INTRODUCTION:
Performance Analysis of Board of Investment (BOI) Bangladesh
Introduction
The Board of Investment (BOI) was established in 1989 by the
Investment Board Act to encourage investment in private sector, to
identify the hindrance of investment and provide necessary
facilities and assistance in the establishment of industries. The
wide range of services BOI provides includes investment promotion
and facilitation covering support, suggestion and aftercare support
to the investors. The prime vision of BOI is to promote domestic
and foreign investment as well to enhance international
competitiveness of Bangladesh and contribute to overall social and
economic development of Bangladesh.
Rational of the StudyForeign and local investment carries
enormous significance in a developing country like Bangladesh.
Realizing the importance of foreign investment Bangladesh
formulated its first industrial investment policy in 1973, revised
it again in 1974, 1975, and in 1978. Foreign private investment
(Promotion and protection) act, 1980 and the Bangladesh Export
Processing Zones authority act 1980 were enacted. To make the
foreign investment more attractive new industrial policy was
announced in 1982. However, the industrial policy 1999 is by far
the most comprehensive document. Bangladesh has ever made for
investment including foreign investment.
With the passage of time Bangladesh reform its regulatory
structure in regard to the FDI to open up the new avenue and to
dislodge the compliances related to the FDI and now it is all
controlled by board of investment (BOI). But the effort of this
structural progress has back warded by sudden and unexpected
political influence and changes. The situation becomes worse one in
the September attack on US. Bangladesh had also severely affected
by that unwanted changes in the world scenario. Before going for in
depth analysis the flow of FDI in Bangladesh we have the privilege
to have a look on the regional and worldwide flow of FDI in the
recent period.Objective of the studyThis study is conducted with
the objective to get an overall insight the performance of
Bangladesh board of investment and their operations in the flow of
FDI and local investment in Bangladesh. The total objective is
decomposed into several parts to get idea about BOI and those the
factors affecting the flow of FDI and also the process of FDI in
Bangladesh. The specific objectives of this study are: To give an
overview of Bangladesh and its investment opportunity.
To give an organization structure of BOI.
To analysis the operation, incentives, facilities of BOI.
To give an insight into the theoretical issues relating to
FDI.
To highlight the role of multinational corporation in FDI. To
give an overview of local investment. How FDI held in Bangladesh
the process. To evaluate the status of FDI in Bangladesh. To
identify the problem of FDI & prescribe some issues for their
solution.Scope of the studyThe primary scope of this paper is to
get acquainted with the flow of foreign direct investment and local
investment and the evaluation of performance of BOI. The study will
cover the scenario of FDI and current situation and opportunity of
investment in Bangladesh. Comparative analysis of statement of
sector wise distribution of FDI in Bangladesh and sources of FDI
has been presented. The findings will be strictly structured upon
the data provided by the Directorate of Board of Investment
(BOI).Sources of InformationThroughout the report I presented
historical background of the flow of FDI and to get insight about
the possible changes in the coming years. I have gathered
information and data relevant to this analysis from several
sources. The collected data are highlighted in the tabular analysis
and trend analysis. This analysis helps me to know about the
movement of FDI flow over the year. I also tried to find out the
possible causes and factors that shaped the trend line of the flow.
In a particular year the flow is upward moving at another time this
is downward moving. So what is the reason behind that is the
objective of the study as a whole. The analysis of the report is
supported by some theoretical arguments that enhance the overall
findings and guide towards a reasonable recommendation.Limitations
of the studyAlthough I tried to find and set the causes that
determine the shape of the flow of FDI, I believe Im not at the
best peak. I have relied extensively on published data and other
secondary sources to precede the report. But some of those sources
were not approachable and we lacked from data of that sources. In
analyzing the report I have presented some factors that determine
the shape of the flow of FDI. But these are not surely the only
factors and many important factors may be omitted from the
analysis. And another thing is that the underlying factors are
mostly in qualitative factors in nature and therefore cannot be
measured in numerical way. The consequences are that we failed to
provide absolute guideline about restructuring policy and some
other decisions. The finding of the report is based on some assumed
scenario and changes on those scenarios may reshape the future flow
of FDI. That is the analysis is situation and time based. The
biggest problem we faced in the reporting period is the paradoxical
data set. I have three sets of data in regard to the FDI, but all
that provides us contradictory result. Board of Investment does not
confirm what the Bangladesh bank published and vice versa. On the
other hand the recording of FDI data is almost a new concept in our
country. Why Invest in Bangladesh? From the inception of the
independence Bangladesh has been in the centre of economic
investment incentive for many countries and institutional bodies of
the world. With the passage of time Bangladesh reform its
regulatory structure in regard to the FDI to open up the new avenue
and to dislodge the compliances related to the FDI. But the effort
of this structural progress has back warded by sudden and
unexpected political influence and changes. The situation becomes
worse one in the September attack on US. During this period flow of
FDI all over the world shrunken at a greater extend. Bangladesh had
also severely affected by that unwanted changes in the world
scenario. Before going for in depth analysis the status of
Bangladesh from different aspects are discussed. Bangladesh could
be an attractive place of FDI. It is located between the growing
markets of south Asia.
Economic Status: The macroeconomic situation of the country is
by large, stable, characterized by a manageable fiscal deficit and
low current account deficit. In external trade, it has steady
export growth. Foreign Exchange reserve is not bad. Political
Status: Bangladesh is a developing country having a republic type
democratic government. It has British style parliamentary system.
After liberation in 1971 the then government nationalized all the
key industries. As a result, aid from western world remains as the
means of survival. But development of Bangladesh through aid seems
to have failed. We see hat Bangladesh is still poverty-ridden. As
the effectiveness of aid declined very much demand arose about
market access to the developed countries of the product &
services of developing countries. But the market access of
developed countries is faced with several problems of which
politics seems to be prominent. A free trade policy otherwise
called globalization is seen as a lively remedy to solve both the
problems of developed and developing countries.
Investment Status: The present democratic government
concentrates on more local & foreign investments in oil, gas,
cement, infrastructure, textile sectors of Bangladesh to face the
challenges of the twenty first century. Though prospects are there
in Bangladesh, due to insufficiency of capital & technology
greater investment is no taking place. However the recent trends o
administrative, banking and infrastructure reform process, low rate
of inflation compared to the neighboring countries( in Pakistan
11.2%, in India 8.5%, Srilanka 16.7 % and Bangladesh 5%) and
separate export processing zones are some of the indicators of the
countries development process. That may help in attracting local
and foreign investors from developed countries.
