Govt weighs 3 firms\' bid for equity investment abroad

The authorities are weighing three local companies' applications for permission to making equity investment worth US$37.44 million abroad under their overseas business-expansion plan, officials said.  
The companies are Akij Jute Mills Ltd with a proposed investment of $ 20 million for acquisition of two companies in Malaysia  while Ha-Meem Group $ 10.44 million for setting up a garment factories  in Haiti and Nitol-Niloy Group for establishing Gambia Commerce and Agriculture Bank Ltd in Gambia with a proposed investment of $7.0 million.
Earlier, the three leading companies had applied to Bangladesh Bank (BB) for allowing them to invest foreign remittance in these ventures abroad for business expansion.
The BB sent a letter to the Ministry of Finance (MoF) on May 02 for considering the proposals.
Finance Minister AMA Muhith suggested submitting the issue to the cabinet committee on economic affairs for taking decision in its meeting this week.  
And following the minister's directive, the finance division which is under the MoF has sent the proposal to the cabinet division.
"We have sent their (companies) equity-investment proposals to the Cabinet Division for permission by the cabinet committee on economic affairs," a high official of the MoF told the FE.
The central bank, however, said the present amount of foreign-exchange reserves could fulfill only seven to eight months' import (commodities and capital machinery) requirements.
It pointed out that there is sufficient idle money (excessive liquidity) in the baking channels that badly needed to be invested.
The amount of local investments should be at least 32 per cent out of the total for achieving the desired level of growth of the country's gross domestic product (GDP).
The central bank suggested that the government take decision very prudently for allowing investment abroad, with utmost consideration for encouraging more local investment in the country.
In the meantime, the government has taken a decision to create $10 billion Bangladesh Sovereign Fund within five years (each year $2.0 billion).
The government has also formed an export-development fund (EDF) worth $2.5 billion for importing capital machinery at low-rated interest for increasing the country's exports.
For attracting more local and foreign investments for creating more employment and socioeconomic development of the country, the government has undertaken a plan for building 100 special economic zones.  
The BB suggested strict monitoring so that foreign currencies being sent abroad for investment should not be diverted to other sectors, return of profits to the country of origin, considering the country's interest for investment in the potential sectors and ensuring jobs for local people abroad.
The Foreign Exchange Regulation Act 1974 restricts equity investment abroad. And it is necessary to take government permission as per FER Act 1974 for offshore equity investment.
There are some renowned established local companies in the country. They are capable of making investment abroad. The global economic meltdown has crippled the country's export growth and flow of remittance.
Considering the situation, if export earnings and flow of remittances are crippled further, then such kind of equity investment abroad may help the country earn foreign currencies, the company people think.  
    talhabinhabib@yahoo.com