Ten major hiccups cloud BD investment climate
Thursday, 9 December 2010
FE Report
There remain 10 major constraints having a negative impact on the investment climate of Bangladesh -- that include corruption, electricity crisis, political instability and legal framework, according to a report of Asia Society, Washington.
The report has been made public on Wednesday at a luncheon meeting of American Chamber of Commerce in Bangladesh (Amcham). Jack Garrity, Executive Director, Asia Society, has formally launched the report, styled 'Enhancing Trade and Investment between the United States and Bangladesh,' at a local hotel.
The report highlighted trade and economic relations between Bangladesh and the US, US-Bangladesh trade and investment issues, impediments to investment, and finally trade and investment agenda for the country.
James F. Moriarty, US Ambassador to Bangladesh, Sajeeb A.Wazed, who provides advice to Prime Minister Sheikh Hasina on Information Technology Services, Dr. Gustav Papanek, President, Boston Institute for Developing Economies and Aftab-ul Islam, President, Amcham also spoke on the occasion, among others.
According to the report, the major constraints to investment in Bangladesh include electricity, access to finance, political instability, corruption, access to land, inadequately educated workforce, tax rates, customs & trade regulation practices etc.
The report said corruption has long been recognised as a severe problem in Bangladesh. Bangladesh ranked among the lowest countries in Transparency International's corruption surveys from 2001 to 2007-lower than Nigeria, Somalia, Myanmar, Afghanistan and Sudan.
The report, however, said some progress has been made over the last two years and the country's ranking has improved somewhat.
"Despite this improvement, the country remains riddled with corruption throughout the bureaucracy. At the higher levels, there often have been large payments for project tenders and approvals, and at the lower levels, smaller amounts in the form of speed money required for expedited processing and approval of application," reads the report.
On power crises, the report said power shortage and blackouts of up to eight hours a day are common in Bangladesh causing serious problems facing the government, industry and the urban population.
The report said Bangladesh's revenue board needs urgent overhaul if the country wants to attract more foreign investors.
Criticising the legal framework, the report, said the legal framework in Bangladesh is a major impediment to foreign investors in a number of areas, particularly land acquisition, dispute settlement and in the area of intellectual property rights.
Jack Garrity, while lunching the report, said US export to Bangladesh increased by 33 per cent between 2004 and 2009, while Bangladesh's export to US during the period by 61 per cent. The export from Bangladesh to the US was $3.3 billion in 2009.
According to the report, Foreign Direct Investment (FDI) in Bangladesh in 2009 was $700.20 million, of which FDI from the US was $42.90 million or 6.1 per cent of the total FDI.
The total amount of US investment in Bangladesh as of 2009 was $700.20 million. The US investment in Bangladesh has focused mainly on the energy and power sectors (79 per cent), the financial sector, along with some in manufacturing, the report elaborated.
The report underscored the need for striking a deal between Dhaka and Washington on trade and investment after the Bangladesh government had regretted signing Trade and Investment Framework Agreement (TIFA) with the US.
"An alternative approach would be to establish a US-Bangladesh Economic and Trade Cooperation Forum. This option would also create a platform for mutual cooperation and regular higher level dialogue in which both sides could raise issues related to bilateral trade and investments," reads the report.
Jack Garrity said the country image has to be changed to attract FDI. Elaborating, he said, no report on foreign tours of Prime Minister Sheikh Hasina appeared in the European media despite the fact that she toured many countries during the last six months.
On the contrary, news like blockade, hartal and natural disasters often are covered by foreign news media.
Ambassador Moriarty at the meeting said, Bangladesh offers boundless opportunity for trade and investment. A vibrant and dynamic private sector has led the country to two decades of consistent economic growth, and has created a world-class ready-made garment industry.
He said Bangladesh is well positioned to build on this success by diversifying its export industries and supplanting China as the most competitive producer of other labour-intensive goods.
However, in order to take full advantage of these opportunities, it will be critical for Bangladesh to take steps to develop its infrastructure and improve its investment climate, the US ambassador in Bangladesh added.
He also said, investors consistently identify energy shortage as the most significant obstacle to higher economic growth in Bangladesh. At the same time, Bangladesh will need to develop and modernise its port, transportation and communication infrastructure to facilitate increasing trade and improve the country's competitive position, Moriarty added further.
"I have been encouraged to see recent progress in energy projects, including several power projects involving US companies. While it will take a sustained effort to ensure that these projects are implemented, in the longer term it may be even more important to address some of the bureaucratic and institutional constraints that have contributed to the current energy shortage," Moriarty said.
Through USAID programmes, we are assisting small and medium enterprises to improve their capacity to export shrimp, leather products and other goods that help diversify Bangladesh's export, he said.
Sajeeb Wazed in his speech said the incumbent government will add another 3,000 megawatt of electricity by the next month to the national grid. He said the government has, meanwhile, finalised a transit deal with India.
"We are in favour of enhanced connectivity with South Asian countries to reap maximum benefit out of our geographical advantages," Sajeeb said.
Criticising Bangladesh Nationalist Party for its stand against transit, Sajeeb Wazed, also the son of Prime Minister Sheikh Hasina, said "they (BNP) perhaps believe in isolationism instead of nationalism."
