Kazi Zahidul Hasan :
Bangladesh economy has been growing over 6.0 per cent in the past decade. In 2017-2018 Bangladesh became the fastest growing economy in Asia.
“The remarkable and fascinating story of economic transformation and resilience have sent the country to next development path and the country is moving from MDG to SDG and has a legitimate aspiration to move towards middle-income country,” Deepal Abeywickrema, Managing Director, Nestlé Bangladesh Limited, told The New Nation in an exclusive interview.
However, Bangladesh should look for necessary reforms in its regulatory and tax regimes to attract more Foreign Direct Investment (FDI), the honchos said.
He said Bangladesh has been maintaining a low level of FDI in absence of necessary reforms, trade facilitation measures and capital control norms. Bureaucratic red tapism and lack of skilled labour also hinder FDI inflow.
Bangladesh received $3.61 billion Foreign Direct Investment (FDI) last year, which is lowest among the regional countries.
“FDI inflow into Bangladesh is low compared to many countries at the similar level of development. Bangladesh’s low labour costs are generally believed to be attractive to foreign investors, but yet they hesitate to make fresh investments in the country because of the country’s underdeveloped infrastructure, lack of reforms and bureaucratic bottleneck and its low rank in ease of doing business,” cited Deepal Abeywickrema.
He said Bangladesh could even attract more FDI taking advantage of reforms, low labour cost and infrastructure development. Investment is necessary to sustain growth, create more jobs and pull out millions from poverty.
For promoting investment, Deepal Abeywickrema said that the government has taken mega projects such as Padma Bridge, Rooppur Nuclear Power Plant, and LNG terminals, to improve the ‘doing business’ ranking.
“These will also work as incentives for investors and further accelerate Bangladesh’s journey to realizing its full economic potential.”
He observed that the government of Bangladesh over the past few years has taken various initiatives, such as policy reforms, removing infrastructure deficiencies and creating a positive business environment to encourage more investment.
The initiative to establish 100 Special Economic Zones (SEZs) by 2030 also give FDI a great boost, with investors already having started production in some of the zones.
“But the higher rate of corporate tax is an area of concern for investors’ and it is discouraging foreign investors,” said Deepal Abeywickrema adding, “The corporate tax rate is one of the highest in Asia.”
He mentioned that the average corporate tax rate is 40 per cent in Bangladesh while it ranges between 17 and 25 per cent in countries like Thailand, Indonesia, Vietnam and India.
“We need to revisit the area and make it competitive with the regional peers,” added the chief of the Nestle Bangladesh.
He also said the access to industrial land is very challenging in Bangladesh. Land prices go up and there are a lot of land-related litigations that make the investment very costly. Again, some of the big foreign investors in the country are in tax-related disputes with the government.
“To enjoy higher FDI, Bangladesh needs to concentrate in further improvement of power and energy, ensure consistent policy and regulatory framework, and improve governance and political certainty” he observed.
“The government needs to address these to attract necessary FDI into the country,” he added.
Lauding Bangladesh’s recent economic development, Deepal Abeywickrema said that the country has been achieving a high GDP growth in the recent years taking advance of apparel exports, migrant remittances and consumption. The growth may be accelerated further if other potential industrial sectors get proper attention along with acceleration of domestic and foreign investment.
Reading the ongoing banking crisis, the Nestle Bangladesh Managing Director said that high non-performing loans along with AD (advance to Deposit) ration misalignment in banks has created cash crunch. This is due to reduction in AD ratio to 83 per cent from 90 per cent by the Central bank. This cash crunch hinders the growth opportunities. However, mostly business climate is very conducive.
“The next budget should put a right mix of reform, necessary investment education, health, infrastructure and power to attract more FDI,” said Deepal Abeywickrema.
At the same time, necessary policy and enforcement measures should be put in place to protect interest of foreign companies in Bangladesh, stop illegal parallel imports and reduce gap in supply chain and ensure its integration with global network.
“Bangladesh should increase capacity of the Chittagong port for a better integration with global supply chain, while the deep-sea port comes to realization.
He, however, mentioned that cost and time of export and import consignment is much higher at the Chittagong port than other ports in the region. “Bangladesh should also look for improving rail and river network to reduce cost of doing business.”
Commenting on the tax regime, Deepal Abeywickrema urged the government to simplify the customs and tax policies. Since we are paying legitimate tax, we need to have a level playing field. The existing tax law (income tax, VAT and customs law) is ambiguous which cause a lot of hassles for investors. So, the law requires major reforms including full automation of tax administration.
“The tax policy should also be made consistent for a longer period to attract more FDI. Besides, foreign companies need an extended period of tax holiday, modernization of VAT law and liberate the profit repatriation policy. If possible, VAT rate should be made flat. The manufacturing units should also get uninterrupted supply of utilities to help them utilize full production.”
“I expect, the next budget should focus on particular areas to further accelerate inflow of foreign investment for realizing Bangladesh’s full economic potential,” said Deepal Abeywickrema.