Besides, the most important tasks is to revive the rural economy
so that the migration of rural people will come down, because a
country like Bangladesh has poor resources to meet the bargaining
demand of the citizens already settled in the urban areas.
Strategic Location of Bangladesh
Photo: Bangladesh on the world mapChina and India between them
have vast and increasingly prosperous populations, which are
projected to grow to three billion by 2050. Bangladesh is well
situated in every sense to take advantage of this opportunity. With
improving education, technology and economic growth, Bangladeshs
own market of 146.6 m people is becoming increasingly attractive to
business and foreign investors. The cost of doing business in
Bangladesh has significantly and visibly decreased in recent
times.Advantageous Trading Agreements All Bangladeshi products
(other than armaments) enjoy complete duty and quota free access to
EU, Japan, Canada, Australia and most other developed
countries.
Bangladesh is a signatory to the Multilateral Investment
Guarantee Agency (MIGA); Overseas Private Investment Corporation
(OPIC), USA; International Center for Settlement of Investment
Disputes (ICSID); World Intellectual Property Organization
(WIPO).
Bilateral agreements to avoid double taxation have been signed
with 28 countries with a further nine countries under
negotiation.Attractive Business and Investment Climate
Bangladesh inherits a largely homogeneous society, in which
people live in harmony and peace, irrespective of race and
religion. It is a democratic country, providing broad and
non-partisan political support for market-oriented reforms and for
active encouragement of foreign investors.
The Foreign Private Investment (Promotion & Protection) Act
1980 provides protection for investments made in
Bangladesh.Bangladesh is Youth and AmbitionUnlike older
industrialized societies with growing legions of ageing dependents,
Bangladesh has a very youthful demographic.
59.3 % of the population are economically active (15 years and
over).
The country is young too,40 years old.
Improving Education and Skills
Bangladesh has 31 public universities, 54 private universities,
60 teacher training colleges and 1,143 technical and vocational
institutions.
Typical of the sub-continent, vocational training and
professional qualifications are highly respected.
Thousands of Bangladeshis who have wide work experience abroad
add to the national reservoir of skill.
English Widely Spoken
The national language is Bengali or Bangla.
Yet our second language, English, is widely spoken, understood
and written.
More than 90% of staff at management level is fluent in
English.
Source: Bangladesh Bureau of Educational Information And
Statistics, Bangladesh Technical education BoardBangladesh Export
Competitiveness
Bangladesh, despite being a least developed economy, has a
proven record in export competitiveness. Here is a summary of the
facts. From 2003 to 2007 Bangladesh achieved annual export value
growth of 19.6%, a testimony to its export competitiveness. Whilst
not wishing to be complacent, and being mindful of difficult global
trade conditions in 2008-2010, these positive trade differentials
are likely to be with Bangladesh well into the future.
Manufacturing output has seen steady growth, recently in double
figures. Bangladesh provides significant benefits to exporters.
Bangladesh offers a most liberal FDI regime in South Asia, with
no prior approval requirements or limits on equity participation
and repatriation of profits and income in most sectors.
Bangladesh enjoys tariff-free access to the EU, Canada,
Australia and Japan. Bangladesh is the top manufactured products
exporter to the least developed countries as well as to Europe,
with more than 50% market share.
Competitive Cost Base
In January 2010, JETRO conducted a comparative survey of
investment-related costs in 29 major cities and regions in Asia.
The following comparison is based on that survey with some selected
cities. Bangladesh offers a truly low competitive cost base. Wages
and salaries are still lowest in the region, a strong business
advantage. Yet this is an increasingly well educated, adaptive and
peaceful population with many skilled workers. Dhaka's skilled
labor cost base is still less than the other major cities. Dhaka's
management grades are 2-3 times less than in Singapore, Shanghai,
and Bangkok. Industrial estate rent in Dhaka is cost effective than
Shanghai, Jakarta, Bangkok Office rents are also very competitive
with other international cities. Dhaka's housing rent for
foreigners are less expensive than Singapore, Mumbai, Karachi,
Hanoi. Cost of diesel in Dhaka is found to be more competitively
priced than most other large cities.Fiscal and Non-Fiscal
Incentives
Bangladesh offers some of the worlds most competitive fiscal
non-fiscal incentives. BOI can advise further on this matter.
In summary and in most cases, these amount to the following:
Remittance of royalty, technical know-how and technical assistance
fees.
Repatriation facilities of dividend and capital at exit.
Permanent resident permits on investing US$ 75,000 and
citizenship on investing US$ 500,000.
Tax holidays : In the Dhaka & Chittagong Divisions: 100% in
first two years: 50% in the year three and four: and 25% in the
year five.
In the Rajshahi, Khulna, Sylhet, Barisal Divisions and three
Chittagong Hilly Districts: 100% for first three years, 50% for
next three years, 25% for year seven.
Depreciation allowances : Accelerated depreciation for new
industries is available at the rate of 50%, 30% and 20% for the
first, second and third years respectively, on the cost of plant
and machinery.
Cash and added incentives to exporting industries : Businesses
exporting 80% or more of goods or services qualify for duty free
import of machinery and spares, bonded warehousing.
90% loans against letters of credit and funds for export
promotion.
Export credit guarantee scheme.
Domestic market sales of up to 20% is allowed to export oriented
business located outside an EPZ on payment of relevant duties.
Cash incentives and export subsidies are granted on the FOB
value of selected exports ranging from 5% to 20% on selected
products.
About Board of Investment (BOI)Board of Investment (BOI) was
established by the investment board Act 1989 to promote and
facilitated investment in the private sectors both from domestic
and overseas sources with a view to contribute to the social
economic development of Bangladesh. It is headed by the Prime
Minister and is a part of the Prime ministers office. Its
membership included representatives (at the highest level) of the
relevant ministries- industry finance, planning, textiles, foreign,
commerce, telecommunications, energy power, science and information
& communication technology etc. and other autonomous body, such
as Governor of Bangladesh Bank, precedents of FBCCI and BCI.
Broadly, the objective of BOI is to encourage and promote
investment in the private sector both from domestic and overseas
sources and to provide necessary facilities and assistance in the
establishment of industrial sectors with a view to contribute to
the socio-economic development of Bangladesh.
