Although many local investors hold the view that the political uncertainty now prevailing in Bangladesh is not congenial to foreign investment, Mominul Islam, Managing Director & CEO, Industrial Promotion and Development Company of Bangladesh Ltd. (IPDC Bangladesh Ltd), is for one who looks at the investment scenario positively. "The present Investment scenario in Bangladesh is very investment friendly and Foreign Direct Investment (FDI) has been identified as one of the main propellers for the economic growth in Bangladesh. Institutions both from the public and private sector are working for the FDI development." IPDC has been providing financial solutions for the private sector industrial development since 1981 as well as playing an important role in financing the private sector. The company has also provided financial solutions for a number of foreign investments.

Why investors should come to Bangladesh

Mominul says one of the big strengths of Bangladesh as far as attracting FDI is concerned is that the GDP of the country has grown quite steadily, around 6.5%, for the last couple of years. "And this is expected to grow further. Besides we have the EPZs, where various facilities are available. The infrastructure of the country is improving day by day. Today, almost all parts of the nation are networked with road connection. Roads are well supported by an adequate number of bridges and culverts. Many international flights are operating regularly. Chittagong sea port is functioning more efficiently now. Also, the government is planning to construct a new express highway between Dhaka and Chittagong, which will reduce the time to travel between these cities by more than 50%." Mominul expects communication to improve further. "The government is now planning to establish another submarine cable connection which will definitely boost the ICT sector."

There are other positive factors, observes Mominul. The geographic location of the country is ideal for global trades as the country has convenient access to international sea and air routes. He also thinks our homogenous society and a population gifted with great resilience in the face of adversity (e.g. natural calamities) are plus points.

Low-cost labour and huge tax incentives for foreign investors hold greatest attraction for investment in Bangladesh, according to Mominul. "Tax incentives are available for 5 to 7 years for investors, in general. However, for power generation exemption is allowed for 15 years. There is no import duty for export oriented industry. Moreover, double taxation can be avoided in case of foreign investors on the basis of bilateral agreements. There is exemption of income tax up to 3 years for expatriate employees."

Referring to the issue of company ownership and repatriation of profits and sales proceeds the IPDC managing director says, "Foreign investors can set up ventures either with full ownership or in collaboration with local partners. An investor can wind up investment either through a decision of the AGM or EGM (extraordinary general meeting). Once a foreign investor completes the formalities to exit the country, he or she can repatriate the sales proceeds after securing proper authorization from the Central Bank."

Sectors with high potential for attracting FDI

Mominul thinks the following sectors are of prime benefit for both FDI and the country.

• Agriculture: Agriculture contributes 21.77% of the GDP. 51.69% of the country's workforce is engaged in this sector. Agricultural goods account for the second highest export earnings. "We have a very fertile land. If foreign investors focus on this sector then they will introduce the best international agro practices and machineries and that will definitely increase the productivity of the sector. If we can strengthen the backbone of this sector then definitely better results will be achieved."

• Manufacturing Industry: A huge chunk of our industry is based on Garments & Textiles. "We should definitely diversify our focus and explore other sectors like electronic goods. Other possible sectors can be Construction, Power Generation etc. Demand for power in Bangladesh is enormous and is increasing day by day. There is a substantial gap between supply and demand. Moreover tax exemption for this industry is for a period up to 15 years."

Pointing out that most of our FDI is for Service oriented industries like telecommunications, banking & finance and oil & gas exploration, Mominul says, "We can not expect our economy to grow only with these sectors so we need to concentrate on other important sectors simultaneously."

Still a lot of challenges

Mominul acknowledges that even though there exists a highly investment friendly environment some foreign investors may prefer to wait until a democratic government comes to power.

Then there is the country's image problem. He believes participation in international trade shows, fairs and other promotional activities are necessary for giving the right impression to foreigners.

Other areas that need to be addressed, according to Mominul, are:

• Corruption: Corruption needs to be controlled in a proper manner.

• Labour Policy: Government must ensure proper implementation of labour policy.

• IPR: Intellectual Property Rights (IPR) law needs to be implemented and practised properly.

• Gas and Electricity: Proper supply of gas and electricity should be ensured to the investors.

• Board of Investment: Board of Investment must ensure that it has a very efficient and active one stop service for foreign investors.

• Political Stability: Political stability is of utmost importance and needs to be ensured so that the positive image of the country is communicated to the rest of the world and foreign investors do not hesitate to come to Bangladesh.

• Trade Bodies: Trade bodies in the country have a very important role to play. They should be more proactive and establish good bilateral trade agreements with different countries.r

ET Report