Investment-climate constraints, deficiencies in energy and transportation infrastructures, and an opaque regulatory environment prevent Bangladesh from bagging higher growth, says a US report.
The US State Department, in its latest report on Bangladesh investment market, titled 'Investment Climate Statements 2022', also highlights the opportunities here saying that Bangladesh represents an excellent potential market for US exports.
It categorically says relatively high and steady GDP growth over the last decade has shown the resilience of Bangladesh's economy in weathering these challenges.
Commenting on the report, Foreign Secretary Masud Bin Momen said the report mentioned many positive things about the Bangladesh economy and that the constraints mentioned in it are also known to them.
"The concerned ministries are working to remove these bottlenecks," he adds.
According to the US report, scarcity of land, depleting natural gas reserves, and inadequate power distribution remain major impediments to investment.
Electricity-generation capacity has grown significantly over the last decade, but transmission and distribution systems need additional work to ensure more reliable and inclusive access to electricity, it suggests.
It says "corruption is also widely perceived to be endemic at all levels of society", discouraging investments and inhibiting economic growth.
About tax and banking the report says reputable companies have complained the Bangladesh National Board of Revenue (NBR) has inconsistently subjected businesses' prior-year tax returns to renewed scrutiny.
"While this process is taking place, normal business activities such as banking, immigration procedures for foreign staff, and branch office licensing permissions may be slowed or stopped entirely," the US foreign office adds in the report.
"Labor rights continue as a source of international concern, marked particularly by low and delayed wages and government interference in attempts by workers to organize.
"Economic weaknesses also include an undeveloped and undercapitalized financial sector, an inefficient and chronically loss-making public sector, and a decision-averse bureaucracy that often resists measures to improve the business climate."
It feels that the financial sector also needs to address the persistent problem of state-controlled banks' high balance of non-performing loans (NPL).
"Bangladesh has one of the lowest wage rates in the world, which has fueled an expanding industrial base led by the RMG industry," the report says, adding that it is well-positioned, however, to diversify its exports and move up the value chain.
The government offers a range of investment incentives under its industrial policy and export-oriented growth strategy.
According to the United Nations Conference on Trade and Development (UNCTAD), Bangladesh received foreign direct investment (FDI) net inflows of $2.9 billion in 2021.
The country also has large pharmaceutical, footwear, and agricultural-processing industries. Other important sectors include construction, information and communication technology (ICT) and business-process outsourcing, light engineering, shipbuilding, leather products, jute products, and ceramics.
There is substantial scope for U.S. companies to enter the market and invest in these thrust sectors.
The US notes that Dhaka is the primary financial, political, and cultural center of Bangladesh. Located on the coast, Chattogram (previously called Chittagong), the second-largest economic and financial hub, hosts the country's major seaport, which handles more than 90 per cent of the country's international trade. Both cities host stock exchanges.
A future economic hub is expected to form south of Chattogram in Matarbari, where the country's first deep-water port is under construction, the US State Department mentions.
mirmostafiz@yahoo.com