He said 280 projects have so far been undertaken by the government to establish a digital Bangladesh.
There remain 10 major constraints having a negative impact on the investment climate of Bangladesh -- that include corruption, electricity crisis, political instability and legal framework, according to a report of Asia Society, Washington.
The report has been made public on Wednesday at a luncheon meeting of American Chamber of Commerce in Bangladesh (Amcham). Jack Garrity, Executive Director, Asia Society, has formally launched the report, styled 'Enhancing Trade and Investment between the United States and Bangladesh,' at a local hotel.
The report highlighted trade and economic relations between Bangladesh and the US, US-Bangladesh trade and investment issues, impediments to investment, and finally trade and investment agenda for the country.
James F. Moriarty, US Ambassador to Bangladesh, Sajeeb A.Wazed, who provides advice to Prime Minister Sheikh Hasina on Information Technology Services, Dr. Gustav Papanek, President, Boston Institute for Developing Economies and Aftab-ul Islam, President, Amcham also spoke on the occasion, among others.
According to the report, the major constraints to investment in Bangladesh include electricity, access to finance, political instability, corruption, access to land, inadequately educated workforce, tax rates, customs & trade regulation practices etc.
The report said corruption has long been recognised as a severe problem in Bangladesh. Bangladesh ranked among the lowest countries in Transparency International's corruption surveys from 2001 to 2007-lower than Nigeria, Somalia, Myanmar, Afghanistan and Sudan.
The report, however, said some progress has been made over the last two years and the country's ranking has improved somewhat.
"Despite this improvement, the country remains riddled with corruption throughout the bureaucracy. At the higher levels, there often have been large payments for project tenders and approvals, and at the lower levels, smaller amounts in the form of speed money required for expedited processing and approval of application," reads the report.
On power crises, the report said power shortage and blackouts of up to eight hours a day are common in Bangladesh causing serious problems facing the government, industry and the urban population.
The report said Bangladesh's revenue board needs urgent overhaul if the country wants to attract more foreign investors.
Criticising the legal framework, the report, said the legal framework in Bangladesh is a major impediment to foreign investors in a number of areas, particularly land acquisition, dispute settlement and in the area of intellectual property rights.
Jack Garrity, while lunching the report, said US export to Bangladesh increased by 33 per cent between 2004 and 2009, while Bangladesh's export to US during the period by 61 per cent. The export from Bangladesh to the US was $3.3 billion in 2009.
According to the report, Foreign Direct Investment (FDI) in Bangladesh in 2009 was $700.20 million, of which FDI from the US was $42.90 million or 6.1 per cent of the total FDI.
The total amount of US investment in Bangladesh as of 2009 was $700.20 million. The US investment in Bangladesh has focused mainly on the energy and power sectors (79 per cent), the financial sector, along with some in manufacturing, the report elaborated.
The report underscored the need for striking a deal between Dhaka and Washington on trade and investment after the Bangladesh government had regretted signing Trade and Investment Framework Agreement (TIFA) with the US.
"An alternative approach would be to establish a US-Bangladesh Economic and Trade Cooperation Forum. This option would also create a platform for mutual cooperation and regular higher level dialogue in which both sides could raise issues related to bilateral trade and investments," reads the report.
Jack Garrity said the country image has to be changed to attract FDI. Elaborating, he said, no report on foreign tours of Prime Minister Sheikh Hasina appeared in the European media despite the fact that she toured many countries during the last six months.
On the contrary, news like blockade, hartal and natural disasters often are covered by foreign news media.
Ambassador Moriarty at the meeting said, Bangladesh offers boundless opportunity for trade and investment. A vibrant and dynamic private sector has led the country to two decades of consistent economic growth, and has created a world-class ready-made garment industry.
He said Bangladesh is well positioned to build on this success by diversifying its export industries and supplanting China as the most competitive producer of other labour-intensive goods.
However, in order to take full advantage of these opportunities, it will be critical for Bangladesh to take steps to develop its infrastructure and improve its investment climate, the US ambassador in Bangladesh added.
He also said, investors consistently identify energy shortage as the most significant obstacle to higher economic growth in Bangladesh. At the same time, Bangladesh will need to develop and modernise its port, transportation and communication infrastructure to facilitate increasing trade and improve the country's competitive position, Moriarty added further.
"I have been encouraged to see recent progress in energy projects, including several power projects involving US companies. While it will take a sustained effort to ensure that these projects are implemented, in the longer term it may be even more important to address some of the bureaucratic and institutional constraints that have contributed to the current energy shortage," Moriarty said.
Through USAID programmes, we are assisting small and medium enterprises to improve their capacity to export shrimp, leather products and other goods that help diversify Bangladesh's export, he said.
Sajeeb Wazed in his speech said the incumbent government will add another 3,000 megawatt of electricity by the next month to the national grid. He said the government has, meanwhile, finalised a transit deal with India.
"We are in favour of enhanced connectivity with South Asian countries to reap maximum benefit out of our geographical advantages," Sajeeb said.
Criticising Bangladesh Nationalist Party for its stand against transit, Sajeeb Wazed, also the son of Prime Minister Sheikh Hasina, said "they (BNP) perhaps believe in isolationism instead of nationalism."
He said 280 projects have so far been undertaken by the government to establish a digital Bangladesh.