Reform companies law to attract FDI: EU envoy

The European Union (EU), a forum of 28 countries, wants Bangladesh to revise and update its century-old companies act to improve the business climate and attract foreign investment.

“The current one, that is still in force, dates back to 1913. More than a century has passed and it is time to revisit this fundamental legal framework,” Pierre Mayaudon, ambassador and head of delegation of the EU to Bangladesh, told economic reporters yesterday.

The EU has already raised the issue at different forums, including Bangladesh's commerce ministry, said Mayaudon.

The Economic Reporters' Forum (ERF) organised the event on “Bangladesh-EU Trade Ties: Prospects and Challenges” at the National Press Club with its president Sultan Mahmud in the chair.

The ambassador said the EU wants to develop a bold economic partnership with Bangladesh.

To serve this purpose, he said, the EU is working in three directions -- implementing the sustainability compact (SC), improving the business climate and climbing the value chain.

Mayaudon said the Rana Plaza building collapse has triggered an immense emotion in Europe and also an immediate reaction. Both have translated into the SC, he said.

He said implementing rules for the labour law is urgent; the status of the EPZ in the law should benefit from the revision.

“The implementation rules should be there by the end of June,” he said. Of course, the ILO wants to ensure full compliance of the labour legal framework with the international conventions, he added.

In addition, the compact is preparing the Bangladesh economy to graduate from the generalised system of preference (GSP) regime and apply to access GSP Plus.

“In 2021, when Bangladesh will become a middle-income country, it will have to be compliant with 27 UN core conventions in the fields of human rights, labour rights, the environment and good governance, in order to benefit from the GSP Plus scheme,” said the ambassador.

“Bangladesh should perceive the SC not as a burden but rather as a fantastic opportunity to bring its economy forward. This is also the best tribute that could be paid to the thousands of victims of the Rana Plaza tragedy.”

On improving the business climate, Mayaudon said economic reform is an absolute necessity for Bangladesh. The century-old companies act must be reformed to attract foreign investment.

The service sector, where Europe can share its expertise with Bangladesh, should be an integral part of this reform process, he said.

“What companies need is a transparent and predictable regulatory framework to secure investment,” he said, adding that a new law cannot change everything overnight but it is a critical driver to the process of reform.

“Concerning news here and there in the media can possibly deter investors to consider Bangladesh as a suitable destination. Then we observe that 70 percent of the court cases are related to land disputes, which is not an encouraging signal to foreign investors who look for safety and stability,” he added.

Moreover, Bangladesh is not the only candidate to receive foreign direct investment, rather it has to compete with many attractive destinations, the EU diplomat said.

Offering the labour force better training options, improving the standards, exploring high-tech intensive domains and going for a green and environment-friendly growth would impact Bangladesh's value chain positively, he said.

Mayaudon said Bangladesh's growth is driven not only by the apparel sector and remittance, but by two inspiring visions -- Digital Bangladesh and Blue Economy.

This comes together with efforts to diversify the economy in four sectors -- IT, shipbuilding, leather and pharmaceutical, he said.

Blue Economy is marine-based economic development that leads to improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities.

“What the EU can provide to Bangladesh is a smart combination of trade, development assistance and access to state of the art technologies. This is exactly what Bangladesh needs at this point of time.”