The devil really is in the detail

For Bangladesh to graduate to a middle income country investments somewhere in the region of $120 billion are required, especially in infrastructure. Compared to that the average annual investment stands at roughly $3.0 billion with $4.0 billion having come from Japan Tobacco's acquisition of Akiz' tobacco business in 2018. There is a credit squeeze internationally leading to a shyness in major investments by corporations. Time after time during visits abroad by the Prime Minister, President and others the message of Foreign Direct Investment has gone out not only to businesses but also expatriate Bangladeshis. The results haven't been encouraging. Part of it is due to mere exhortation no longer being adequate and part of it is due to inadequate branding of the country.

Then again there is the small print detail beyond the alluring generalised statements. This was picked up quite aptly by a panel of discussants on the sidelines of an international conference of the South Asian Federation of Accountants recently. The facts and figures were sobering, coming as they did in the backdrop of key indices save remittances on a downward slide. For all the shortfall in investable funds Singapore cashed in on $1.3 trillion and Vietnam outstripped India and Bangladesh in attracting $25 billion. Bangladesh currently has a GDP of over 8% but economists are questioning this figure in the wake of missed revenue targets and a free-fall in the stock market, not to mention the alarming growth in bad loans from the banking sector and non-banking financial institutions. As one panelist pointed out, 40% of the US Stock Exchange comprises the technological industries such as Facebook and Google.

Much has been made of the stability in foreign exchange reserves, but, as the panelists pointed out, while Bangladesh wants inflow of investment it must be prepared for outflow in repatriation of profits. Added to this was the treatment being given to companies that already have and continue to make investments. Where our policies fall short is ensuring policy, especially taxation allows for business plan continuity. Where investors are falling short is that more often than not they seek to plough back their retained profit in Taka terms rather than ensuring an inflow of forex.

The Indian and Bangladeshi delegates agreed on the point that, however friendly, the investment policies were areas of investment needed to be clearly defined rather than opening the floodgates. Nearly a decade ago there was quite a hullabaloo over services sectors showing an overbearing intent to invest whereas the need was for labour intensive industry. Given the future is one of technology and the fourth industrial revolution, BIDA and other agencies set up for one-stop services have to be revamped even as they move from being regulator to facilitator. There are complaints about the registration process so much so that of companies seeking registration, only 5% were successful. The investment policy also fails in providing competitive and skillable workforce familiar with the Digital Infrastructure and equipped with the knowledge required. This has been a demand of industries in general that exposes the inadequacy of the education system to provide the workforce that is required in this day and age.

From a legal perspective companies suffer in moving capital in and out and absence of steps to clarify double taxation treaties. Dispute resolution is slow and the Alternate Dispute Resolution process is not working. Singapore and Vietnam stirred the debate and there was also a lively discussion about South Asia investing in itself. Despite Mr. Narendra Modi's overtures the response to investment has been less than satisfactory and to an extent Bangladesh has faced similar issues even with the 100 economic zones having been declared. As Dr. Ahsan H Mansur summed up the discussions through his question 'Are we telling our growth story', the answer is well known. Dr. Stephen Kottler made the point a couple of years ago when he insisted Bangladesh needed to be branded properly.