BOIs Major Functions
Investment Promotion
Country promotion. Sector/industry promotions. Publications on
business processes.Investment Facilitation Pre-investment
information and counselling service.
Investor welcome service (faster immigration).
Registration/approval of foreign, joint-venture and local
project.
Registration/approval of branch/liaison/representative
offices.
Approving work permit for the foreign nationals.
Facilitating utility connections (electricity, gas, water &
sewerage, telecom etc.).
Assistance in obtaining industrial plots.
Approving remittance of royalty, technical know-how and
technical assistance fees.
Facilitating import of capital machinery & raw
materials.
Approving foreign loan suppliers' credit, PAYE scheme etc.Policy
Advocacy Advocating policy suggestions to the government.
Assisting the government in framing new policies for private
sector development.
Assisting the National Taskforce on investment climate
facilitation.Organization StructureSl.PositionName and
Designation
1.ChairpersonSheikh Hasina Honble Prime Minister
2.Vice ChairpersonDilip BaruaHonble Minister
Ministry of Industries
3.MemberAbul Maal Abdul MuhitHonble Minister
Ministry of Finance
4.MemberAbdul Latif SiddiquiHonble Minister
Ministry of Textiles & Jute
5.MemberAir Vice Marshal (Retd) A K KhondkerHonble Minister
Ministry of Planning
6.MemberAdvocate Shahara KhatunHonble Minister
Ministry of Post and Telecommunications
7.MemberEngineer Khandaker Mosharraf HossainHonble Minister
Ministry of Expatriates Welfare and Overseas Employment
8.MemberCol. (Retd) Faruk KhanHonble Minister
Ministry of Civil Aviation and Tourism
9.MemberDr. Dipu MoniHonble Minister
Ministry of Foreign Affairs
10.MemberArchitect Yeafesh OsmanHonble State Minister
Ministry of Science and Information & Communication
Technology
11.MemberBrig Gen (Retd) Muhammad Enamul HuqHonble State
Minister
Ministry of Power, Energy & Mineral Resources
12.MemberDr. Atiur RahmanGovernor
Bangladesh Bank
13.MemberMohammad Moinuddin Abdullah Secretary
Ministry of Industries
14.MemberFazle KabirSecretary
Ministry of Finance
15.MemberMd. Ghulam HussainSecretary-in-Charge
Internal Resources Division
16.MemberKazi Akram Uddin AhmedPresident, The Federation of
Bangladesh
Chambers of Commerce and Industry (FBCCI)
17.MemberA. T. M. WaziullahPresident
Bangladesh Chamber of Industries (BCI)
18.Member-SecretaryDr. Syed A SamadExecutive Chairman
Board of Investment
Performance of BOI Bangladesh1. Industrious Low-Cost
WorkforceBangladesh offers a well-educated, highly adaptive and
industrious workforce with the lowest wages and salaries in the
region. 57.3% of the population is under 25, providing a youthful
group for recruitment. The country has consistently developed a
skilled workforce catering to investors needs. English is widely
spoken, making communication easy.
2. Strategic Location, Regional Connectivity and Worldwide
AccessBangladesh is strategically located next to India, China and
ASEAN markets. As the South Asian Free Trade Area (SAFTA) comes
into force, investors in Bangladesh will enjoy duty-free access to
India and other member countries 3. Strong Local Market and
GrowthBangladesh has proved to be an attractive investment location
with its 146.6 million populations and consistent economic growth
leading to strong and growing domestic demand.
4. Low Cost of EnergyEnergy prices in Bangladesh are the most
competitive in the region. Transportation on green compressed
natural gas is less than 20% of the diesel price.
5. Proven Export CompetitivenessBangladesh enjoys tariff-free
access to the European Union, Canada, Australia and Japan. In
Europe, Bangladesh enjoys 60% of the market share and is the top
manufacturing exporter amongst 50 least developed countries.
6. Competitive IncentivesBangladesh offers the most liberal FDI
regime in South Asia, allowing 100% foreign equity with
unrestricted exit policy, easy remittance of royalty, and
repatriation of profits and incomes.
7. Positive ClimateA largely homogeneous society with people
living in harmony irrespective of race and religion, Bangladesh is
a democratic country enjoying broad bi-partisan political support
for private investment. The legal and policy framework for business
is conducive to foreign investment. For detailed about legal
infrastructure of Bangladesh please visit Business Laws.
Export Processing Zones (EPZ)Export Processing Zones (EPZs) are
export oriented industrial enclaves which provide the
infrastructures, the facilities, administrative and support
services for a wide variety of enterprises. Bangladeshs highly
successful EPZs in Dhaka and Chittagong are now complemented by new
EPZ developments and other valuable real estate developments around
the country.
The Bangladesh Export Processing Zones Authority (BEPZA) is the
official organ of the government to promote, attract and facilitate
foreign investment in the Export Processing Zones. The primary
objective of an EPZ is to provide special areas where potential
investors would find a congenial investment climate, and location
free from cumbersome procedures. Businesses from 32 countries have
so far invested in the existing zones.
There are currently eight zones with others due to open in the
next few years.
1. EPZ-Adamjee2. EPZ-Chittagong 3. EPZ-Dhaka 4. EPZ-Mongla5.
EPZ-Uttara6. EPZ-Ishwardi 7. EPZ-Comilla8. EPZ-KarnaphuliIf you are
interested in setting up your business in an EPZ, the Board of
Investment will be pleased to advise you and introduce you to
BEPZA.
Incentives & Facilities
Fiscal Incentives1. 10 years tax holiday for the Industries to
be established before 1st January, 2012 and Industries to set up
after 31st December, 2011 tax holiday period will be:
Tax exemption periodRate of tax exemption
First 02 years (1st and 2nd Year)100%
Next 02 years (3rd and 4th Year)50%
Next 01 years (5th Year)25%
2. Duty free import of construction materials.
3. Duty free import of machineries, office equipment & spare
parts etc.
4. Duty free import and export of raw materials and finished
goods.
5. Relief from double taxation.
6. Exemption from divident tax.
7. GSP facility available.
8. Accelerated depreciation on machinery or plant allowed.
9. Remittance of royalty, technical and consultancy fees
allowed.
10. Duty & quota free access to EU, Canada, Norway,
Australia etc. Non Fiscal Incentives1. 100% foreign ownership
permissible.
2. Enjoy MFN (most favored nation) status.
3. No ceiling on foreign and local investment.
4. Full repatriation of capital & dividend.
5. Foreign Currency loan from abroad under direct automatic
route.
