The stark reality, however, the government agencies do not have a friendly and cooperative relationship with the foreign investors. Also it has been reported many times before – that the government agencies harass the foreigners with unnecessary bureaucratic red tapes, those who represent their countries in Bangladesh. The government should seriously consider these age-old reported accusations.
Take for instance the sudden exit of the American Multinational Energy Corporation Chevron. They had left at a watershed moment when Bangladesh could have got its assistance for exploring the hydro-carbon minerals store beneath the Bay of Bengal. Also it couldn’t have left if our government’s rules for withdrawing investment by the foreign companies were not made so easy and effortless.
On one hand we mark, evident flaws in policy making with regard to foreign investments, while on the other the government is doing practically little for wooing direct foreign investments. Creation of many Export Processing Zones are not the only solution in this regard – one needs to be policy-wise much astute so to formulate win-win FDI policies. That said – we should not make our policies too rigid or too flexible and strike a balance between the two.
Another example – Among all tax rates, the corporate tax rate is the highest in Bangladesh, being as high as 42.50 percent for banks, whereas the rate in our next-door neighbour India is 30 percent and the government has pledged to reduce it further to 25 percent in the next three years. Coupled with the high tax rate another problem which is deterring the FDI flow in Bangladesh is the propensity to bring repeated changes to regulatory policies. Surprisingly, the policies are sometimes changed in between 9-10 months of their formation, which makes the foreign investors sceptic and discouraged as well. Furthermore, the global country perception problem is another one. Many foreign firms still do not consider our economy as an industrial economy — rather they think of the country as an agriculture-based economy, even though the country’s dependency on agriculture has declined significantly by now. Our Diplomatic Missions abroad are in need to run the extra mile for changing this wrong perception while portray Bangladesh as an emerging industrial economy.
However, against the backdrop of all the above prevailing predicaments, we expect the government and its policy makers to be more realistic and pro-active for drawing and implementing effective FDI policies. Currently, the country has a mere $2 billion in FDI but given the country’s GDP consistent growth and industrialisation it should have been tripled by now.
Last but not least, even though the Cabinet has reportedly approved the One-Stop Service Act concerning FDIs and it would hopefully be enacted in the next Parliament Session – but it should be formulated by including all the above stated shortcomings in it. Moreover, the Service Act should include pre-conditions for stronger foreign and local collaborations among the stakeholders to overcome all business related problems. Policies should be mutually beneficial and pragmatic otherwise, they are mere papers unable to serve any purpose.
