Dr. Syed A. Samad Executive Chairman, BOI
Monday, 17 May 2010
First of all I would like to stress with all the strength that I can command here is the fact that BOI doesn’t do anything alone. You know we have a very collegial decision making process and except for giving registration, for everything else, we have to go to one Minister or the other. And much has been said about bureaucracy and rules and regulations. Correct, but bureaucracy has a defined hierarchy based on rules, regulations and conventions. You can change the rules, they will perform differently but you cannot ask servants to flout rules. They sometimes are really slaves of rules, some public servants are supposed to be bolder than others but there is a high element of risk when one flouts rules.
We have a multi-layered system of decision-making; we all belong in the domain of political and economic governance so I leave it to that. Board of Investment has got nothing to do with sanction of foreign loan. There is a committee which is housed in the Board of Investment backed by two officials of the Bangladesh Bank. Bangladesh Bank processes it and then it goes to the relevant committee. It is up to them to decide on how much and to what extent to allow foreign investors to borrow from the domestic market.
On FDI flows I have seen that it tends to follow a special pattern, if you look at the global figures of the last twenty or twenty-five years, you will find that South East Asia, South Asia, Latin America, America, Europe, India, Japan and China constitute clear patterns with South Asia, which is the least integrated economic region in the world, getting the least. India was closed in the past but of late it has opened up and is getting increased inflows of investment; in fact it can get a lot more than it is getting now. FDI is supply-led not demand-following.
We may need ten billion dollars of FDI but that will not be guaranteed. Why does Vietnam get so much? Clearly, because of American investors who lead the table. Sri Lanka never lost FDI from the trend flow despite having thirty years of civil war. Like Mirza Azizul Islam said just now that in FDI there are elements of randomness for which clear cut explanations may not always be possible. We say it may be that the country which has democracy and where decision making is transparent etc. would attract more FDI. Perhaps, but that is again a mere assumption.
How do we treat our existing investors? I will give you an example: In the Lafarge plant, the Indian court ruled that the supply of limestone will be stopped and we got the message. That Lafarge is our client, and that my client doesn’t owe anything to me but I owe everything to my client because I depend on him or her for my subsistence, for my survival, for my continuance created a deep sense of anxiety in our minds. The President of Lafarge was visiting Bangladesh. I asked him to accompany the Foreign Minister of Bangladesh who was going to India at that time and they did so. When the Honorable Minister visited India it was included as one of the top items on the agenda for bilateral talks, when that didn’t work they were told that they had earlier hired a low ranking/junior lawyer who could not prevail vis-à-vis the Amicus Curae. We advised them to change the lawyers- which they did- then pay compensation to those affected by the mining operations on the Indian side of the boundary. We expect positive results; we’ll do this not just because we want a part of stock of Lafarge, but because they are our client and it is our duty and obligation to render all possible help and assistance to them.
In Singapore we had an investment meeting recently and one of the Singapore Airline investor said- I am quoting him these are not my words- that Bangladesh is the best place to do business but you have to know certain people. Now, about country branding, it is not nice to hear those awful things about us many years after Henry Kissinger had said that Bangladesh was going to be an international basket case (1971). We have not somehow improved our image much following years of military and quasi military government rules. There is so much said on country branding. Chinese are complaining that with this branding (incredible India!) India is taking away lots of things from China. I don’t know how far this is true, but when I watch the T.V. and that brand comes up on the monitor, I’m stunned and it creates a big impact on me. Hence maybe we should use some such stunning and fully connotative country brand to change and improve our hackneyed image which in any case is not at all representative of the ground realities and quality of life and people of Bangladesh. We can even go back to the Shonaton Bangla or Shonar Bangla or whatever as possible brand candidates.
Now about the Bengali diaspora; I don’t think our diaspora has graduated to the level of China or India. We have created many facilities for them, and many incentives, but they are still in speculative land purchase or other forms of accumulation of assets, not in direct investment as such. Our friend from Japan said that certain companies have been given a certain tax concession, but another company has not been. I would request him to please approach the telecom regulatory commission. I request him to do that but all I can tell him now is what Prof. Papanek has taught us : a definition of under-development. Underdevelopment is a state where nothing can be done because everything has to be done at the same time ( J.Buchanan).
Somebody mentioned about savings investments gap in Bangladesh, that the savings are higher than investment which means that the economy will contract. Now where do we begin? It’s a simultaneous approach and about restructuring, root and branch reforms. I can assure the audience that we’ll do it almost on a daily basis, we’ll bring the required incremental reforms, but in our own sort of ways because we do feel the necessity of making things easier, less time consuming, shorten the process of fast registration and we will go online and we have updated our websites. We will spare ourselves no pains and make sure that the changes bring about perceptible, visible improvements in investment processing and management.
Now, to close these remarks, we will say what attracts the foreign investment, we all know that; raw materials, other resources etc., the size of the market, policy making standards, technical progress, sanctity of contracts that how much reliance can be placed when the government signs a contract, how a deal is broken or honored. These are as important as physical and legal infrastructures. We often have protracted litigation costing much money but we don’t want to do it. We believe that it is “In the interest of Justice that there should be an end to all litigation”- these are not my words, these are the words of rulers and jurists and judges. I feel that organizational management standards, political stability, equal treatment in investment, etc. etc. are critical issues. Investors are seeking two things, in my opinion, security of the investment and the profitability of investment to which all these factors contribute and I think Bangladesh scores very high points on both. You cannot make such profits anywhere in the world and foreign investors have repeatedly told me that no one has ever lost money in Bangladesh. Therefore, please come and invest in Bangladesh before it gets too crowded!
