Despite having a huge investment potential, Bangladesh gets less FDI from Korea mainly due to delay in customs clearance, high-interest loan for foreign investors, discrimination in export incentives for them and hassle of reissuing work permit visa.
The Korean investors also cited restrictions on remittance of profits, arbitrariness of corporate income tax, and lack of transparency in corporate information as bottlenecks.
Edward Kim, Director of Korea Bangladesh Chamber of Commerce & Industry (KBCCI), made the disclosure at a seminar titled “Korea-Bangladesh Economic Cooperation-Sharing Development Experience and Exploring Opportunities” in Dhaka on Tuesday, marking the 50th anniversary of establishing diplomatic relations between the two countries.
He informed that Korea is the 3rd largest foreign direct investment country for Bangladesh. Korean investors invested $313 million in different sectors like textile, leather, trading, cement, construction, IT and other sectors in Bangladesh in 2022.
Describing the trade relationship between Korea and Bangladesh, Edward Kim stated that Bangladesh imported products worth $2357 million from Korea in 2022. On the other hand, Bangladesh exported products worth $677 million to Korea during the same period.
While speaking at the programme, Executive Director of Policy Research Institute of Bangladesh Dr Ahsan H Mansur said the country’s economy may face a big challenge if effective measures are not taken.
“We need to build sustainable and smart industry. We have to focus on modern technology as well. We should learn from Korea how the country can overcame its economic problems since its beginning. Now we need cooperation from the country to address our challenges,” he added.
The economist also recommended that the government should further lay emphasis on education to create skill manpower, and strengthen institutional capacity.
New challenges for building Smart Bangladesh
Dr. Jaehan Cho, Director of Industrial Innovation Policy Division at Korea Institute for Industrial Economics and Trade (KIET), said industrial policy is a key element for developing a country. Bangladesh set four pillars like smart citizen, smart government, smart society and smart economy to build Smart Bangladesh by 2041.
“Digital economy is a new challenge for the country as digitalization has been expanding across Global value chains (GVCs). Digital Companies are the key players. However, Bangladesh has to focus on attracting digital companies and providing services,” Dr. Jaehan recommended.
He also stated that knowing how to use advanced tech is more important than possessing it, and keeping balance with traditional GVC upgrading strategies. GVC strategy based on manufacturing/cost-advantages remains valid. Leverage manufacturing sector maintains economic stability and employment.
Mentioning two-way strategy for potential collaborations with Korea, Dr. Jaehan suggested attracting Korean manufacturing for new production and markets, and attracting Korean digital companies promoting overseas expansion.
Dr Celia Shahnaz, professor at Bangladesh University of Engineering and Technology (BUET), said the relationship between the two countries continues for 50 years. “Now we can expand our technology transformation to adopt latest technology in our industries. Besides, climate resilience also should be focused,” she added.
She pointed out that there is a huge potential to increase bilateral trade. “So, we need to work together. We hope that collaboration of Bangladesh and Korea will be further stronger in future,” she hoped.
Economic partnership agreement discussion on the table
Korean Ambassador to Bangladesh Park Young Sik said Korea has been with Bangladesh from the very beginning of the growth and prosperity of Bangladesh’s RMG industry.
“Two-way trade surpassed $3 billion last year. However, Korea and Bangladesh are currently discussing the negations of bilateral Economic Partnership Agreement. EPA, if reached, will greatly increase bilateral trade in the mutually beneficial ways,” he said.
The envoy said most notable in recent investment is the increase of manufacturing industries in automobiles, mobile phones and electronics in the joint venture with local partners. The first country-specific private Export Processing Zone, KEPZ, established in Chattogram has been a symbol of Korea-Bangladesh business ties.
He added that the LDC graduation will give a positive signal to the international business community, making it easier to attract foreign capital needed for Bangladesh’s infrastructure development. “Korea wishes to become an important partner in Bangladesh’s infrastructure development as we have done in the past in the RMG industry.”
“It is right time to discuss how to enhance bilateral cooperation in the next fifty years. In this regard, today’s seminar is very meaningful and timely. I hope that scholars and academics will have more opportunities to share development experiences.”
State Minister for ICT Division Zunaid Ahmed Palak said his government has taken a good number of initiatives to adopt AI technology for sustainable economy.
“I urge Korea to be Bangladesh’s close friend and partner to attain our next goal of building Smart Bangladesh by 2041,” he said.
State Minister for Foreign Affairs Md Shahriar Alam said, “We need comprehensive strategic partnership with South Korea considering further expanding duty-free coverage for Bangladeshi products, and continuing tariff concession benefits beyond 2026. Japan and EU extended up to 2029. We need cooperation and collaboration to build smart industry in the country through investing and transferring technology,” he added.
He added: “We want further support from Korea. If anyone invests in Bangladesh will benefit. We hope that out diplomatic, economic and people-to-people relations will continue in future as well.”
