Curing Bangladesh's image problem
Shahriar Khan | Friday, 8 August 2008
FOREIGN direct investment (FDI) in Bangladesh continues to be a trickle whereas other countries in its neighbourhood continue to be the major beneficiaries of it. China remains the top recipient of FDIs. India and Pakistan are also receiving much more FDIs than Bangladesh although probably not offering better conditions of investment or returns. It is time to analyse what are the major constraints standing in the way of attracting greater FDIs by Bangladesh. It is also time to address them promptly and effectively.
A sound analysis of the scenario is likely to show that the country's unfavourable image abroad remains the biggest bottleneck. For FDIs, a positive macro-economic environment, sound state of infrastructure, easily trainable workers, good terms and conditions for capital and profit repatriation by the investors and, above all, policy continuity or stability are among the determinants.
Bangladesh does not lack in these aspects in relation to its neighbours, though some concerns yet remain, on real or perceived grounds, over policy continuity or stability, notwithstanding the fact that the basic policy thrust upon attracting FDIs has remained unchanged over the last one and a half decades or more. Labour cost in Bangladesh is lower than that of the other South Asian countries and even China. But its infrastructural facilities, barring the latest developments relating to uninterrupted power supply, are not so bad as to divert foreign investments on a large scale. India's infrastructure is no good either. Bangladesh's macro-economy, with some slumps, has been stable on the whole for long. The macro-economic indicators have improved in recent years. Besides, its workforce is known for its aptitude for training and to adapt to the requirements of foreign funded enterprises. Certainly, there is scope for Bangladesh to further improve the conditions for FDIs. But it can be no reason for larger foreign investment flows not coming into the country.
Bangladesh, with opportunities offered by it, should have been a destination for foreign investment by now. Why the foreign investors are not responding to yet? One of the main reasons could be that the potential foreign investors are ignorant about what the opportunities Bangladesh has been offering to them. Besides, they are demotivated by an image problem of the country. Somehow, Bangladesh suffers from a negative image depicted by some rival countries. Bangladesh definitely deserves a better image.
First of all, there is an information gap about Bangladesh abroad. Many intending investors even don't know that Bangladesh has developed a world class export-oriented apparel industry, that it exports high quality shrimp and frozen foods or that it has all the potential to make and export a wide range of environment-friendly products, with rising demand in the world market. They also don't know that the biggest component of production costs, the wages to be paid to labour, are the most competitive in Bangladesh.
Bangladesh missions, in several countries of the world, by disseminating all these positive factors should be able to attract FDIs into the country. What the External Publicity Wing of the Foreign Affairs Ministry does in this regard or why this wing is not empowered to publicise these factors remains a big question.
The national press and local correspondents of the foreign media, operating from Bangladesh, should take the lead to extensively report the success stories of Bangladesh in the economic spheres, instead of only sending the negative reports. The chamber bodies should work together with the government to project Bangladesh in the positive light by organising international seminars, publicity campaigns in international business media, frequent holding of exhibitions of Bangladeshi products abroad and making investors aware about the good returns they would get out of investment in Bangladesh.
They ought to counter the systemic negative projection of Bangladesh by its competitors for international market share. They should make it clear to the foreign investors that law and order in Bangladesh are at least similar, if not better, compared to the other countries in South Asia.
A sound analysis of the scenario is likely to show that the country's unfavourable image abroad remains the biggest bottleneck. For FDIs, a positive macro-economic environment, sound state of infrastructure, easily trainable workers, good terms and conditions for capital and profit repatriation by the investors and, above all, policy continuity or stability are among the determinants.
Bangladesh does not lack in these aspects in relation to its neighbours, though some concerns yet remain, on real or perceived grounds, over policy continuity or stability, notwithstanding the fact that the basic policy thrust upon attracting FDIs has remained unchanged over the last one and a half decades or more. Labour cost in Bangladesh is lower than that of the other South Asian countries and even China. But its infrastructural facilities, barring the latest developments relating to uninterrupted power supply, are not so bad as to divert foreign investments on a large scale. India's infrastructure is no good either. Bangladesh's macro-economy, with some slumps, has been stable on the whole for long. The macro-economic indicators have improved in recent years. Besides, its workforce is known for its aptitude for training and to adapt to the requirements of foreign funded enterprises. Certainly, there is scope for Bangladesh to further improve the conditions for FDIs. But it can be no reason for larger foreign investment flows not coming into the country.
Bangladesh, with opportunities offered by it, should have been a destination for foreign investment by now. Why the foreign investors are not responding to yet? One of the main reasons could be that the potential foreign investors are ignorant about what the opportunities Bangladesh has been offering to them. Besides, they are demotivated by an image problem of the country. Somehow, Bangladesh suffers from a negative image depicted by some rival countries. Bangladesh definitely deserves a better image.
First of all, there is an information gap about Bangladesh abroad. Many intending investors even don't know that Bangladesh has developed a world class export-oriented apparel industry, that it exports high quality shrimp and frozen foods or that it has all the potential to make and export a wide range of environment-friendly products, with rising demand in the world market. They also don't know that the biggest component of production costs, the wages to be paid to labour, are the most competitive in Bangladesh.
Bangladesh missions, in several countries of the world, by disseminating all these positive factors should be able to attract FDIs into the country. What the External Publicity Wing of the Foreign Affairs Ministry does in this regard or why this wing is not empowered to publicise these factors remains a big question.
The national press and local correspondents of the foreign media, operating from Bangladesh, should take the lead to extensively report the success stories of Bangladesh in the economic spheres, instead of only sending the negative reports. The chamber bodies should work together with the government to project Bangladesh in the positive light by organising international seminars, publicity campaigns in international business media, frequent holding of exhibitions of Bangladeshi products abroad and making investors aware about the good returns they would get out of investment in Bangladesh.
They ought to counter the systemic negative projection of Bangladesh by its competitors for international market share. They should make it clear to the foreign investors that law and order in Bangladesh are at least similar, if not better, compared to the other countries in South Asia.