Investment is the lifeblood for the emerging economies! It’s a two-way traffic, a give and take situation! So, why shouldn’t we think big and look wide for our 5th Bangladesh Investment Summit for the greater interest of Bangladesh as well as investors? This Summit may provide ‘food for thought’ for the investors, entrepreneurs’ professionals and government. The summit may cover high priority industrial sectors as well as potential business sectors and share market - a pride place for investors. The Summit is going to be a show-case for emphasizing on growth opportunities for every sector of the economy directly or indirectly and by cross-sectional synergies. The Key takeaways may be as follows:Upcoming 5th Bangladesh Investment Summit
Unique investment prospect for industrialists, entrepreneurs and share market patrons
Md Azizur Rahman
Investment is the lifeblood for the emerging economies! Its a two-way traffic, a give and take situation! So, why shouldnt we think big and look wide for our 5th Bangladesh Investment Summit for the greater interest of Bangladesh as well as investors? This Summit may provide food for thought for the investors, entrepreneurs professionals and government. The summit may cover high priority industrial sectors as well as potential business sectors and share market - a pride place for investors. The Summit is going to be a show-case for emphasizing on growth opportunities for every sector of the economy directly or indirectly and by cross-sectional synergies. The Key takeaways may be as follows:
A great interacting forum for investors, unique investment opportunities for entrepreneurs; and overview and assessment on share market for portfolio investment.
What are the investment opportunities in Bangladesh?
Bangladesh is one of the fastest growing economies in the world. Currently, it is enjoying lower middle income status on one hand, and Least Developed Country (LDC) grade on the other. This unique combination is an opportunity for investors and will facilitate them more than in another 10 years. A recent report of PWC, a renowned economy reviewer projects that Bangladesh is going to be the 23rd largest global economy in the world by 2050 which is another good news for the investors. The investors who are intelligent and far-sighted, forward looking may be able to take this unique opportunity of investment advantage in Bangladesh. Its business friendly policies, suitable geographical location and skilled labour force at cheap wages are the basic facilities to beacon the entrepreneurs and share market investors. Moreover, it is observed that Asia is rapidly becoming the worlds new consumer market. Therefore, as an LDC, the comparative advantage for Bangladesh is that investors may export most of the products to Asia as well as to the develop countries. On the other hand, considering current dynamics of stock market under low index, foreseeable economic growth of the country and considerable value growth scope of fundamental stocks also creates unique investments opportunity in share market of Bangladesh. Moreover, under current economic context of a balanced share market, future investment will sustain business growth and is likely for significant positive role for continuous economic development of Bangladesh which is also a unique feature for investors.
What could be the outline for our investment summit?
The last Investment Summit was held in Hong Kong on 26 April 2016. In order to further focus on the current good opportunity of investment in Bangladesh, we need more initiatives of Public Private Partnership (PPP). The Professional Institutes, Chambers and Associations in collaboration with relevant Government authorities and regulators may lead to organize in advance level the Bangladesh Investment Summit which may be held in December, 2017 or first quarter 2018. The Summit may be a full, 4 days event where 2 days may be for entrepreneurs and 2 days for share market investors. The show of the event would not only bring together top entrepreneurs and executives but also will attract share market investors from all over the world. As part of PPP, the summit would be also a flagship investment promotion event of the Government which may lead a unique journey of economic growth of the country. The event may provide unmatched platform for investors to network with all those who matter.
Why is PPP needed to organise the summit?
Quality of a nation depends on quality of companies, quality of a company depends on the quality of governance and quality of governance breeds from quality of corporate professionals.
The corporate professionals, who lead corporate world ensuring good governance safeguarding interests of the stakeholders may facilitate increasing to attract FDI in Bangladesh. Therefore, it is essential to have a Public Private Partnership (PPP) to organise the 5th Bangladesh Investment Summit in order to achieve the objectives. The PPP will help us be stronger together. Under the PPP, all Professional Institutes like ICSB, ICAB, ICMAB; Chambers and Associations like FBCCI, FICCI, MCCI, DCCI; in collaboration with relevant Ministries, Government authorities and regulators like BIDA, BSEC, DSE, CSE; and any other individual stakeholders and professional bodies may join in this collaboration (PPP) to continue the journey of growth which will also facilitate to achieve the sustainable development goals (SDG) of the Bangladesh.
Can we focus on bigger areas?