Thank you so much!
We have a multi-layered system of decision-making; we all belong in the domain of political and economic governance so I leave it to that. Board of Investment has got nothing to do with sanction of foreign loan. There is a committee which is housed in the Board of Investment backed by two officials of the Bangladesh Bank. Bangladesh Bank processes it and then it goes to the relevant committee. It is up to them to decide on how much and to what extent to allow foreign investors to borrow from the domestic market.
On FDI flows I have seen that it tends to follow a special pattern, if you look at the global figures of the last twenty or twenty-five years, you will find that South East Asia, South Asia, Latin America, America, Europe, India, Japan and China constitute clear patterns with South Asia, which is the least integrated economic region in the world, getting the least. India was closed in the past but of late it has opened up and is getting increased inflows of investment; in fact it can get a lot more than it is getting now. FDI is supply-led not demand-following.
We may need ten billion dollars of FDI but that will not be guaranteed. Why does Vietnam get so much? Clearly, because of American investors who lead the table. Sri Lanka never lost FDI from the trend flow despite having thirty years of civil war. Like Mirza Azizul Islam said just now that in FDI there are elements of randomness for which clear cut explanations may not always be possible. We say it may be that the country which has democracy and where decision making is transparent etc. would attract more FDI. Perhaps, but that is again a mere assumption.
How do we treat our existing investors? I will give you an example: In the Lafarge plant, the Indian court ruled that the supply of limestone will be stopped and we got the message. That Lafarge is our client, and that my client doesn’t owe anything to me but I owe everything to my client because I depend on him or her for my subsistence, for my survival, for my continuance created a deep sense of anxiety in our minds. The President of Lafarge was visiting Bangladesh. I asked him to accompany the Foreign Minister of Bangladesh who was going to India at that time and they did so. When the Honorable Minister visited India it was included as one of the top items on the agenda for bilateral talks, when that didn’t work they were told that they had earlier hired a low ranking/junior lawyer who could not prevail vis-à-vis the Amicus Curae. We advised them to change the lawyers- which they did- then pay compensation to those affected by the mining operations on the Indian side of the boundary. We expect positive results; we’ll do this not just because we want a part of stock of Lafarge, but because they are our client and it is our duty and obligation to render all possible help and assistance to them.
In Singapore we had an investment meeting recently and one of the Singapore Airline investor said- I am quoting him these are not my words- that Bangladesh is the best place to do business but you have to know certain people. Now, about country branding, it is not nice to hear those awful things about us many years after Henry Kissinger had said that Bangladesh was going to be an international basket case (1971). We have not somehow improved our image much following years of military and quasi military government rules. There is so much said on country branding. Chinese are complaining that with this branding (incredible India!) India is taking away lots of things from China. I don’t know how far this is true, but when I watch the T.V. and that brand comes up on the monitor, I’m stunned and it creates a big impact on me. Hence maybe we should use some such stunning and fully connotative country brand to change and improve our hackneyed image which in any case is not at all representative of the ground realities and quality of life and people of Bangladesh. We can even go back to the Shonaton Bangla or Shonar Bangla or whatever as possible brand candidates.
Now about the Bengali diaspora; I don’t think our diaspora has graduated to the level of China or India. We have created many facilities for them, and many incentives, but they are still in speculative land purchase or other forms of accumulation of assets, not in direct investment as such. Our friend from Japan said that certain companies have been given a certain tax concession, but another company has not been. I would request him to please approach the telecom regulatory commission. I request him to do that but all I can tell him now is what Prof. Papanek has taught us : a definition of under-development. Underdevelopment is a state where nothing can be done because everything has to be done at the same time ( J.Buchanan).
Somebody mentioned about savings investments gap in Bangladesh, that the savings are higher than investment which means that the economy will contract. Now where do we begin? It’s a simultaneous approach and about restructuring, root and branch reforms. I can assure the audience that we’ll do it almost on a daily basis, we’ll bring the required incremental reforms, but in our own sort of ways because we do feel the necessity of making things easier, less time consuming, shorten the process of fast registration and we will go online and we have updated our websites. We will spare ourselves no pains and make sure that the changes bring about perceptible, visible improvements in investment processing and management.
Now, to close these remarks, we will say what attracts the foreign investment, we all know that; raw materials, other resources etc., the size of the market, policy making standards, technical progress, sanctity of contracts that how much reliance can be placed when the government signs a contract, how a deal is broken or honored. These are as important as physical and legal infrastructures. We often have protracted litigation costing much money but we don’t want to do it. We believe that it is “In the interest of Justice that there should be an end to all litigation”- these are not my words, these are the words of rulers and jurists and judges. I feel that organizational management standards, political stability, equal treatment in investment, etc. etc. are critical issues. Investors are seeking two things, in my opinion, security of the investment and the profitability of investment to which all these factors contribute and I think Bangladesh scores very high points on both. You cannot make such profits anywhere in the world and foreign investors have repeatedly told me that no one has ever lost money in Bangladesh. Therefore, please come and invest in Bangladesh before it gets too crowded!
Thank you so much!