Hospitable business climate the Holy Grail of BIDA

Climbing up the World Bank’s definitive Ease of Doing Business index is Bangladesh’s first priority as a solid performance in the ranking would accelerate the flow of domestic and foreign direct investment, said the chief of the Bangladesh Investment Development Authority (BIDA).

Bangladesh was ranked 168 out of 190 countries in the latest edition of the study, up from 176 last year -- in what was its biggest climb in recent years.

And yet it pales in comparison when the jump made by some of its Saarc neighbours and peer countries are considered. For instance, neighbouring India climbed 14 notches to 63, Pakistan 28 rungs to 108 and Nepal 16 spots to 94.

Not just that, Bangladesh’s rank is lower than all its Saarc neighbours save for Afghanistan and competitors vying for foreign direct investment and exports like Myanmar, Ethiopia, Vietnam and Cambodia -- in a sobering reminder of the uphill task that lies ahead for the government.

Subsequently, BIDA is on its way to implementing a dozen initiatives by this year to bring ease into the process of opening businesses.

The initiatives include reforms to company, bank and the Bangladesh Securities and Exchange Commission rules and regulations alongside tax structures.

Meanwhile, changes have already been brought in line with 22 of its 88 recommendations focusing investors, such as expediting processes for land and company registration and availing power connections.

“We will have to ensure massive reforms to our rules and regulations to take the FDI flow to the level of our expectations,” said Md Sirazul Islam, executive chairman of BIDA.

Islam’s comments came in an interview with The Daily Star recently at his office in the capital’s Agargaon area. The former commerce secretary spoke of the bottlenecks investors were facing and the ways he was trying to turn things around.

Despite achieving the highest growth in the Asia Pacific region last fiscal year, Bangladesh was lagging behind its neighbouring competitors with regard to the flow of FDI.

In 2018, FDI amounting to $3.6 billion flew in, which was 71.43 per cent higher than a year earlier, according to the BIDA.

“Bangladesh needs at least $10 billion in FDI to achieve double-digit growth and the Sustainable Development Goals by 2030 and become a higher income country by 2041,” Islam said.

On reforming the rules, he pointed out that it was a double-edged sword as policy stability was required to give investors peace of mind and aid their plans.

Entrepreneurs do want to invest money but they also want the associated processes to be fast and convenient. They consider long procedures to be a waste of time and money and expect hassle-free official processes and instant results.

Some bottlenecks still exist over providing rapid services to investors, such as bringing changes to laws, which was a time-consuming process.

Keeping note of these issues, BIDA was prioritising on having a unified system in place -- from where investors would be able to avail whatever they required.

Islam, who took over the reins of BIDA from Kazi Aminul Islam in September last year, started off by holding talks with different trade bodies and business leaders.

In the past four months he organised four economic forums in Dubai, Sydney, Shanghai and Hong Kong to brand Bangladesh and shine the spotlight on its current investment-friendly environment.

BIDA is also trying to build the country’s image by holding road shows and seminars in different countries through Bangladesh missions abroad.

It has set up a dedicated lounge at the Hazrat Shahjalal International Airport (HSIA) to welcome investors the moment they step foot in Bangladesh.

BIDA’s office and other contact points with investors are being refurbished while office practices improved to resemble those of international corporates.

“We are trying to create a welcoming environment for the foreign investors so that a positive impression grows among them,” Islam said.

Foreign investors are yet to know about the transformation Bangladesh has gone through in the past 30 years, he said.

The economy’s rapid growth led to the rise of massive potential for many sectors such as automobile, leather, light engineering, plastics, hotel and tourism, transport, agro-processing and jute product diversification.

Some automobile companies, including foreign ones, have already set up plants. Motorcycles are now being manufactured and assembled to cater to the thriving market.

Light engineering is thriving as a backward linkage to many larger industries.

The advent of an increasing number of international five-star hotel chains is testament to the prospects of Bangladesh, Islam said.

The flailing condition of the transport sector could actually be a boon, as it provides an opportunity to foreign operators to invest in joint ventures with locals in bringing about international standards.

These sectors have drawn the attention of investors in China, India, Japan, South Korea, Hong Kong, Dubai and the United Kingdom, Islam said.

Mitsubishi and Suzuki have shown interest in setting up plants, while Saudi Aramco is keen on solar power generation.

Those intrigued include two British companies: IM Power, an independent power producer with over 50 years’ experience, and TenBroeke Co, an independent international advisory firm focused on delivery of major infrastructure projects.

“Infrastructure development is as important as enhancing the business environment,” Islam said.

In this context, he said a future third HSIA terminal would not only augment connectivity but also spread word about Bangladesh through visitors.

Similarly, the construction of the Padma bridge will bring the southern region closer to the rest of the country, giving rise to FDI prospects in rail, road and high pressure gas transmission lines and fibre optic communication links.

When it came to domestic investment, Islam said it was insufficient compared to what Bangladesh’s global competitors were getting.

BIDA is tackling this by encouraging new business ideas.

As per its strategic plan, the agency has already provided basic training on opening businesses among 6,000 youths. It plans to create 24,000 young entrepreneurs across the country.

Islam believes the young generation, with their creativity and innovative ideas, has what it takes to bring new dimensions to business.

“Knowledge and innovation-based start-ups and enterprises will lead the way in the coming days.”