The summit may cover high priority industrial sectors as well as potential business sectors and share market - a pride place for investors. The Summit is going to be a show-case for emphasizing on growth opportunities for every sector of the economy directly or indirectly and by cross-sectional synergies. The sectors create multifaceted job and skill development opportunities in the respective fields. The high priority industrial sectors include Agribusiness, Garments and Textiles, ICT and Business Services, Pharmaceutical Sector, Leather and Leather Goods, Jute and Jute goods sector. On the other hand, priority potential industrial sectors include Plastic Industry, Light Engineering, Manpower Export Sector, Ship Building Ind. Sector, Environment friendly ship breaking and Assembling Industry, Tourism Industry, Frozen Foods, Home Textile Industry, Renewable Energy (Solar Power and Wind Mill), Active Pharmaceutical ingredient Industry and Radio pharmaceutical Industry, Automobile Sector, Power Savings Instrument Industry, Bicycle Industry, Tea Industry, Agro Machinery Manufacturing Industry, Seed Industry, Toys Industry and Cosmetics and Toiletries etc.
Its true that sometimes we dont even know what we dont know. Interact with fellow investors at the Summit to discover new insights to different industries so that share market investor might polish up its own portfolio. Interactions with fellow investors at the Summit to discover insights of different industries might be a big chance for share market investors polishing up their own portfolio. Being able to see things from a different angle may oftentimes make a huge difference to investors returns! Industry fund managers will be sharing insights on where they should focus their attention. Share market investors may get to see investment strategies that they need to implement.
What results would be the outcome if we think big?
The 5th Bangladesh Investment Summit may provide international investors and business leaders exclusive access to the Bangladesh business insights to take investment decision in suitable sector(s). This summit will also focus on investing in the stock market aimed at intermediate- and advanced-level by investors and traders. The investors will not only learn directly from top stock experts how to grow their wealth through value investing but also the respective chief executives and the company secretary of the top public listed companies will apprise their current business status and future strategy. The entrepreneurs will get adequate information on high priority industrial sectors as well as priority potential industrial sectors and stock market investors will be highlighted about the fundamentals of listed companies as well as overall current share market scenario venting unique opportunity for enabling investment in Bangladesh. The 5th Bangladesh Investment Summit may be featuring some of the best investing minds in Asia and around the world, where industry experts, professionals, government authorities and investors alike meet to share ideas, discuss investment strategies and support one another to navigate the investing scenes internationally.
We believe the 5th Bangladesh Investment Summit would be one of the most exciting startup hubs what it deserves to be shown to the world. We may keep the Summit as a casual and informal event, so that we can create unique networking opportunities, unlike the bigger conferences, and real investment opportunities. The Summit may also deliver thought-provoking keynotes, interactive panels and workshops on some of the hottest topics on startups, fundraising and growth.
Considering the additional focus on share market, the summit may also serve as an exclusive platform for large institutional investors, fund managers, asset managers, bankers, Government representatives and advisers representing America, Asia, Europe and Australia for networking and establishing partnerships for future projects. Moreover, the summit may showcase the strengths and industrial dexterity of Bangladesh including its linkage industries facilities, and provide a global platform for interaction with Bangladeshi industry leaders,policy makers, investors and other stakeholders.
This summit may offer much more than any conference, exhibition or trade show, exclusive meeting which will bring together esteemed industry leaders, think-tanks and solution providers to a highly focused and interactive networking event. The senior government ministers, prominent Bangladeshi CEOs, industry experts and global research team may attend the summit. For the interest of the investors, we may facilitate one-on-one meeting program with the CEO/Company Secretary from exciting group of public listed companies from across all sectors of the Bangladesh economy. We may expect over 60 companies to participate in one-on-one meeting program, including some evolving private companies. Our experienced research analysts may also apprise few thematic investor tour program around the Summit. We may be committed to delivering a premium and rewarding experience and it would be our honor and privilege to host the participants in Dhaka, Bangladesh. The Summit may provide various insights on utilising unconventional asset allocation strategies to maintain returns and may highlight the latest strategies for optimising investment efficiency to effectively navigate the macroeconomic climate. Considering all these, we believe the Summit would benefit the participants, investors, executives, think-tanks and observers as follows:
Why should we create FDI atmosphere?
Foreign Direct Investment (FDI) is a potent weapon of economic development, especially in the current global context. It enables a capital-shy country like Bangladesh to build up physical capital, create employment opportunities, develop productive capacity, enhance skills of local labor through transfer of technology and managerial knowledge, and help integrate the domestic economy with the global economy.
Foreign Direct Investors try to find out such a country which has some good facilities for production and sustainable business operation. Factors of production like land, labor, capital, entrepreneurship although are very important, but now the most important things for production and investment are good supply of electricity and gas, good transportation, active, strong and knowledgeable human resources and congenial atmosphere including administrative side as well as judicial system to get fair and equal treatment which may facilitate further to create FDI atmosphere in the country.
