Investment in Bangladesh has been taking a steep rise, with sustained growth from 2009 and policy regimes becoming more conducive. Since time immemorial, Bangladesh has harboured the spirit of free enterprise and innovative entrepreneurship, which is well-knit into the economic fabric of Bangladesh.
'Vision 2021' envisions a Bangladesh which “will be a middle income country where poverty will be drastically reduced, where our citizens will be able to meet every basic need, and where development will be on fast track, with ever-increasing rates of inclusive growth." The key milestones of Vision 2021 are as follow:
* Democracy and strong democratic institutionsThe government of Bangladesh has given highest priority to augmenting private investment in Bangladesh. The incentives offered are considered as the most competitive in South Asia.
There is no restriction on the amount of share of investment. Foreign investors are eligible to take advantage of a wide range of generous tax concessions and other fiscal incentives and facilities.
Investment in Bangladesh is secure vis-à-vis nationalisation and expropriation. To facilitate investment Bangladesh became a signatory to the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group, Overseas Private Investment Corporation (OPIC) of the US, and International Centre for Settlement of Investment Disputes (ICSID), as well as a member of World Association of Investment Promotion Agencies (WAIPA), World Intellectual Property Organisation (WIPO) and World Trade Organisation (WTO).
General packages of incentives for investment include:
* Reduced import duty on machinery and sparesa. Local investment Trends It is seen from the above table that the amount of local investment since 2009 is increasing.
b. Foreign Investment Trends
Foreign Direct Investment is coming in the following forms:
-- Equity capital: direct investor's purchase of shares of an enterprise in another countryIn recent times, foreign borrowings for project financing have increased mostly due to funding by multilaterals and investment banks. These are seen as a low cost finance to implement the projects more viably, and are mainly allocated to textile and power sector projects to supplement foreign currency financing needs. This trend can be seen from the table below:
These multipronged efforts will definitely increase the volume of investment.Many reform initiatives have been taken by this government to augment investment and further ease conducting business in Bangladesh. For the purpose of business regulation simplification 18 reforms have been made; in the area of legal/policy amendments and new laws 12 reforms have been made; and in private-public joint efforts four efforts have been made. Some of the efforts have been detailed below:
BOI introduced an automated registration system for both local and foreign investors in Bangladesh in December 2010. The online platform enables potential investors to complete the entire registration process, including submitting the application, attaching relevant documents, tracking the registration status, providing interactive feedback and seeking approval, without visiting the BOI office or using an intermediary.
Bangladesh Export Processing Zone Association introduced an automated export permit issuance process at the Dhaka Export Processing Zone in June 2010. Once the export permit application gets submitted, the system automatically notifies the applicant through a return email and/or an SMS as soon as it is approved. As a result, the average time to issue an export permit has reduced by 33 percent. Number of interfaces between companies and DEPZ authority has reduced to zero from four in obtaining export permits. As of 2011, 77 firms used the automated export permit system which is 91 percent of firms operating in DEPZ, and a total 48,871 export permits were issued by BEPZA for that year. Automated export permit issuance system is expected to save USD 1.9 million in direct compliance cost in four years. Beneficiaries of the system include all active firms currently operating in DEPZ.
Registrar of Joint Stock Companies & Firms introduced online name clearance in February 2009 and automated business registration in March 2009. The automated system allows businesses to complete the entire registration process online. The number of visits has reduced by 40 percent since initiation. Furthermore, there has been a 26 percent reduction in time required for registration (23 days in 2009 to 17 days in 2012) and 98 percent reduction in time required to obtain name clearance (nine days in 2009 to 1.58 hours in 2012). This will benefit all businesses (public, private, partnerships, societies and associations) that obtained registrations post-automation and all future business registration applicants.
Following Core Group recommendations, Bangladesh Bank passed a circular in September 2009 for streamlining the cash subsidy claim procedure and reducing the time taken by firms to obtain their cash subsidies. Manufacturers of export products get cash subsidies on domestic raw materials used as inputs. Subsidy rates vary from sector to sector between 5 to 20 percent of the value of the local inputs. Prior to this circular, firms' claims were only disbursed after a full audit by Bangladesh Bank and subject to fund availability. Smaller firms were suffering more from uncertainty in disbursement time before the circular and are thus benefited the most. As of 2011, firms were getting 70 percent of a claim on the same day after a preliminary verification by commercial banks. The remaining 30 percent is received within 15 days. The steps to obtain a cash subsidy have reduced from seven to two. Simplification of cash subsidy claim procedure was expected to save USD 20.7 million in direct compliance cost within 4 years of initiation.
The Customs Bond Commissionerate (an agency under the purview of National Board of Revenue) implemented the bonded warehouse licensing simplification process, with support from BICF. In June 2008, the government issued a set of rules to streamline the licensing process and reduce uncertainty and discretion. The new rules stipulated a reduction in required documents, set a time limit for issuance of the license and omitted the requirement to get approval from an additional agency. Furthermore, through the Business Initiative Leading Development - BUILD (a platform for public-private dialogue), the bonded warehouse licensing process was further simplified in July 2012. The overall time taken to obtain a bonded warehouse license reduced by 53.5 percent by 2013. Contrary to popular perception investment in Bangladesh has been steadily raising since 2009, FDI in particular. In 2013, annual growth was a robust 24 percent – the highest ever in the history of the country. In the years to come this will increase even further. Bangladesh as an investment destination of prime value is an idea whose time has certainly come.