Bangladesh economy has been growing over 6.0 per cent in the past decade. In 2017-2018 Bangladesh became the fastest growing economy in Asia.
“The remarkable and fascinating story of economic transformation and resilience have sent the country to next development path and the country is moving from MDG to SDG and has a legitimate aspiration to move towards middle-income country,” Deepal Abeywickrema, Managing Director, Nestlé Bangladesh Limited, told The New Nation in an exclusive interview.
However, Bangladesh should look for necessary reforms in its regulatory and tax regimes to attract more Foreign Direct Investment (FDI), the honchos said.
He said Bangladesh has been maintaining a low level of FDI in absence of necessary reforms, trade facilitation measures and capital control norms. Bureaucratic red tapism and lack of skilled labour also hinder FDI inflow.
Bangladesh received $3.61 billion Foreign Direct Investment (FDI) last year, which is lowest among the regional countries.
“FDI inflow into Bangladesh is low compared to many countries at the similar level of development. Bangladesh’s low labour costs are generally believed to be attractive to foreign investors, but yet they hesitate to make fresh investments in the country because of the country’s underdeveloped infrastructure, lack of reforms and bureaucratic bottleneck and its low rank in ease of doing business,” cited Deepal Abeywickrema.
He said Bangladesh could even attract more FDI taking advantage of reforms, low labour cost and infrastructure development. Investment is necessary to sustain growth, create more jobs and pull out millions from poverty.
For promoting investment, Deepal Abeywickrema said that the government has taken mega projects such as Padma Bridge, Rooppur Nuclear Power Plant, and LNG terminals, to improve the ‘doing business’ ranking.
“These will also work as incentives for investors and further accelerate Bangladesh’s journey to realizing its full economic potential.”
He observed that the government of Bangladesh over the past few years has taken various initiatives, such as policy reforms, removing infrastructure deficiencies and creating a positive business environment to encourage more investment.
The initiative to establish 100 Special Economic Zones (SEZs) by 2030 also give FDI a great boost, with investors already having started production in some of the zones.
“But the higher rate of corporate tax is an area of concern for investors’ and it is discouraging foreign investors,” said Deepal Abeywickrema adding, “The corporate tax rate is one of the highest in Asia.”
He mentioned that the average corporate tax rate is 40 per cent in Bangladesh while it ranges between 17 and 25 per cent in countries like Thailand, Indonesia, Vietnam and India.
“We need to revisit the area and make it competitive with the regional peers,” added the chief of the Nestle Bangladesh.
He also said the access to industrial land is very challenging in Bangladesh. Land prices go up and there are a lot of land-related litigations that make the investment very costly. Again, some of the big foreign investors in the country are in tax-related disputes with the government.
“To enjoy higher FDI, Bangladesh needs to concentrate in further improvement of power and energy, ensure consistent policy and regulatory framework, and improve governance and political certainty” he observed.
“The government needs to address these to attract necessary FDI into the country,” he added.
Lauding Bangladesh’s recent economic development, Deepal Abeywickrema said that the country has been achieving a high GDP growth in the recent years taking advance of apparel exports, migrant remittances and consumption. The growth may be accelerated further if other potential industrial sectors get proper attention along with acceleration of domestic and foreign investment.
Reading the ongoing banking crisis, the Nestle Bangladesh Managing Director said that high non-performing loans along with AD (advance to Deposit) ration misalignment in banks has created cash crunch. This is due to reduction in AD ratio to 83 per cent from 90 per cent by the Central bank. This cash crunch hinders the growth opportunities. However, mostly business climate is very conducive.
“The next budget should put a right mix of reform, necessary investment education, health, infrastructure and power to attract more FDI,” said Deepal Abeywickrema.
At the same time, necessary policy and enforcement measures should be put in place to protect interest of foreign companies in Bangladesh, stop illegal parallel imports and reduce gap in supply chain and ensure its integration with global network.
“Bangladesh should increase capacity of the Chittagong port for a better integration with global supply chain, while the deep-sea port comes to realization.
He, however, mentioned that cost and time of export and import consignment is much higher at the Chittagong port than other ports in the region. “Bangladesh should also look for improving rail and river network to reduce cost of doing business.”
Commenting on the tax regime, Deepal Abeywickrema urged the government to simplify the customs and tax policies. Since we are paying legitimate tax, we need to have a level playing field. The existing tax law (income tax, VAT and customs law) is ambiguous which cause a lot of hassles for investors. So, the law requires major reforms including full automation of tax administration.
“The tax policy should also be made consistent for a longer period to attract more FDI. Besides, foreign companies need an extended period of tax holiday, modernization of VAT law and liberate the profit repatriation policy. If possible, VAT rate should be made flat. The manufacturing units should also get uninterrupted supply of utilities to help them utilize full production.”
“I expect, the next budget should focus on particular areas to further accelerate inflow of foreign investment for realizing Bangladesh’s full economic potential,” said Deepal Abeywickrema.
