Attracting FDI: More need to be done

We can consider the present business environment in Bangladesh to be more or less satisfactory. At least after the January 5 elections, we have not seen that much of political troubles. However while we say this, the potential investors are not totally out of fear of any possible political flare-up or uncertainty. I would rather say that Bangladesh business environment is going through a challenging time.
Domestic economy needs lots of investment. In addition, there is huge excess liquidity in the banking sector and also international community, looking at the increasing domestic demand and expansion of the local market, is keen on investing in Bangladesh.
Nevertheless the image-problem still exists. Among these, the infrastructure problem remains to be the most acute one. Congested roads and highways and power and energy shortage are one segment of the problems where much improvement has not taken place. The government is failing to attract sufficient bids (both domestic and international) for big infrastructure projects like bridge and highways. On the other hand, the reputed international contractors lack the confidence of winning the bids even if they participate. Because of tremendous level of politicisation, the international investors are not that much interested in taking part in bids. This is another issue that needs to be addressed.
I feel that the international business community is also not sure how the regulator or local investors look at foreign direct investment (FDI). Often, the latter underscore the necessity of it, but, in reality, they offer a lukewarm attitude towards it. However, how far we are ready in terms of policy, philosophy and human resources for receiving FDI remains to be questioned.
Another issue deserves attention is our attitude towards the foreign investors who are already operations in this country. An international company comes here, make investment, transfers technology and recruits locals. As long as they do the job in a non-controversial way and pay taxes, we should allow them to repatriate their earnings easily without subjecting it to any form harassment and hassles.
The Bangladesh apparel industry is about to enter the next phase. In its journey towards the next trajectory, the most important factor is productivity improvement, ensuring a safe workplace, secured plants and machines. In addition to development of the managerial class, an integrated solution to the problems of our apparel industry operators are required. Garments village, safety equipment, fire-fighting equipment, evacuation equipment, putting the factory in an independent building instead of a shared building are the ground realities that we have started to realize after the Rana Plaza incident.
The Rana Plaza incident as I see has emerged as a turning point for Bangladesh. It has opened up many opportunities for the Bangladesh apparel industry, provided they do their home work. We have to learn the fact that we have to ensure higher wages, employ more educated and compliant workers, and ensure safe workplaces.
I would say Rana Plaza should have created the awareness to all our stakeholders in the garments industry. Reality tells us the fact that had there been no Rana Plaza, we would not have seen our development partners and big buyers coming forward in togetherness to help us out.  The workers are no more workers; they are our partners in progress. Of course, we don't want any more incidents like what happened in Tazreen Garments and Rana Plaza. But at the same time, I am happy that we could realize, with much of incidental expenses though, the importance of compliance, internal control, and safe workplace.
Purchasing power, taxation regime, gas and electricity supply, roads and highways, availability of good human resources, and good worker ethics- these are the issues that the multinational companies consider while considering a country like Bangladesh as their destination. At the same time, Bangladesh's image, policy regime, regulatory system, regulator's and civil society's welcoming approach, and availability of land, infrastructure, and energy at competitive prices should be working towards bringing MNCs in Bangladesh to do business. We also have one of the most liberal FDI policies among our peer countries but we could not attract much of FDIs because of our policy planners' greater sympathy towards our domestic operators who are also gradually but slowly obtaining global standards. How the existing foreign direct investors are being treated is another parameter that matters a lot to the prospective investors who wish to make investments in Bangladesh.
The risks that MNCs consider are political risks, cross-border risks, risks related to repatriation of profits, local currency interest rate, liquidity and most importantly foreign currency liquidity, industrial relations, availability of good human resources, labour standards, accessibility to internationally accepted law firms, and functioning code of conduct. In addition to these, availability of water, gas, & electricity, efficient port, good roads and highways are also very important.
MNCs ensure technology transfer and help the local enterprises to improve their standard. They ensure the migration of best practices and develop their people to grow up with a global outlook apart from being a good employer. MNCs make money but they do not make too much of it and most importantly they try to make it in a responsible and accountable way. Along with this, they are good corporate citizens and responsible members of the business community. They ensure knowledge transfer, work place safety and believe in diversity.
While talking about different avenues, I feel the telecom sector warranted a lot of investments which our domestic companies could not meet. Hence, the telecom sector should be given a little better tax treatment. They are being forced to pay higher tax rates. That is why they are not being able to make adequate investment in product development, human resources development, and technology improvement. Apart from Grameenphone, no other telecom company is making enough profit. We would like to see almost all the large telecom companies to make enough profit and to be listed on the capital market. This would bring in lot of stability in the capital market and lot of confidence to the businesses. Telecom companies are employing a good number of young people which is very much appreciated as they are creating employment.
Success of the telecom companies can be transferred to other sectors through which multinational investments will be welcomed. In many sectors in Bangladesh, multinational investment is not welcomed or is deemed controversial. Foreign companies do not want to come as they feel afraid of being stopped after they start making profit or being treated in a step motherly attitude. This is also an important issue to mention when we are talking about foreign direct investment.
Good multinationals or companies that are following them always want to be good corporate citizens by giving back to the community where they are making money from. Therefore, most of the multinationals keep CSR at the centre of their attention. At the same time, we would like to see that money is not given away at the pressure of the politicians or due to the peer pressure. They should rather spend that money to develop curriculum for the autistic people, rural health infrastructure development, education sector development, science and technology development, mathematical and science Olympiad etc. I would suggest the multinational companies to redefine their CSR activities to develop the aforementioned sectors.
Bangladesh is lagging behind with regard to its potentials. If we look at Sri Lanka, they welcome foreign investments from any country regardless of all other external political or democratic factors. Even Pakistan, despite their pressing political conditions, welcomes all kinds of investments. And the countries we compete with- like Vietnam, Cambodia, Myanmar- foreign direct investment is most welcome in those countries. Bangladesh needs to do more homework in these opportunity spaces. It is not about one stop service kind of facility rather it is about the depth of the banking sector, infrastructure support, availability of land for putting up manufacturing plants, and adequate workforce.
In order to boost investments in Bangladesh, it is essential that we have good regulatory regime, investment friendly policy planners, infrastructure support, political stability, and positive attitude towards Bangladesh from the global investment community, more as a `happening place'.
(Mamun Rashid is a banker and economic analyst. He can be reached at: mamun1960@gmail.com)