Second Stakeholder Round Table on Overseas Investment by the Bangladeshi Entrepreneurs
Shafiul Islam Mohiuddin, President of the Federation of Bangladesh Chambers of Commerce & Industry (FBCCI) was present in the event as the Chief Guest, while Mr. Ajit Kumar Paul, Member of BIDA was present as the Special Guest. The Round Table was held on 25 July 2017 at the IBFB Conference Hall
Overseas investment has numerous potentialities to increases the efficient use of productive resources especially when home country faces infrastructural inadequacies including shortage of adequate land, power and energy. If Bangladesh fails to take advantage of such opportunities, then other countries will definitely do so for which it will limit the scope of increasing GDP growth and poverty alleviation at least to some extent.
Like the investors of neighboring countries such as India, Pakistan and Sri Lanka, Bangladeshi entrepreneurs should be allowed to explore the enormous investment opportunities prevailing around the world.
The suggestions strongly came in a 2nd Round Table on “Overseas Investment by Bangladeshi Entrepreneurs” organized by the International Business Forum of Bangladesh (IBFB) in its Conference Hall. IBFB is a business think tank conducting research and advocacy on Overseas Investment by Bangladeshi Entrepreneurs for last three years. Based on the advocacy work of IBFB, currently Bangladesh Investment Development Authority (BIDA) is considering to formulate a policy for liberalizing the Overseas Investment by the Bangladeshi Entrepreneurs.
Shafiul Islam Mohiuddin, President of the Federation of Bangladesh Chambers of Commerce & Industry (FBCCI) was present in the event as the Chief Guest, while Mr. Ajit Kumar Paul, Member of BIDA was present as the Special Guest.
Mr. Hafizur Rahman Khan, President of IBFB chaired the seminar.
The Keynote Paper titled Policy Recommendations for Facilitating “Overseas Investment by Bangladeshi Entrepreneurs” by Mr. M. S. Siddiqui, Director of IBFB and Legal Economist.
It was mentioned in the Keynote Paper that global FDI flows are projected to surpass $1.8 trillion in 2018. Many firms from developing countries have gone to the foreign shores in 1960s, 1970s and 1980s (e.g., the first outward venture of India was in 1956), but in case of Bangladesh, things are a bit different. There are some restrictions on overseas investment by Bangladeshi entrepreneurs since its birth, which contradicts with government policy of pursuing free market economy. In 2012, 2013 and 2014 outward FDI of Bangladesh was USD. 43, 34, and 48 million respectively.
Until present, legally overseas investment was effectively restricted following the Foreign Exchange Regulation Act 1947. However, in September, 2015, the government amended the Act that provides “conditional provision” for opening up overseas investment from the current and capital accounts. Critically, according to Section 5(V) the scope of FDI is strictly limited to those investors, who are only in the export business; other potential investors are effectively erased from availing the said opportunity. But real scenario is different exporters also faces difficulties to invest abroad due to different kind of regulation.
Against such backdrops, IBFB took this initiative to highlight the importance of liberalizing the policy relating to overseas investment by the Bangladeshi entrepreneurs further. According to Global Financial Integrity unrecorded capital flow from Bangladesh stood $61.63 billion between 2005 and 2014. Here, an average, $6.16 billion was siphoned out of Bangladesh each year during 2005 and 2014.
The returns from Overseas foreign direct investment (OFDI) is the economic returns and technology transfer have a beneficial impact on economic development, if they help mitigate certain development needs faced by a home economy, such as financial or technological constraints, capability bottlenecks, resources shortages or a low amount of exports. Bangladesh can invest in China for technology supported intermediate product and component and bring these products /components into Bangladesh for labor intensive finishing or assembling final products. These products may transformed to suitable and competitive for local and export market. Some Korean companies already set up assembling plants in Bangladesh for assembling monitors and other high tech equipment with imported components from own factories in Korea and exporting those finish equipment for own market or re-export to other markets.
In order to promote, facilitate, and deal with all the relevant issues of overseas investment, a strong suggestion has been raised from the seminar to form an independent “Overseas Investment Cell.” In addition to this IBFB suggested to amend the Foreign Exchange Regulation Act, 1947 to liberalize the overseas investment, establish global financial integrity and electronic dashboard system for effective and strengthening the Financial Intelligence Unit with a view to minimize/reduce capital flight.
Lieutenant General M Harun-Ar-Rashid Ex. Army Chief said Bangladeshi entrepreneurs should invest and build trade relation where Bangladesh Army is keeping peace keeping duty. Because Bangladesh Army build a good image of the country in those countries.
Mr. Kamal Uddin, Trade Commissioner of Canadian High Commission in Bangladesh said, OFDI can move Bangladesh in the higher level of excellence and will help to develop the economy.
Mr. Shishir Kothari, Trade Commissioner of Indian High Commission in Bangladesh said, Currently some of Bangladeshi investors such as PRAN and Rahimafrooz are invested in India and doing very well. There are tremendous of opportunity for Bangladeshi investors to invest in different Indian states.
Mr. Md. Sahabudddin Sabuj, Senior Assistant Director of WALTON mentioned, due to lack of supportive policy Walton cannot set up assembly plant abroad. If they set up foreign assebmbly plant raw materials and labor can be taken abroad and it will provide them comparative advantage and enable them to operate from the near export destination.
Dr. Golam Moazzem, Research Director of CPD stated that, India started OFDI gradually we can follow their strategies. Initially Indian investors can invest up to $5 million now they can invest up to $2 billion in foreign countries.
The Special Guest of the Round Table Mr. Ajit Kumar Paul, FCA said, private of Bangladesh is much strong now. They can run without any govt. support but not mature enough go independently. That’s why the govt. want to formulate the OFDI policy with some rules and regulation. He said, OFDI is a opportunity of Bangladesh. hence, we don’t want to see any kind of regulatory failure for OFDI.
The Chief Guest of the program Mr. Shafiul Islam Mohiuddin, President of FBCCI mentioned that, Bangladeshi investors has very good prospects for the overseas investment. It can increase their efficiency, competency and market share as well. He said, so many African countries are offering lands for the foreign investors. Bangladeshi entrepreneurs can go there set up plants, mills and agricultural firms. It will ensure food and cotton security for Bangladesh.
The Round Table discussion was attended by eminent business leaders, academia, civil society members, dignitaries from different foreign missions and international agencies etc. Md. Omar Shafayat Kauser, Vice President, and Mr. Humayun Rashid, Vice President (Finance) of IBFB and among the Board of Directors, Ms. Lutfunnisa Saudia Khan; Dr. Md. Mozibur Rahman, former Chairman, Bangladesh Tariff Commission; Mr. Iqbal Hussaiyn, Mr. Mohammad Ali Deen; etc. were present in the seminar.