage on them. Citing the example of Myanmar, they said their government has even released the opposition leader Suu Kyi to build investors' confidence, and the opposition party also stands by the side of the businesses. Ashraful H Chowdhury said: "We all call for investment, but we have seen investors who came to Bangladesh later went to Vietnam or Cambodia, thinking those countries as the best place for investment." Shahedul Alam said regulatory environment in Bangladesh is unpredictable and discouraging for foreign investment, especially in telecom sector. The government is moving towards class licensing regime discouraging foreign entities, which is curbing scope of business for the existing market players and creating a negative impact on business viability, he also said. Mobile telecom companies contributed about 60 per cent of the total FDI in Bangladesh. Five such companies have already invested Tk 500 billion in Bangladesh and contributed about 2.3 per cent of the GDP with actual potential of contributing about 6.0 per cent, he added.