Mr. Ifty Islam, Managing Partner, Asian Tiger Capital Limited:
Monday, 17 May 2010
First thing I'd say based on the branding issue, I find a lot of confused signals, confused views within Bangladesh about do we have a branding problem or not. 0n one hand, I hear that everybody knows that we're Bangladesh and we're in the next 11, we're in the frontier in Goldman sacks list and frontier of J.P. Morgan, people do know about Bangladesh but they're more worried about the energy and structural constraints. My own view is that we're grossly over estimating how much people do actually know about the Bangladesh story.
Secondly we are missing a major opportunity to engage our diaspora as "Brand Ambassadors" in working with the Government, Foreign Embassies and our private sector corporate in helping rebrand the country. Many of our NRBs are in influential positions in Finance, Consulting and the corporate sector more broadly where they can positively influence the image of Bangladesh. We should also actively engage them in any future roadshows.
Finally, I believe the Board of Investment can establish a PPP on investment promotion with FBCCI and other in the private sector to overcome capacity constraints in government and combine our efforts. This is what Indian has done recently with a new Investment Promotion Corporation 51% owned by FICCI and 49% by the Ministry of Commerce. A similar effort by Bangladesh has a much better chance of tackling the major challenge not just of country branding but of attracting FDI more broadly. How do we support investment in Bangladesh, both foreign and domestic investment? Let me give you in 10 minutes if I can, some thoughts that are relevant to the presentations this afternoon and to some just this morning. I think investment promotion overseas and country branding are important .. A second factor is effective investor facilitation and investor servicing . Currently a regularly theme in terms of putting off foreign investment is the energy crisis and the gas adequate gas supply. That's also probably the biggest domestic constraint on investment and maybe one of the reasons why we have so much excess equity in the stock market and in property because domestic companies are unconvinced or unclear about their security to electricity and gas supply.
There are other factors is such as land requisition and I would say on country branding, I think that a lot of work needs to be done and I think that one of the things I find frustrating is that some circularity in the logic between those that argue that we shouldn't rebrand the country until we sort out all of our problems in terms of making sure that investors have a good experience. I think this is grossly underestimating two things, one is just how poor our country perception already is so we have to what I call a branding deficit for Bangladesh so people think a lot worse of the country than we actually are and I think will take a lot of investment and a lot of effort to correct that - country branding is a bit like playing around a supertanker. It always astonishes me how naïve some comments are from some people that they think we are going to do brochures and a few roadshows in a year and suddenly we'll have a change of country brand, and that's ridiculous that's naïve. I've done presentations in 60 countries in my previous career in investment banking and country perceptions change slowly. One of the things we need to avoid is circlular logic and what I find frustrating is that we cannot have an FDI because we do not have energy and infrastructure. But this misses the point that the energy and infrastructure crisis is itself the biggest source of FDI opportunity. We estimate that Bangladesh needs 35 billion dollars of infrastructure investment and that cannot all be generated domestically so FDI is a solution and the opportunity. Coming to the issues of a better investment environment for both domestic and for foreigners is and is that you need to ensure that investors are given support in buying land and
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getting utility connections. I think on this front one of the thing that struck me out in being in Bangladesh is really the contrast with the Government Sector and the Private Sector, in-terms of accountability and transparency. What I mean is if you are in the private sector you make a series of bad decisions then eventually you'll go bankrupt, That isn't the case in the government sector. One of the things that Prof Papanek was warning about and what might happen to if the government does not address issues of income inequality and provision of basic services such as energy is that what we are seeing in Thailand in terms of the recent unrest by the Red Shirts might be a taste of things to come in countries such as Bangladesh . One more thing is that I, you know I think you need to fix this gap in the way the private sector thinks and the problems they face with the government. We need to have PPP and policy making and I think that the Better Business Forum in the Caretaker Government was at least a useful concept in having a more systematic discussion between the private sector and public sector on key issues constraining investments key bottlenecks in the regulatory process and recommend some policy changes some solutions. And then on the regulatory reforms commission, beyond highlighting lots of regulatory bottlenecks everyday, the institution needed to have executive power to solve these problems All these regulations are man-made rules and they can be reformed and they can be changed. And I remember Ahsan Bhai and I went to Hanoi a while back, and were speaking to the Head of Korean Regulatory Reforms Commission, and what struck us was that they have very clear executive authorities given by the Prime Minister even to some extent in overriding parliament authority to actually change the regulations on the spot if they are blocking things so I think we need a more empowered regulatory reforms commission to solve these bottlenecks in terms of problems facing us. Thank you!