6. Non-resident Foreign Currency Deposit (NFCD) Account
permitted.
7. Operation of FC account by 'B' and 'C' type Industries
allowed.
Facilities 1. No UD, IRC, ERC and renewal of Bond license.
2. Work permits issued by BEPZA.
3. Secured and protected bonded area.
4. Off-Shore banking available.
5. Import on Documentary Acceptance (DA) basic allowed.
6. Bank of Back L/C.
7. Import and Export on CM basis allowed.
8. Import from DTA (Domestic Tariff Area).
9. 10% sale to DTA (Domestic Tariff Area).
10. Customs clearance at factory site.
11. Simplified sanction procedure.
12. Sub-contracting with export oriented Industries inside and
outside EPZ allowed.
13. Relocation of foreign industries allowed.
14. Accords Residentship and Cityzenship.
15. One Window same day service and simplified procedure.
Foreign Direct Investment (FDI)Foreign Direct Investment is one
of the vital forces to boost up the economy. In this project report
I would like to draw a current scenario of Foreign Direct
Investment in Bangladesh. In this regard I present the most updated
data, avoid the uncompleted data and use the best judgment at the
time of presenting the data to better knowing the current trend
about the Foreign Direct Investment in Bangladesh. Foreign Direct
Investment (FDI) has played a key role in the modernisation of the
Bangladesh economy for the last 15 years. Foreign Direct Investment
(FDI) is the acquisition of managerial control by a citizen or
corporation of a home nation over a corporation of some other host
nation. Corporations that widely engage in FDI are called
multinational companies, multinational enterprises, or
multinational corporations. FDI traditionally implies export of
real capital from home to the host nation, but even when economic
investment results from FDI, capital may not be transferred from
the home nation to the host one. Rather, multinational corporation
may acquire/utilize real capital from local (or a third-nation)
sources foreign capital means capital invested in Bangladesh in any
industrial undertaking by a citizen of any foreign country or by a
company incorporated outside Bangladesh. In the form of foreign
exchange, imported machinery and equipment, or in such other form
as the government may approve for the purpose of such investment;
Bangladesh invites FDI for industrial growth, in particular
welcoming establishment of manufacturing firms and service sector
enterprises that would sell their products within the country and
also export outside it.Factors Affecting FDIBecause Foreign Direct
Investment can significantly affect a countrys economy, the most
influential factors are:
i. Impact of Inflation:If a countrys inflation rate increases
relative to the countries with which it invests, its capital
account would be expected to decrease, other things being equal.
Consumer and corporations in that country will most likely purchase
more goods or invest more in overseas (due to high local
inflation), while the countrys exports to other countries &
flow of investment from foreign will decline.
ii. Impact of National Income:
If a countrys income level (national income) increases by a
higher percentage than those of other countries, its capital
account is expected to decrease, other things being equal. As the
real income level (adjusted for inflation) raises does consumption
of goods. A percentage of that increase in consumption will most
likely reflect an increased demand for foreign investment.
iii. Impact of Government Restrictions:
A countrys Government can prevent or discourage investment from
other countries. By imposing such restrictions, the Government
disrupts investment flows. Among the most commonly used investment
restriction are bureaucratic tangles, projection of intellectual
property right and f\fiscal policy changes. In addition to these, a
Government can reduce its countrys investment by enforcing laws, or
a maximum limit that can be invested.
iv. Impact of Exchange Rates:
Each countrys currency is valued in terms of other currencies
through the use of exchanges rates, so that currencies can be
exchanged to facilitate international transaction. The values of
most currencies can fluctuate over time because of market and
government forces. If a countrys currency begins to rise in value
against other currencies, its capital account balance should
decrease, other things being equal. As the currency strengthens,
Investment by that country will become more expensive than the
receiving countries.
Necessity of FDIThe world has seen a spectacular wave of global
corporate activity particularly during the second half of the last
decade. This has been facilitated by advances made in the
information technology. This trend, strengthened with the direction
toward border less-Economies, is drawing more and more TNCs (Trans
National Corporation) into the global operation. FDI is no longer
only a strategic option of corporations; it also plays a key role
in the national economic development strategies. Various countries
are attempting to attract foreign investors through a variety of
measures, i.e. liberalization of investment environment, fiscal
reforms and a package of incentive offers. FDI can transform a
countrys economic scenario within shortest possible time. It is not
merely access to fund, but also provide transfer of technical
know-how and management expertise. It is also a stabilizing factor
in any economy, because once TNCs have made an asset-based direct
investment, they can not simply pull out overnight like in the case
of portfolio investment. Normally the benefits accruable from FDI
are inclusive of
(a) Transfer of technology to individual firms and technological
spill-over to the wider economy,
(b) Increased productive efficiency due to competition from
multinational subsidiaries.(c) Improvement in the quality of the
factors of production including management in other firms, not just
the host firm.(d) Benefits to the balance of payments through
inflow of investment funds.(e) Increase in exports.(f) Increase in
savings and investment and.(g) Faster growth and employment.
Thus, foreign direct investment is viewed as a major stimulus to
economic growth in developing countries. Its ability to deal with
two major obstacles, namely, shortages of financial resources and
technology and skills, has made it the centre of attention for
policy-makers in low-income countries in particular.
Foreign Investment OpportunityPrivate investment from overseas
sources is welcome in all areas of the economy with the exemption
of five industrial sectors (arms, production of nuclear energy,
forest plantation and mechanized extraction within the bounds of
reserved forests, security Printing and minting, air transportation
and railways) reserved for public sector. Such investments can be
made either indecently or through joint venture on mutually
beneficial terms and conditions. In other words, 100% foreign
direct investment as well as joint venture both with local private
sponsor and with public sector is allowed. Foreign investment,
however, is specially desired in the following categories:
export-oriented industries;( industries in the Export Processing
Zones;( high technology products that will be either
import-substitute or export-oriented;( undertaking in which more
diversified use of indigenous natural resources is possible;( basic
industries based mainly only on local raw materials;( investment
towards improvement of quality and marketing of goods( manufactured
and/or increase of production capacities of existing industries;
and Labour intensive/technology intensive/capital intensive
industries.(Inflows of FDIThere was an inflow of $666m foreign
direct investment in 2007 which raised significantly in 2008 to
$1086m. As of 2011, inflows of foreign direct investment recorded
to $1136.38m.
