Investment suffers as legal dispute remains unresolved

Mohammad Ali | Published: November 22, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

Foreign direct investment (FDI) in the country's commercial service sector has virtually stalled for more than two years over a legal dispute.
The long-pending legal dispute is affecting investments in areas including freight forwarding and logistic service, shipping agency, airlines GSA, distribution and travel agency in the commercial service sector, insiders and lawyers have said. Both local and foreign investors have been indecisive in such a situation.
A number of businesses said that many foreign firms had approached them and offered to make investments in the local commercial service sector during the last two years.
But, unfortunately, "we could not but refuse to accept their proposals because of the legal dispute lying pending with the court for long."
Some of the industry-insiders appealed to the authorities concerned to take necessary measures to immediately settle the legal dispute, no matter whether the court's decision goes against or in favour-partially or fully-of foreign investment.
This, they say, is imperative for betterment of the sector.
"We, the businesses, want early disposal of the legal dispute, whatever the court order is" Faruber Anwar, managing director of the Trident Shipping Line Limited, told the FE.
The High Court (HC) on September 26, 2012 imposed an injunction on granting registration, licence, permission or work permit to any new foreign and/or joint-venture (JV) company in the sector, lawyers said.
However, the companies that commenced their business prior to issuance of the injunction are unaffected by the order.
The court passed the rule in response to a public-interest litigation (PIL) filed by Mirza Walid Hossain, president of Bangladesh Jubo Arthanitibid Forum, on September 25, 2012.
In the petition, Mr Walid claimed that many foreign or JV companies, with nominal paid-up capital as little as only Tk 200, were operating in Bangladesh. They were enjoying all benefits, including bank loan and other commercial privileges, under the existing law by making such a nominal amount of investment.
Even, they were remitting large sums of money abroad, Mr Walid said. There was no legal bar to forming foreign or JV companies with such a paltry amount of paid-up capital under the existing law, he added.
"As a result, the local investors as well as the bona fide foreign investors are facing an unfair competition from them," he said.
He argued that there should be a policy and categories based on full, partial or no FDI under certain conditions in greater interest of the country. The petitioner pointed out that the government earlier had drafted a guideline in this connection but it was yet to be finalised.
He further said that the Board of Investment (BoI) had earlier issued a directive relating to bringing an amendment to the Companies Act 1994 to include, among others, the minimum paid-up capital required to form foreign and JV companies in the service sector. It was also not carried through.
In the PIL, Mr Walid also challenged the authorities for failure to finalise guideline and implement the BoI directive.
Following the petition, an HC bench comprising Justice Salma Masud Chowdhury and Justice Quazi Reza-Ul Hoque issued a rule asking the authorities concerned to explain as to why they should not be directed to finalise the guideline by incorporating some relevant terms and conditions on operation of foreign or JV companies or industries in Bangladesh.
It also sought explanation as to why the respondents concerned should not be directed to bring necessary amendments to the Companies Act 1994 to this effect.
Respondents made in the HC rule are the commerce secretary, the finance secretary, the law secretary, the education secretary, the shipping secretary, the civil aviation and tourism secretary, the home secretary, Bangladesh Bank governor, the National Board of Revenue (NBR) chairman, the Registrar of Joint Stock Companies and Firms (RJSC) in Dhaka, executive chairman of the BoI and the commissioners of the Customs House in Dhaka, Chittagong and Mongla.
Later, around 50 companies got involved in the petition as added respondents to fight against the challenges made in the petition, indicating that they took the matter seriously.
The companies include Yusen Logistics (Bangladesh) Ltd, UTI Pership (Pvt) Ltd, Bangladesh Shipping Agents Association, Jet Airways (India) Ltd, M/s GBX Logistics Ltd (GBX), Scanwell Logistics Bangladesh (Pvt) Ltd, Hellmann Worldwide Logistics Ltd, NYK Line (Bangladesh) Ltd, Dubai Aviation Corporation, Saudi Arabian Airlines, Expeditors (Bangladesh) Ltd, China Southern Airlines Company Ltd, Siemens Bangladesh Ltd, D.T. Overseas Ltd and APM Global Logistics Bangladesh Ltd.
Such other companies are Dart Global Logistics (Pvt) Ltd, HTL Logistics (BD) Ltd, ACE Bangladesh Ltd, Kuehne + Nagel Ltd, On Time Worldwide Logistics Ltd, CMA CGM Bangladesh Shipping Ltd, Zuellig Pharma Bangladesh Ltd, GE Bangladesh Industries Pvt Ltd, CP Logistics Ltd and Tune Aviation Ltd.
When contacted, Advocate Kalipada Mridha, lawyer for the petitioner, told the FE: "Earlier the Chief Justice had sent the matter to the HC bench headed by Justice Naima Haider. So, it will be disposed of at this bench."
On a query as to why disposal of the petition was taking such a long time, Mr Mridha said: "As this particular bench is likely to hear and dispose of the petition and sometimes the bench does not have required jurisdiction to hear it, the case disposal is being delayed."
The petitioner's lawyer expressed his hope about immediate settlement of the long- pending legal dispute. "Both the parties are eager to do so as soon as possible," he said.
However, Advocate S.M. Aslam, lawyer of the Syed Ishtiaq Ahmed & Associates, which represented some companies in the petition, does not see any possibility of disposal of the dispute anytime soon.
Giving the reason behind the delay he said: the HC bench concerned is generally given both motion and hearing jurisdiction and it causes more pressure of work on the bench.
"Immediate disposal of the petition would be possible, if the bench concerned is given only hearing jurisdiction (not motion) to deal with such a matter," Mr Aslam opined.
When his attention was drawn to the legal matter and its added respondents numbering around 50 companies, Attorney-General Mahbubey Alam Wednesday suggested those companies to inform and contact him about it.
According to the HC cause list of November 19, the petition was at the serial number 77 on the cause list of the HC bench comprising Justice Naima Haider and Justice Md. Jahangir Hossain.
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