Ferdaus Ara Begum :
Policies of Bangladesh to encourage foreign investors are appreciated but so far the responses are not sufficient. In FY 2018-19, FDI inflow has shown a surge to 2.6 billion USD which is 0.82% of the total GDP of the country for the first time, but country needs more foreign investment and FDI. In the post COVID-19 time, there might be a number of changes and shifts in foreign investment, Bangladesh need to track the situation and get benefit out of it. It is predictable that manufacturers may decide to get rid of the Chinese dominance from their supply chain. It will cause more equitable distribution in the supply chain for other countries that could hardly compete with China previously. Bangladesh needs to establish its foothold in this respect.
Government has announced a number of stimulus packages for the private sector, local manufacturer-exporters, CMSMEs, large industries& services. So far no specific stimulus packages announced for the foreign investors. Given the prevailing COVID-19 related disruptions, Bangladesh Bank through FE Circular 19 on May 3, 2020 decided that foreign-owned or controlled companies operating in Bangladesh irrespective of sectors may access short-term working capital loans, for the tenure of one year extendable to another one year, from their parent companies or shareholders abroad. The foreign-owned or controlled companies can take the loan to meet actual needs for payments of three-month wages and salary to staff regardless of their length of engagement in manufacturing or services output activities.
Bangladesh Bank published its BRPD Circular no.-7 on April 2, 2020 regarding the concessional loan under the stimulus package for the export oriented industries to combat the impact of COVID-19. The interest-free loan, which will be used to pay wages to the employees of the industrial units, will carry 2 per cent service charge and has a repayment period of two years, including a grace period for six months from July to December this year. Banks other than this 2% service charge will not get any other government charge.
On 15 April, 2020 the government decided to include C-Type industries (100% Locally owned) operating in Export Processing Zones (EPZ), Economic Zone (EZ) and High Tech Park in the stimulus package for exporters to provide wages to their employees. However, on 27 April, 2020 the government included B- Type industries (joint venture projects) operating in Export Processing Zones (EPZ), Economic Zone (EZ) and High Tech Park in the aforementioned stimulus package.
However, Type-A industries (100% foreign owned) have not come under the coverage of this stimulus yet. One reason behind it can be the government is trying to provide stimulus to the industries that have full or partial local ownership. Another reason can be that most of the countries around the world are announcing stimulus packages for their businesses and industries to combat the impact of COVID-19. The foreign investors operating in Bangladesh may be getting the stimulus packages/incentives from their own countries.
BEZA has forwarded some proposals to Prime Minister’s Office for the foreign investors in the country and requested for Type A industries (100% foreign owned) in EPZ, EZ and high tech park to be included in the stimulus package with minimum service charge (one time at 2%) due to breakout of COVID-19. Also foreign companies interested to relocate their production to Bangladesh can be allowed to import used machinery to set up their factories in the country, corporate tax exemption for 10 years, VAT waiver facilities.
We need to attract foreign investment to leverage our competitiveness in the global market. Rational treatment need to be announced for the 100% foreign owned companies to attract and sustain FDI to increase cash inflow, more job creation and technology access.
Policies of Bangladesh to encourage foreign investors are appreciated but so far the responses are not sufficient. In FY 2018-19, FDI inflow has shown a surge to 2.6 billion USD which is 0.82% of the total GDP of the country for the first time, but country needs more foreign investment and FDI. In the post COVID-19 time, there might be a number of changes and shifts in foreign investment, Bangladesh need to track the situation and get benefit out of it. It is predictable that manufacturers may decide to get rid of the Chinese dominance from their supply chain. It will cause more equitable distribution in the supply chain for other countries that could hardly compete with China previously. Bangladesh needs to establish its foothold in this respect.
Government has announced a number of stimulus packages for the private sector, local manufacturer-exporters, CMSMEs, large industries& services. So far no specific stimulus packages announced for the foreign investors. Given the prevailing COVID-19 related disruptions, Bangladesh Bank through FE Circular 19 on May 3, 2020 decided that foreign-owned or controlled companies operating in Bangladesh irrespective of sectors may access short-term working capital loans, for the tenure of one year extendable to another one year, from their parent companies or shareholders abroad. The foreign-owned or controlled companies can take the loan to meet actual needs for payments of three-month wages and salary to staff regardless of their length of engagement in manufacturing or services output activities.
Bangladesh Bank published its BRPD Circular no.-7 on April 2, 2020 regarding the concessional loan under the stimulus package for the export oriented industries to combat the impact of COVID-19. The interest-free loan, which will be used to pay wages to the employees of the industrial units, will carry 2 per cent service charge and has a repayment period of two years, including a grace period for six months from July to December this year. Banks other than this 2% service charge will not get any other government charge.
On 15 April, 2020 the government decided to include C-Type industries (100% Locally owned) operating in Export Processing Zones (EPZ), Economic Zone (EZ) and High Tech Park in the stimulus package for exporters to provide wages to their employees. However, on 27 April, 2020 the government included B- Type industries (joint venture projects) operating in Export Processing Zones (EPZ), Economic Zone (EZ) and High Tech Park in the aforementioned stimulus package.
However, Type-A industries (100% foreign owned) have not come under the coverage of this stimulus yet. One reason behind it can be the government is trying to provide stimulus to the industries that have full or partial local ownership. Another reason can be that most of the countries around the world are announcing stimulus packages for their businesses and industries to combat the impact of COVID-19. The foreign investors operating in Bangladesh may be getting the stimulus packages/incentives from their own countries.
BEZA has forwarded some proposals to Prime Minister’s Office for the foreign investors in the country and requested for Type A industries (100% foreign owned) in EPZ, EZ and high tech park to be included in the stimulus package with minimum service charge (one time at 2%) due to breakout of COVID-19. Also foreign companies interested to relocate their production to Bangladesh can be allowed to import used machinery to set up their factories in the country, corporate tax exemption for 10 years, VAT waiver facilities.
We need to attract foreign investment to leverage our competitiveness in the global market. Rational treatment need to be announced for the 100% foreign owned companies to attract and sustain FDI to increase cash inflow, more job creation and technology access.
Writer: CEO of Business Initiative Leading Development(BUILD)
