Fresh reforms on cards to attract FDI amid Covid-19

Fresh legal reforms are on the cards amid Covid-19 pandemic as the government has failed to overcome Foreign Direct Investment (FDI) drought which is badly impacting the employment and purchasing power of the people.

Government’s multi-faceted efforts have not yielded the expected results to woo foreign investors.

During the Covid-19 pandemic period, foreign investments are being relocated across the world.

Last month, the United Nations Conference on Trade and Development (UNCTAD) annual report on the prospects of FDI titled "World Investment Report 2020" published. It is revealed that Bangladesh saw a record drop in foreign direct investment in 2019, with FDI inflow falling by 55.8 percent to $1.6 billion.

During coronavirus pandemic, a total of 87 foreign firms are shifting their investment out of China. Under these circumstances, the government is desperate to take advantage of this opportunity and entice the foreign firms to do business in Bangladesh. Therefore, steps are being taken to remove all kinds of legal barriers and bureaucratic tangles to foreign investment.

During the coronavirus period, the Bangladesh Economic Zone Authority (BEZA) received two Chinese investment proposals.

The first is that a Chinese company is taking 100 acres of land in Bangabandhu Sheikh Mujib Industrial City for an investment of $ 300 million. They have also deposited money for this. Another is that 60 Chinese firms have shown interest in investing in the Chinese economic zone in Anwara, Chattogram.

Asked about this, BEZA executive chairman Padan Chowdhury said, "We want to see the initiatives taken to attract foreign investment as a benefit." It can be seen that when a big Chinese company invests in one country, others are also encouraged,’ he pointed out.

Meanwhile, a virtual meeting has been held at finance division with all the divisions concerned.

The meeting decided to bring changes to seven important issues related attract foreign investment.

At the same time, proposals on how to improve in the World Bank's business standards in the 'Business Facilitation Index' were sent to the agencies concerned. This information has been known from the minutes of the meeting held on April 26.

ABM Rahul Azad, Additional Secretary, Department of Financial Institutions, also told the meeting that in order to achieve double-digit growth, the amount of investment must be raised to 40 per cent of GDP.

But the investment-to-GDP ratio is still 31.6 percent, while the national savings-to-GDP ratio is 22.83% percent.

There is no chance to increase this rate of savings suddenly.

Consumption has played a big role in GDP growth towards demand. So if you want to raise the investment, there is no alternative to increasing foreign investment.

At the meeting, it was decided to change seven important issues to attract foreign investment.

These include facilitating the opening of a foreign current account under the Foreign Exchange Regulation Act-1948, making it easier for foreign investors to repay dividends of investment in Bangladesh, taking necessary steps to facilitate inflow of remittances from expatriate Bangladeshis.

In addition, specific proposals are sought from the ministry, department or agency concerned on how the existing rules and regulations of the banking sector can be amended to attract foreign investment.

Nargis Morsheda, deputy secretary at the commerce ministry, said a number of rules, including the Companies Act, 1994, have been amended. Registration fee for opening new company has been reduced. At the same time, efforts are being made to attract foreign investors through commercial counsellors in the Bangladesh embassies abroad. At the same time, necessary initiatives are being taken in coordination with BIDA and BEZA.

Abdul Mannan, Senior Assistant Secretary of Finance Division, said that according to the 2nd Perspective Plan, investment in the country needs to be increased to meet the high GDP growth target of 9.99 per cent by 2040. He said new economic polarization is underway in the Covid-19 situation and there is a possibility of relocation of investment and industrial establishments. This opportunity must be taken advantage of. The meeting decided to change seven important protocols to attract foreign investment.

At the meeting, General Manager (Joint Secretary) of Bangladesh Economic Zones Authority (BEZA) Mohammad Hasan Arif said, "We have to accept the economic challenges in the Covid-19 situation." Seminars and web shows can be organised through missions abroad highlighting the country's investment opportunities.

In the case of foreign investment, special attention should be paid to infrastructure, corporate debt, stock market and equity market. He further said that the one-stop service should be fully introduced by the Ministry of Commerce as part of the initiative.