Foreign and Joint Venture Investment
In the year 2009-10 (February), there were 89 new foreign and
joint venture investment projects registered to BOI which amount to
$590m. The projects were invested to mainly in the service,
engineering, clothing and agricultural sectors.
Country wise foreign and joint venture investment during
2009-2010 CountryNo. of ProjectsProposed Investment (US$ m)
Saudi Arabia3478.652
Australia42.036
USA52.990
Finland23.023
India98.451
South Korea1233.768
Malaysia33.056
Netherlands58.544
China1221.000
United Kingdom53.507
Pakistan20.990
Japan82.624
Denmark11.217
Sri Lanka20.646
Canada21.017
Taiwan10.502
Singapore41.929
Turkey10.150
Greece10.156
Italy21.039
Hong Kong514.805
Total89590.102
Source: Bangladesh Economic Review-2011 (Bangla version),
Ministry of FinanceFDI Magazine's rankings
FDI Magazine of The Financial Times in March 2010 conducted a
competition entitled Global Ranking Competition of Economics Zones
based on the following nine categories of ranking:
Best Overall Global Special Economic Zone
Best Economic Potential
Best Cost Effectiveness
Best Facilities
Best Transportation Link
Best Incentives
Best Promotion
Best Airport
Best Port
In the competition out of 700 Economic Zones globally 200
participated in the competition. All the zones were evaluated on a
10 point scale on the basis of some set criteria. Among the top 10
of the two categories Chittagong Export Processing Zone, Bangladesh
scored 3rd position in the Best Cost Effectiveness and also 4th
position in the Best Economic Potential for 2010-2011.Future of FDI
in Bangladesh According to a recent study, FDI inflows are
projected to average about $900 million annually from 2000-2010, as
compared to $620 million annually during 1992-2000. Outflows in
this case would rise, on an annual basis, from a mere $129 million
during 1996-2000, to almost $600 million during 2001-2005, and $1.2
billion during 2006-2010.
The energy sector has been the principal recipient of the
inflows but, if current trends continue, foreign investment in
telecom, manufacturing, and services could overtake energy by 2006.
All these expected trends in FDI depend on several factors. The
regulatory body like Board of Investment and other government and
non-government institution should take proper step to remove the
obstacles in the way of foreign direct investment.
Despite substantial changes in government policy, Bangladesh has
failed to attract satisfactory levels of FDI and reasons for this
failure can be identified quite easily. Government policy is
obviously an important factor influencing inflows of FDI. But,
there are other, equally important factors. So far as the
investment related policies of the government are concerned, these
are fine in spirit, but their actual implementation continues to
create obstacles for both local and foreign investors. An
inefficient and not-too honest bureaucratic system is primarily
responsible for this problem. All the administrative barriers are
in fact generated from this non-investment-friendly bureaucratic
system.Major findings from the study of FDIFour major conclusions
can be drawn from the study: Bangladesh has experienced a more
stable (less vulnerable) form of capital inflow, with FDI making up
about 85-90 percent of the total inflows so far.
Both FDI and private debt inflows in Bangladesh have largely
financed imports of machinery and equipment a sign that Bangladesh
is only in the preliminary phase of FDI flows.
FDI and debt inflows have not helped in augmenting foreign
exchange reserves so far and are not expected to do so over the
next 10 years. In fact, as inflows grow so do outflows in the
medium- to long-term.
The benefits of FDI are many and worth harnessing. But the
downside risks must not be overlooked. The growing repayment
obligation presents the prospects of net negative transfers in the
future and poses major challenges requiring the country to search
for new avenues of earning (or saving) additional foreign exchange.
The benefits of FDI in terms of physical capital formation,
transfer of technology, and know-how are sufficient to justify
sustaining these flows. Capital controls are not the answer to a
rising flow of FDI. To ensure that resulting payments liabilities
remain within the country s debt-servicing capacity, it is
essential to develop an effective non-intrusive reporting and
monitoring system the main ingredients of which are presented in
the study.FDI Process in BangladeshImplementing a 100%
foreign-owned or joint venture industrial project in Bangladesh is
a rather simplified process. The entire process is divided into 5
(five) major steps as presented the following diagram
1. Information Search
Board of Investment (BOI):
The most reliable information source of the Government of
Bangladesh regarding investment.
Government of Bangladesh Agencies:
Other sources of the Government of Bangladesh like Ministries
and trade related offices. Chambers:
Chambers can provide real experiences of the existing investors.
Among other chambers following are some helpful chambers helpful to
the foreign investors: The Federation of Bangladesh Chambers of
Commerce and Industry (FBCCI)
Foreign Investors Chamber of Commerce & Industry (FICCI)
The Dhaka Chamber of Commerce & Industry (DCCI)
Metropolitan Chamber of Commerce & Industry (MCCI)
International Chamber of Commerce in Bangladesh (ICCB)
Associations:
Business associations of the country could also provide specific
information related to the respective industry.
International Organizations:
UN bodies like World Bank, UNCTAD, UNDP, WTO, IFC, MIGA, FIAS
etc. and other international organizations could also be a
trustworthy source.
Consultants:
Independent business consulting firms and consultants provide
professional services and assistance.
Websites:
A number of independent websites on Bangladesh hosted in
different locations of the world could be surfed from the Web. The
keyword searching by 'Bangladesh Investment', 'Bangladesh
Business', 'Bangladesh Profile', 'FDI Bangladesh' etc. would
provide numerous results. To have more results, please search in
different search engines like Google, Yahoo and Lycos etc.2.
Physical VerificationUpon analysis of the collected information and
initial decision to move forward, the investor requires to visit
Bangladesh to have physical verification. He could either visit
independently or ask LEIC or the partner to arrange the
visit.Immigration Procedures
Business travellers may request for visas with year duration and
multiple entries. Bangladesh issues following categories of
business visas:
Single-entry for three months
Single-entry for six months
Multiple-entry for six months
Multiple-entry for one year
Multiple-entry for five year
Multiple-entry for work period
Extensions of each of the above are also permitted
Landing Permit (LP)/Visa on Arrival (VOA)
The foreign investors and businesspersons could avail LP/VOA
from Zia International Airport for maximum 30 days under the
following conditions:
The foreign investors are identified on the basis of
certification from Board of Investment (BOI)/ BEPZA / Ministry of
Industries. Officials from the BOI are on duty round-the-clock to
facilitate certification of the relevant documents to get
VOA/LP.