Secondly we are missing a major opportunity to engage our diaspora as "Brand Ambassadors" in working with the Government, Foreign Embassies and our private sector corporate in helping rebrand the country. Many of our NRBs are in influential positions in Finance, Consulting and the corporate sector more broadly where they can positively influence the image of Bangladesh. We should also actively engage them in any future roadshows.
Finally, I believe the Board of Investment can establish a PPP on investment promotion with FBCCI and other in the private sector to overcome capacity constraints in government and combine our efforts. This is what Indian has done recently with a new Investment Promotion Corporation 51% owned by FICCI and 49% by the Ministry of Commerce. A similar effort by Bangladesh has a much better chance of tackling the major challenge not just of country branding but of attracting FDI more broadly. How do we support investment in Bangladesh, both foreign and domestic investment? Let me give you in 10 minutes if I can, some thoughts that are relevant to the presentations this afternoon and to some just this morning. I think investment promotion overseas and country branding are important .. A second factor is effective investor facilitation and investor servicing . Currently a regularly theme in terms of putting off foreign investment is the energy crisis and the gas adequate gas supply. That's also probably the biggest domestic constraint on investment and maybe one of the reasons why we have so much excess equity in the stock market and in property because domestic companies are unconvinced or unclear about their security to electricity and gas supply.
There are other factors is such as land requisition and I would say on country branding, I think that a lot of work needs to be done and I think that one of the things I find frustrating is that some circularity in the logic between those that argue that we shouldn't rebrand the country until we sort out all of our problems in terms of making sure that investors have a good experience. I think this is grossly underestimating two things, one is just how poor our country perception already is so we have to what I call a branding deficit for Bangladesh so people think a lot worse of the country than we actually are and I think will take a lot of investment and a lot of effort to correct that - country branding is a bit like playing around a supertanker. It always astonishes me how naïve some comments are from some people that they think we are going to do brochures and a few roadshows in a year and suddenly we'll have a change of country brand, and that's ridiculous that's naïve. I've done presentations in 60 countries in my previous career in investment banking and country perceptions change slowly. One of the things we need to avoid is circlular logic and what I find frustrating is that we cannot have an FDI because we do not have energy and infrastructure. But this misses the point that the energy and infrastructure crisis is itself the biggest source of FDI opportunity. We estimate that Bangladesh needs 35 billion dollars of infrastructure investment and that cannot all be generated domestically so FDI is a solution and the opportunity. Coming to the issues of a better investment environment for both domestic and for foreigners is and is that you need to ensure that investors are given support in buying land and
Continued to page 14
getting utility connections. I think on this front one of the thing that struck me out in being in Bangladesh is really the contrast with the Government Sector and the Private Sector, in-terms of accountability and transparency. What I mean is if you are in the private sector you make a series of bad decisions then eventually you'll go bankrupt, That isn't the case in the government sector. One of the things that Prof Papanek was warning about and what might happen to if the government does not address issues of income inequality and provision of basic services such as energy is that what we are seeing in Thailand in terms of the recent unrest by the Red Shirts might be a taste of things to come in countries such as Bangladesh . One more thing is that I, you know I think you need to fix this gap in the way the private sector thinks and the problems they face with the government. We need to have PPP and policy making and I think that the Better Business Forum in the Caretaker Government was at least a useful concept in having a more systematic discussion between the private sector and public sector on key issues constraining investments key bottlenecks in the regulatory process and recommend some policy changes some solutions. And then on the regulatory reforms commission, beyond highlighting lots of regulatory bottlenecks everyday, the institution needed to have executive power to solve these problems All these regulations are man-made rules and they can be reformed and they can be changed. And I remember Ahsan Bhai and I went to Hanoi a while back, and were speaking to the Head of Korean Regulatory Reforms Commission, and what struck us was that they have very clear executive authorities given by the Prime Minister even to some extent in overriding parliament authority to actually change the regulations on the spot if they are blocking things so I think we need a more empowered regulatory reforms commission to solve these bottlenecks in terms of problems facing us. Thank you!