An elite chamber has sought government steps to utilise unused lands of industrial estates of the Bangladesh Small Industries Corporation (BSCIC) for economic zones (EZs), which can attract foreign investment.
"Efforts should have been made to locate some of the EZs in such industrial estates of the BSCIC where the lands are now being used for anything other than industrial operations," the Metropolitan Chamber of Commerce and Industry (MCCI) in Dhaka said.
In its quarterly economic review through March, the leading trade body said there are vast tracts of unutilised lands in the BSCIC's existing industrial units. The government needs to consider these lands for selecting feasible sites of the proposed EZs.
The MCCI noted Bangladesh is lagging far behind in the race of attracting foreign investment whereas countries like Vietnam, Myanmar and China have already set up special economic zones (SEZs) replete with physical infrastructure, including power, road and rail links to attract foreign investment.
"Vietnam has already established 400 SEZs. Recently, Myanmar is making fast progress to catch the waves of global investors," the review said.
In July-February of FY15, the net foreign direct investment (FDI) in Bangladesh increased by 7.15 per cent to US$1,004 million from US$937 million in the corresponding period of FY14.
According to industry insiders, this investment is not enough for the country's development. It needs US$7.4 billion to US$10.0 billion annually for infrastructural development in line with its target of graduating to a middle-income country by 2021.
The review said foreign investors have adopted a 'go-slow' policy in making fresh investments because of their lack of confidence in the business environment, which they attribute to the country's underdeveloped infrastructure, shortage of power and energy, procedural bottlenecks, lack of proper regulatory framework, scarcity of industrial lands, and political uncertainty.
The MCCI analysis suggested that the government need to overcome these obstacles to attract more FDI in the country.
The review said Bangladesh is a safe haven of FDI as the government has offered various incentives, including corporate tax holiday ranging from 5-7 years in certain areas and sectors.
"The government reduced import duty on machinery and spares and allowed accelerated depreciation on cost of machinery and new industries."
"Besides, the incentives also include a liberal regulatory environment characterised by allowance of 100 per cent foreign equity, unrestricted exit policy, full repatriation of dividends and capital and remittance of royalty and attractive incentive package for export-oriented industries." The review, however, underscored the need for restoration of investors' confidence.
However, according to the Board of Investment (BoI) data, foreign investment proposals fell 73.53 per cent in the third quarter under review (January-March of FY'15) from the previous quarter, mainly due to a volatile political environment.
Commitments by foreign investors stood at Tk10 billion during January-March period of FY15, down from Tk39 billion in October-December of FY15.
The number of investment proposals from foreign investors or joint ventures also dropped in Q3 of FY15; only 24 investment proposals, including 8 fully-foreign investment proposals, were registered at the BoI.
The number was 30 in the previous quarter. But local investment proposals rose by 48.13 per cent in the same period.
Local entrepreneurs made a proposal to invest Tk.245.98 billion in 336 proposals during January-March of FY15, while 291 proposals worth Tk.166 billion were proposed in the immediate past quarter.
Among the proposals, the highest 51.89 per cent were registered for agro-based projects, followed by 10.46 per cent in chemicals sector, 8.94 per cent in engineering sector, 8.52 per cent in textiles and 20.19 per cent for the other sectors.
"Once the investment proposals are implemented, it would create employment opportunities for around 53,744 people," the review said.
It said the government has, reportedly, decided to go aggressive in wooing the private entrepreneurs to invest in the economic zones (EZs) of the country.
"Of the 17 EZs approved, three will be developed as private economic zones and one each exclusively for Chinese and Japanese investors in the first phase."
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