The foreign businesspersons who are directly associated with
import of Bangladeshi products are identified on the basis of the
certificate by the relevant associations of export-oriented
commercial/industrial organizations or the FBCCI or the BGMEA. The
certificate shall include Tax Identification Number (TIN) of the
respective local commercial/industrial organizations.
The conditions of issuing LP/VOA include following:
The period of LP/VOA can not be extended.
The LP/VOA applicant shall have endorsement of US$500 in the
passport / in cash.
The LP/VOA Fee will be determined on Reciprocity Policy with the
respective countries.
The applicant shall have Return Air Ticket.
The applicant shall utilize same port for entry and
departure.
Various Types of Companies in BangladeshBusiness in Bangladesh
may be carried on by a company formed and incorporated locally or
by a company incorporated abroad but registered in Bangladesh. The
incorporation or registration is done by the Registrar of Joint
Stock Companies and Firms (RJSC&F) under the provisions of the
Company's Act 1994. Companies could be classified in following
categories:
Limited Companies:
Company Limited by Shares
Private Limited Company
Public Limited Company
Company Limited by Guarantees
Unlimited Companies: unlimited companies and companies limited
by guarantees may or may not have share capital.
Private Limited Company
Restricts the rights to transfer the shares
Limits the number of its members to minimum 2 and maximum 50
excluding the persons employed in the company
Prohibits any invitation to the public to subscribe for the
shares or debentures of the company
Entitles to commence business from the date of its
incorporation
Public Limited Company May issue invitation to the members of
the public to subscribe the shares and debentures of the company
through a prospectus which complies with the requirements of the
Companies' Act 1994 and the Securities and Exchange Commission Act
1993 as amended from time to time
Has minimum 7 members, but there is no maximum limit
Has at least 3 Directors
May a private company converted into a public company
Incorporation Options for Foreign InvestorsForeign investors can
incorporate following types of companies:
Setting up a 100% foreign-owned company in Bangladesh
Setting up a Joint Venture with Bangladeshi company/investor
Establishing the Company's Place of Business in Bangladesh
Setting up a branch or a subsidiary of a foreign company in
Bangladesh
Setting up a Bangladeshi Company or participate in a Bangladeshi
Company already formed.Company Formation Procedure
To register a company with the Registrar of Joint Stock
Companies and Firms (RJSC&F), promoters have to undertake
activities in following steps:Step 1: Selection of the Company
Name
Step 2: Memorandum of Association (MOA)
Step 3: Articles of Association (AOA)
Step 4: Registration Application. The application should
include:
Application Form. Duly filled in, signed and stamped
MOA Duly signed and stamped
AOA Duly signed and stamped
Registration Fees
Stamp Duty for MOA
Stamp Duty for AOA Private Companies (also require)
Form I: Declaration on Registration of Company
Form XI: Notice of situation of registered office or any change
therein
Form VI: Consent of Director to Act
Form X: List of Persons Consenting to be Directors
Form XII: Particulars of Directors, Managers and Managing Agents
and any change therein.Public Companies (also required)
Form XI: Agreement to take Qualification Share of the Propose
Company
Form XIV: Declaration before commencing business in case of the
company filling a Statement in lieu of Prospectus upon complete
submission of the above, registration is given by the RJSCF.
Establishing Place of Business
In establishing a place of business of a foreign company, the
company has to be registered with the Registrar of Joint Stock
Companies as the place of business. Such registration is required
in respect of capital issue and obtaining clearance from the
central bank i.e. Bangladesh Bank.
Documentary Requirements Include:
Prescribed Application Form. Duly filled in, signed and
stamped.
Copies of Charter, statutes or MOA and AOA or other similar
instrument. Duly certified by Oath Commissioner or Notary Public
and authenticated by Bangladesh Embassy in the respective
country.
List of Company Directors and Secretary.
Complete address of the Registered or Principal Office in the
country of origin.
Opening of Liaison/Branch/Representative Office
To open or seek extension of Liaison/Branch/Representative
Office of a foreign company, the company has to submit in prescribe
application form to Board of Investment along with following
documents:
Prescribed Application Form. Duly filled in, signed and stamped.
MOA and AOA of the Principal Company. Certificate of Incorporation.
Name and Nationalities of the Directors/Promoters of the Principal
Company . Board Resolution to open a Branch/Liaison/Representative
Office in Bangladesh. Audited Accounts of the last financial year.
Proposed organogram of the office. List of activities of the
proposed office
All papers/documents must be attested by the Bangladesh
Embassy/High Commission of the country of origin. Embassy/High
Commission of the applicant's country of origin or Apex Chamber of
Commerce of the country of origin. The Trade License has to be
secured from the local government office like City Corporation or
Municipality or Union Parishad, as applicable.Securing Trade
LicenseJoint Venture and 100% Foreign Investment proposal in the
Private Sector
Entrepreneur/investors are advised to apply for registration to
Board of Investment (BOI) in order to avail of facilities and the
institutional support services provided by the Government.
Prescribed application form has to be collected from BOI Office
or downloaded from BOI website. Documents to be enclosed with the
application are:
Application in prescribed Form duly filled in. 2 (two)
copies.
Certificate of incorporation along with Memorandum &
Articles of Association in case of Public/Private Limited Company.
In case of Joint Venture Project (JVP), JVP Agreement duly signed
in by both the parties. 2 (two) copies.
Attested copies of Deeds/Documents in support of project land
(in case of own land, Purchase Deed and in case of lease / rental
premises, Deed of Agreement). 2 (two) copies.
If the total project cost exceeds Tk. 50 (fifty) million, submit
Project Profile 2 (two) copies.
Background of the Promoters in official letterhead pad
describing Name, Permanent and Mailing Address, Position and
Nationality. 7 (seven) copies.
List of machinery indicating quantity and price. 7 (seven)
copies.
In case the project is financed by loan, copy of relevant
documents in support of loan. 2 (two) copies.
Pay order / bank draft amounting required amount in favor of
"EXECUTIVE CHAIRMAN AND MEMBER-SECRETARY, BOARD OF INVESTMENT".
After receiving the application duly filled in, signed and required
documents enclosed, BOI reviews the application and, if found
suitable, Registration Certificate is issued by 7 days.3. Plant
Setup
BOI registration makes the company eligible to avail the
incentives and facilities provided by the Government.The
entrepreneurs of such projects are to fill up a simple prescribed
application form and submit to BOI for registration. After a first
hand scrutiny of the information, BOI issues registration
letter.
