The National Board of Revenue (NBR) has moved to explore ways to lure foreign investors into relocating their factories to Bangladesh with offering them incentives.
To this effect, the revenue board has formed a committee that would devise strategies for the foreign industries planning to relocate especially from China amid the Covid-19 pandemic.
The committee will find out required incentive packages, compare existing benefits with other neighbouring countries, review existing benefits, analyze impacts of industries located in economic zones if new incentives are offered to other industries outside the zones etc.
The NBR formed the four-member committee comprising senior officials of income tax, customs and VAT following the instructions of the Chief Coordinator for Sustainable Development Goals (SDGs) at the Prime Minister's Office (PMO).
The PMO is preparing a work plan to attract the foreign investors who are planning to relocate their industries from different countries to a safe destination.
Earlier, Japan, US and Europe announced their plans to relocate their industries from China to reduce their dependence on a single country. Japan has already declared $2.20 billion financial assistance package for relocation of industries.
The Japanese newspaper 'Mainichi' on May 3, 2020 had named 10 ASEAN countries as relocating destinations for Japanese industries. The name of Bangladesh was not there.
Meanwhile, the PMO sent several proposals to the NBR recommending different fiscal incentives for Japanese industries.
To tap the potential, the government has moved to review its existing rules, regulations and incentive packages, officials said.
On August 20, Prime Minister Sheikh Hasina instructed all agencies concerned to take immediate steps to formulate a comprehensive strategy and future action plan to attract investors to Bangladesh as part of a trend of global relocations in the wake of the Covid-19 pandemic.
The NBR committee will review the existing tax incentives in the industries located in Bangladesh Economic Zones Authority (BEZA) and Bangladesh Export Processing Zones Authority (BEPZA) and compare those with the incentives for the industries located outside the zones.
It will explore what other incentives could be offered to attract the foreign investors who are looking for suitable destination of relocation of their manufacturing units.
The PMO has already conducted a review of incentive packages in India, Vietnam and Thailand.
According to a report of the PMO, obtained by the FE correspondent, India has reduced its corporate tax rate from 30 per cent to 22 per cent but it is 17 per cent for the industrial sector.
Corporate tax rate in Vietnam is 20 per cent and it has signed several FTAs with different alliances including ASEAN-China FTA, ASEAN-India FTA, Vietnam-South Korea FTA, Vietnam-Eurasian Economic Union.
Officials said the government will formulate a future action plan accumulating the recommendations made by various agencies, including the NBR, to attract the industries willing to relocate their manufacturing units.
India has adopted a Plug and Play Model to reap the China Plus One policy of foreign investors.
Under the Plug and Play Model, the country will offer ready facilities in terms of building, utility connectivity, road connectivity and clearances in hand required to start the industry.
According to the PMO analysis, Bangladesh can also follow the Plug and Play Model as BEZA and Bangladesh Hi-Tech Park Authorities are developing economic zones and parks with readymade land, infrastructure and other facilities.
Executive Chairman of BEZA Paban Chowdhury said the country needs to offer competitive benefits to the investors to attract them to Bangladesh.
He said economic zones are ready with ready land, quality utility services and tax incentives to lure investments.
Currently, around 10 economic zones including the largest Bangabandhu Sheikh Mujib Industrial City have been prepared for investors, he added.
A senior tax official said reducing taxes or offering tax incentives is not the only way to attract investments.
Many other factors including port facility, necessary infrastructure, skilled workforce are involved with it, he said.
In 2019, Bangladesh attracted $3.4 billion of foreign direct investment (FDI) while Thailand, Vietnam and India received FDI worth $13.2 billion, $15.5 billion and $49billion respectively.
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