Potential Areas For FDI
The potential investment areas in Bangladesh are power generation, distribution and exploration of gas and other mineral resources, highway development including bridge, express-way and tunnels, Port infrastructure facilities, Industrial parks/private export processing, computer software and electronics, diversified jute goods and jute based pulp and study, chemicals and petrochemicals, LP gas, environment friendly insecticides, leather and leather goods, tourism, food processing, Fruit canning and allied products, sports goods, light, engineering and agro-based industry etc.
Concerns For FDI Which Requires Immediate Attention
As a developing country, Bangladesh needs Foreign Direct Investment (FDI) for its ongoing development process. In order to attract more and more FDI, the current Government undertook a massive liberalization of its investment programme. However, there are a number of concerns which need to be addressed to facilitate a positive mind-set of the potential foreign investors. These are as follows:
Unfriendly Taxation policy and unfair tax burden
The current taxation policy of Bangladesh is not favorable at all to attract FDI. Many incidents of unfair tax claims were imposed on Foreign Investment/Multinational Companies (MNCs) in recent times misusing gap of local regulations which violates the provisions of equal treatment as per the international treaties. Moreover, in many cases, the National Board of Revenue (NBR) tries to impose additional tax burden irrationally on MNCs to meet revenue short target. Not only that MNCs are not getting proper justice against any unfair treatments as well as irrational additional taxes claims through administrative process. Therefore, MNCs are bound to file a number of cases in judicial process where final remedies are long pending year on year due to vested quarter interests. The unfriendly taxation policy, non-cooperation of administrative process to resolve unfair tax burden and long pending judicial process to get fair judgment are giving wrong message to business community locally as we as internationally which is a big concern currently for FDI in Bangladesh.
Highest Corporate tax rate discouraging FDI
The maximum Corporate tax rate for MNCs is significantly higher in Bangladesh compared to other neighbor countries of Asia. A comparative chart below shows significant difference in corporate tax rate:
No Level Playing Field
Local competitors are getting extra advantage from law enforcement agencies and other government authorities whereas the same authorities are not supportive enough for the MNCs at the same level. As a result, MNCs regular business operation became difficult and challenging due to lack of cooperation for the lawful business activities.
Foreign investors often do not get the same facilities as local investors. It is always difficult for foreign investors to adopt the culture and associated business mechanism of a foreign country. The lack of facilities makes it harder to attract FDI.
Excessive bureaucratic interference
Bureaucratic complexity to get registered or permission and lack of administrative coordination among different government bodies have restricted FDI potentials in Bangladesh.
Alleged irregularities in processing papers
Alleged irregularities in processing papers, lack of commitment on the part of local investors, and frequent changes in policies on import duties for raw materials, machinery and equipment make it difficult for foreign investors to determine the feasibility or future prospect of the success of their investment.
Lack of proper Infrastructure
Bangladesh needs to develop its infrastructure facilities and service in various sectors and in this context should also encourage private participants with policy initiatives.
Moreover, the relevant government and regulators should address other barrier for FDI in Bangladesh which are alleged irregularities in processing papers; lack of commitment on the part of local investors; inordinate delays in selecting projects for feasibility studies and frequent changes in policies on import duties for raw materials, machinery and equipment; overlapping administrative procedures and absence of a transparent system of formalities often confuse not only investors proposing projects but also staff and personnel assigned for discharging procedural responsibilities; frequent transfers of top and mid-level officials in various ministries, directorates and departments affect continuity and prevent timely implementation of strategic, procedural, and even routine duties; many foreign companies feel disturbed and ultimately are discouraged by disruptions in the production processes in the country because of frequent power failures, poor infrastructure support, labor and political unrest and non-cooperation of administrative process; lack of professional personnel, i.e., the technical, managerial and innovative skills in the country needed to efficiently handle entrepreneurial function including risk taking, planning and coordination and control. Foreign investors often find problems in infrastructure, law and order, and enforcement of contracts. Bangladesh has an advantage in labor costs, which can be converted into an exportable product, but the advantage has many difficulties. The factories in the country have to deal with constraints beyond their control, such as, power failures, poor communications or increased transaction costs and cumbersome procedures in customs and in many government offices.
The political instability, including frequent hartals, etc. is a real hazard; Poor imposition of Intellectual Property law also hampers the progress of FDI.
What would be our aspiration?
We should think in a broader perspective so that we can utilize this Summit as our best to unveil all opportunities and hindrances to overcome the present barrier and set the goal in a higher trajectory.
Moreover, investors will get a unique investment opportunity merging their goals with entrepreneurs and share market investors under the current dynamics of Bangladesh economy which will continue more than 10 years at least. For the greater interest the Summit can be an Interacting Place of best investing minds from Asia and around the world, where the professionals, government, regulators, industry experts and investors alike may meet to share ideas, discuss investment strategies and support one another to navigate the investing scenes internationally.
The writer is Council Member of ICSB, Director General of IPAB and Company Secretary of BAT Bangladesh.