Application in prescribed Form duly filled in. 2 (two)
copies.
Certificate of incorporation along with Memorandum &
Articles of Association in case of Public/Private Limited Company.
In case of Partnership Project, Partnership Agreement duly signed
in by both the parties. 2 (two) copies.
Attested copies of Deeds/Documents in support of project land
(in case of own land, Purchase Deed and in case of lease / rental
premises, Deed of Agreement). 2 (two) copies.
If the total project cost exceeds Tk. 50 (fifty) million, submit
Project Profile. 2 (two) copies.
Pay order / bank draft amounting required amount in favor of
"EXECUTIVE CHAIRMAN AND MEMBER-SECRETARY, BOARD OF INVESTMENT".
Entrepreneur/investors are advised to apply for registration to
BOI in order to avail facilities and the institutional support
services provided by the Government.
Prescribed application form has to be collected from BOI Office.
Documents to be enclosed with the application are:
After receiving the application duly filled in, signed and
required documents enclosed, BOI reviews the application and, if
found suitable, Registration Certificate is issued by 7 days.
BOI registration makes the company eligible to avail the
incentives and facilities provided by the Government.
Any individual entrepreneur either local or foreign can set up
an industry with Public Sector Corporation. Such joint venture is
required to be registered with the BOI if the private sectors
contribution is more than 50% of the project cost and in such case
it is treated as private sector project. For any public sector
which makes contribution out of its own fund needs approval of the
concerned ministry. The public sector project is processed by the
concerned Ministry for approval of the Planning Commission.
Government promotes rapid privatization of the state-owned
enterprises (SOEs).
Infrastructure and high involvement projects like power have
been encouraged for public-private joint venture.Obtaining
Industrial Plot
Entrepreneurs requiring industrial plot for setting up of
industry in any industrial areas/estates apart form BEPZA and
BSCIC, may apply to BOI as following with a view to justifying
actual requirement:
Mentioning of the size of plot required
Copies of sanction / registration letter and
Industrial Layout Plan
After receiving the application, BOI provides assistance to get
the industrial plot.
Most of the industrial areas/ estates are owned / controlled by
city development authorities in three divisional head quarters.
RAJUK in Dhaka, CDA in Chittagong and KDA in Khulna. Besides, a few
industrial estates are owned and controlled by some other
government agencies namely (a) Public Works Department and (b)
Housing and Settlement Directorate.Registration/Approval for
Foreign Loan, Suppliers Credit, PAY Scheme etc.
Entrepreneurs in the private industrial sector arranging foreign
credit in the form of loan, suppliers' credit, PAVE scheme etc. are
required to obtain prior approval from the Scrutiny Committee
headed by the Governor of Bangladesh Bank. However, all necessary
processes are completed at BOI. Representatives from Bangladesh
Bank provide technical assistance to the applicants.
Obtaining Utility Connection Providers
Electricity: Power Development Board (PDB), Dhaka Electric
Supply Authority (DESA), Dhaka Electric Supply Company (DESCO) and
Rural Electrification Board (REB).
Gas: Gas:Titas Gas Transmission & Distribution Company Ltd.
(TGTDCL), Bakhrabad Gas System Ltd. (BGSL) and Jalalabad Gas
Transmission & Distribution System Ltd. (JGTDSL).Telephone:
Bangladesh Telegraph and Telephone Board (BTTB) for Land phone
Grameenphone, Citycell, AKTEL, Bangladesh Telecom, Bangladesh Rural
Telecom Authority, Sheba Telecom, TMI etc. for cellular phone
service.
Water: WASA or Self Generated.Sewerage: WASA or Self
Serviced.Deep Tube well Licensing: WASA.Obtaining Work PermitWork
permit for foreign nationals is required for employment in
Bangladesh. Private sector industrial enterprises (outside EPZ),
branch/liaison/representative office of foreign origin and also
local commercial enterprises desiring to employ foreign nationals
are required to apply in the prescribed form obtainable from BOI.
For expatriate employment the guidelines are as follows:
Nationals of the countries recognized by Bangladesh are
considered for employment.
Employment of expatriate personnel is considered only in
industrial establishments and commercial enterprises duty
sanctioned / registered by the appropriate authority.
Employment of foreign nationals is normally considered for the
job for which local experts / technicians are not available and
persons below 18 years of age are not eligible for employment.
Decision of the Board of Directors of the concerned company for
new employment/ extension has to be furnished.
Initially employment of any foreign national is considered for a
team of one year which may be extended on the basis of merit of the
case.
Necessary security clearance has to be obtained from the
Ministry of Home Affairs after issuance of work Permit and the
duration of visa should be extended upto the period of Work
Permit.
For obtaining new Work Permit, the expatriate investors and
employee must arrive in Bangladesh with PI and E types visa
respectively obtainable from concerned Bangladesh Mission in
abroad.
Application for Expatriate Work Permit must be submitted (List
annexed in the Appendix) to BOI within 15 (fifteen) days from the
date of arrival.
Number of the expatriate employees in an industrial enterprise
should not exceed 1:20 (foreign: local) ratio at any time during
regular production and the ratio for commercial enterprises be 1:5
(foreign: local).
Registering with Factoring Act
In order to regulate working conditions and to ensure safety in
the factory, any manufacturing company employing ten or more
workers is required to be registered under the Factories Act, 1965
along with the office of the Chief Inspector of Factories and
Establishment (CIF&F).
The act is primarily to regulate working conditions and to
ensure safety in the factory.
Prescribed Application Form has to be collected from the office
of the Chief Inspector of Factories and Establishment, filled in
and submitted with requirements. The CI&E office issues
registration within the stipulated period.
Registering with Environmental Legislation
Environment Conservation Act 1995 made it mandatory to all
industrial projects to obtained Environmental Clearance Certificate
from the Department of Environment.
The main criteria for obtaining clearance are set out in the
Environment Conservation Rules 1997 which was established under the
Act.
Different levels of assessment are required depending on the
particular industry concerned.
Investors may apply in prescribed forms for Environmental
Clearance Certificate to BOI Utility Service cell (USC) enclosing
required documents. The USC arranges necessary clearances from the
DOE within the stipulated period.
Remittance of Royalty, Technical Know-How and technical
Assistance Fees
No prior permission of BOI is required for entering into
agreements for remitting fees for the purpose of royalty, technical
know how and technical assistance if the total fees and other
expenses connected with technology transfer are within the
following prescribes limit:
For new projects, such fees and other expenses should not exceed
an aggregate limit of 6% of the C&F value of imported
machinery.
