Bangladesh is not getting foreign direct investment at an expected level although the government has taken different initiatives to give easy access to such funds, analysts said yesterday.
They spoke at a dialogue on foreign direct investment and development of Bangladesh, at the monthly luncheon meeting of American Chamber of Commerce in Bangladesh (AmCham), at the Westin Dhaka hotel.
The government agencies do not have a good relationship with the foreign investors, said Aftab ul Islam, former president of the chamber. Sometimes the government agencies harass the foreigners, who actually represent their countries in Bangladesh, he said.
There are very easy rules and regulations for the foreign companies to withdraw investment from Bangladesh, but the reality is different, he said. The exit of Chevron from Bangladesh is going to be the first instance of withdrawing investment from the country, Islam said.
But according to media reports, they are facing difficulties in leaving the market, he said.
Among all tax rates, the corporate tax rate is the highest in Bangladesh and it is 42.50 percent for banks, he said.
India has introduced a flat corporate tax rate of 30 percent and the government has pledged to reduce it further to 25 percent in the next three years, Islam said.
“Although 72 percent of the lawmakers are businesspeople in Bangladesh, I have never heard them of talking about FDI, remittance and technology neutrality issues.”
Expected amount of investments are not coming to the country, although the government has taken a number of initiatives to boost private sector investment and formed Bangladesh Investment Development Authority (BIDA) nine months ago, said Md Nurul Islam, AmCham president.
The private sector investment accounts for 23 percent of the country's gross domestic product, which has also failed to meet the expectations, he said.
Nihad Kabir, president of Metropolitan Chamber of Commerce and Industry, said the tendency to bring repeated changes to the regulatory policies is one of the major problems in Bangladesh.
The policies are sometimes changed in between 9-10 months of their formation, which makes the foreign investors nervous, she said. The country also suffers from a perception problem as well, she added.
The foreign firms could not yet think of Bangladesh as an industrial economy, Nihad said.
“Rather, they think of the country as an agriculture-based economy although the country's dependency on agriculture has declined. On the other hand, contribution of the manufacturing and service sectors has increased significantly.”
At present, the country has a mere $2 billion in FDI; it should be double or even triple, said Kazi M Aminul Islam, executive chairman of BIDA.
On government initiatives, he said the cabinet has already approved the One-Stop Service Act and it would hopefully be enacted in the next parliament session.
Enactment of the act would help investors get a series of services by submitting just one application, he said.
“One thing is missing and that is a strong collaboration among the stakeholders to overcome the problem.”