Home ›› 13 Mar 2023 ›› Front
Bangladesh is the best option for foreign investors in the South Asian region, as the country offers a good business environment with various fiscal and non-fiscal incentives, such as tax holidays, reduced import tax on capital machinery, low VAT and one stop services for trade.
The country is expecting $100 billion in investments, and investors can focus on sectors with potential, such as readymade garment (RMG), textile, especially manmade fibre, ICT, footwear, heavy and light engineering and pharmaceuticals.
Industry leaders and experts made the remarks at several panel discussions of the Bangladesh Business Summit 2023 on Sunday, held at the Bangabandhu International Conference Center (BICC).
Many foreign and local exporters, businesses, government officials, and rights activists expressed their opinion in the summit.
To address Bangladesh’s investment potentiality, the prime minister’s Private Industry and Investment Adviser Salman F Rahman said, “Bangladesh is the second largest apparel manufacturing country, and it will be the 9th largest consumer market by 2030.
“Moreover, 34 million people will be middle income and affluent class by 2025. The country will be a $1 trillion GDP country by 2041.”
He continued, “If you invest in Bangladesh, you could save 47 per cent - 84 per cent worker’s wages, 41 per cent – 69 per cent manager’s salary, 6 per cent – 89 per cent water cost, and 10 per cent – 55 per cent electricity cost.
“The next global crisis will be power and human resource, and we have surplus electricity capacity. Besides, 68.4 per cent or 114 million of the country’s total 170 million people are of working age.”
Why Bangladesh?
According to the Bangladesh Bureau of Statistics (BBS), the country received $2.9 billion in foreign direct investments (FDI) in 2021, has the 8th largest population, $465 billion economy, which is 32nd largest in the world, and a 6.6 per cent 10-year CAGR of Real GDP growth.
Even amid a global economic crisis and impacts of Covid-19 pandemic, the country’s 60 month average inflation was 5.75 per cent, and it secured $52.08 billion earnings from export in FY22. The country was also able to retain its export growth in the first eight months of FY23.
Bangladesh is a gateway to India and China, while connecting regionally important new markets such as Bhutan, Nepal and Myanmar. It can provide access to 2.9 billion consumers who are spending more than $8.53 trillion annually.
Besides, the country is setting up 100 specialised economic zones, where investors will enjoy special tax rate, as well as low duty for capital machinery imports.
Youngone Corporation, a South Korean textile giant doing business in Bangladesh, Chairman Ki-Hak Sung said, “Bangladesh has huge potential in the manmade fibre (MMF) sector, and investors may invest here.
“We are manufacturing 90 per cent of our clothes with MMF, and we created a strong supply chain of the fibre. Besides, the commodity market in future will be extremely difficult. The investors could invest in the sector, along with the food processing industry, for exports.”
He added, “We managed to cut costs significantly by using solar power. We are getting 40MW electricity from the solar system, and having another 25MW from the same source. So, solar power generation can be a potential sector for foreign investors.”
Bangladesh Textile Mills Association (BTMA) Director Azizur R Choudhury said, “As brands are shifting from China, and the European textile manufacturing sector becoming costlier day by day, Bangladesh will be the next sourcing hub for RMG.” Echoing the same, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said, “MMF-based clothes occupy 75 per cent of the global demand, but Bangladesh is exporting 80 per cent cotton-based RMG products.
“We have huge potential in the MMF sector, and investors can invest in the industry. We have set a target of achieving $100 billion from apparel export by 2030. Bangladesh will be the next recycle-based clothes hub and investors would invest in this sector as well.”
During the panel discussion, government officials and business leaders addressed the ongoing infrastructure development in Bangladesh, such as 100 economic zones, electricity supply, and one stop service. They also addressed the country’s available human resources. Former The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President and Hameem Group Managing Director AK Azad said, “Why would you invest in Bangladesh? The answer is, for cost competitiveness, available human resources. “Nearly 2 million people are entering the job market in the country every year. The government is providing numerous facilities to the investors. If I purchase land in an economic zone, I will get every utility connection. The government is providing one stop service to the investors.”
Business environment must improve
During the discussion, business leaders raised questions on high energy prices. They claimed that due to the recent hike in gas and electricity prices, their production costs have gone up by 10 per cent – 15 per cent.
Besides, interruptions in power supply are hampering their production. They also emphasised on 4IR, where Bangladesh is lagging behind.
BTMA Azizur R Choudhury said, “The country is importing only 70 per cent gas through LNG imports, but the price is set on import rate basis. This is unfair. The gas price must be set based on both the import and domestic rates. Besides, we need cash incentives for MMF.”
Salman F Rahman responded by saying, “Although the country’s energy price is high, it is a global crisis. The government is working to reduce the prices. Considering 4IR, the country is putting a focus on research.
“Students can now learn to code from the primary school level.”
Addressing the event, Textile and Jute Minister Golam Dastagir Gazi said, “We increased gas and power prices because we do not want to become another Sri Lanka. You are demanding some facilities.
“Please create a file for all your demands and go to the prime minister. She will resolve your issues.”
During the discussion, panelists pointed out that though Bangladesh’s progress is satisfactory to investors, it is not yet up to the mark. The country should improve its business environment further.
They also said poor customs facilities, bureaucratic red tape, and difficulties in getting certification and renewals are also major barriers to doing business in the country.
Marubeni Corporation CEO Masumi Kakinoki said, “Bangladesh has a huge opportunity to receive foreign investments, and the country’s development progress is excellent. However, the country should focus on how to improve its ICT sector and customs facilities.”
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Executive President Mohammad Hatem said, “We have to spend $30,000-$40,000 per year to renew several certificates, which increases our cost of production.
“Brands and the government should set up a unified certification system. Moreover, the buyers are not paying fair prices, and we have to work on resolving this issue.”
Global partners praise Bangladesh
Bangladesh’s global partners praised the country’s development, hoping that investors will come here with big investments. They also said the country is on the right track.
Anne-Marie Trevelyan, Minister of State, Foreign, Commonwealth and Development Office of the United Kingdom (UK) said her government is committed to supporting Bangladesh as a commonwealth country. “Standard Chartered and Unilever are playing a vital role in Bangladesh’s economy.”
Korea Trade-Investment Promotion Agency (KOTRA) Director General Jong Won Kim said, “Bangladesh has a huge potential to receive FDIs, but it has to improve its business environment. The country’s trading, banking, and logistical support is good, but the government has to listen to investors’ demands. LG, Samsung, Hyundai and many other Korean giants will start direct manufacturing in Bangladesh.”
Commerce minister Tipu Munshi said, “To improve the business environment, the country has set up one stop services, where investors will get all facilities from a single table. My ministry is also providing all kinds of support to the investors.”