Recurrent annual fees for royalties and other expenses such as
fees for technical know-how, technical assistance, operational
services, marketing of products etc. should not exceed an aggregate
limit of 6% of the previous years sales of the firms as declared in
the tax return.
Once the technical transfer agreement s falling within the above
limits are signed, these are required to be furnished to BOI for
registration.
Proposals which are not covered under the prescribed limits
require prior approval of BOI for which application has to be
submitted along with necessary documents and copy of relevant
agreement.
Prior approval/registration should be required from BOI for
remitting any technical fees by industrial concern registered with
the BOI.4. Commercial Operation After completion of the setup, the
plant goes into trial production.
Successful trial production leads to commercial production.
The investor is required to submit half-yearly performance
report to BOI on production and employment in the project.
Any changes in information provided in the registration letter
have to be informed and made approved by BOI immediately.Local
InvestmentSince the establishment of the Privatization Board in
1993 and thereafter the Privatization Commission in 2000, 74 state
owned enterprises (SOEs) have been privatized. 54 were privatized
through outright sale and 20 through offloading of shares. The
major sectors for privatization are jute, textiles, steel,
engineering, sugar and food, banking and financial institutions,
fisheries and livestock, environment and forestry, chemicals,
telecommunications and tourism.Current Privatization Program
Preparations are now on track to dispose off SOEs to private
investors. Non-financial public enterprises in the country have
been categorized into seven sectors, namely:
Industry
Power, gas and water
Transport and communications
Trade
Agriculture
Construction
Services
As of January 2010, 22 SOEs have been included in the
Commissions current programs for privatization. These are
1. Procurement & Sales Organization, Kaptai, Rangamati;
2. Lumber Processing Complex, Kaptai, Rangamati;
3. Karnafuli Timber Extruction Unit, Kaptai, Rangamati;
4. Arco Industries Ltd., Chittagong;
5. SAF Industries Ltd., Noapara, Jessore;
6. Rangamati Textiles Mills Ltd., Ghagra, Rangamati;
7. Tangail Cotton Mills Ltd., Gorai, Tangail;
8. Magura Textile Mills Ltd., Magura;
9. Rajshahi Silk Factory, Rajshahi;
10. Thakurgaon Silk Factory, Thakurgaon;
11. Dhaka Leather Company Ltd., Nayarhat, Savar, Dhaka;
12. North Bengal Paper Mills Ltd., Pakshi, Pabna;
13. Chittagong Chemical Complax,Chittagong;
14. Karnafuli Rayon & Chemical Ltd., Kaptai, Rangamati;
15. Bangladesh Can Company Ltd., Chittagong;
16. Monowar Jute Mills Ltd., Siddirganj, narayanganj;
17. Aroma Tea Ltd., Fauzdarhat, Chittagong;
18. Handloom Facilities Center (HFC), Raypura, Narsingdi;
19. Fish Landin Center & Wholesale Fish Market, Daburghat,
Sunamganj;
20. Dhaka Match Factory;
21. Salatin Syndicate, Dhaka;
22. Tiger Wire Products;
Source: Privatization Commission, BangladeshPrivate Investment
Statistics
Year Proposed Local Investment Proposed Foreign Investment Total
Proposed Investment Growth %
Project BDT Project BDT Project BDT
2005-200617541837013524986188943356124.62
2006-200719301965819111925212131583-27.15
2007-20081615195531435433175824986-20.89
2008-20091336171171321474914683186727.54
2009-201014702741416062611630336785.67
2010-20111298399761482693514466691298.71
2011-201216044970782093389101813835989212
Source: Bangladesh Economic Review-2011 (Bangla version),
Ministry of FinanceRegistration of Local Company
Required Supporting Documents:1. A valid Trade License (in case
of existing industries).2. Two copies of application in prescribed
form duly filled in.3. Two attested copies of deeds of the proposed
land (if the land is owned by the entrepreneur, then attach copies
of original deed or copy of loan agreement for rented building).4.
Memorandum & Articles copy. (If Limited Company).5. Certificate
of Incorporation copy. (If Limited Company).6. Two attested copies
of Partnership Deeds ( if partnership farm).7. Membership
Certificate from local chamber of commerce or trade association
(Only for an existing enterprise).8. Bank Solvency Certificate.9.
Two copies of project profile if the cost of project if exceeds
Taka 5 Crore.10. A pay order/bank draft for registration fees,
(from any scheduled bank) in favour of "Executive Chairman and
Member-Secretary, Board of Investment".Remarks: After submission of
a completed application, BOI will issue a Registration letter along
with a photocopy of all of letter submitted, and duly signed by a
Director of BOI. Entrepreneurs are issued a registration letter
having a registration number.
RecommendationOvercoming the barriers one can now look for the
ways to overcoming the barriers to FDI as we have mentioned above.
Here, we would recommend following measures that the authorities
concerned might consider:
1. Ensuring good governance
Good governance denotes a desirable state of affairs and so is
the key to success of all the reforms. Political and bureaucratic
accountability are the two principal components of good governance,
and without ensuring them, good governance is not possible.
Securing progress on this front is the highest priority as
continued difficulties pose a serious threat to the sustainability
of even the development achieved already. 2. Accountability and
transparencyAccountability and transparency continue to remain the
twin elusive prerequisites for the overall development of the
country. Private sector investment and FDI inflow are severely
hindered by the administrative barriers that arise out of a lack of
transparency and accountability, which logically leads to
inefficiency and corruption. Competence and efficiency, which are
both appallingly, lacking in the bureaucracy, will both become
achievable goals with the infusion of transparency in
decision-making and governance. 3. Co-ordination among state
agenciesWithout reducing the utter lack of co-ordination among the
state agencies, the services and functionaries cannot be efficient.
Assuring proper co-ordination among ministries, departments,
regulatory bodies, and faster decision-making in the implementation
process will enhance the flow of investment.
4. Strengthening the regulatory authorityGovernment agencies
responsible for facilitating investment need to be more active. In
this regard, full autonomy to the agencies like the central bank,
investment promotion agencies, telecom regulatory authority, energy
regulatory authority, securities and exchange commissions etc., is
a prerequisite.
5. Rightsizing the governmentThe size of the state organs is
quite large and thus mostly inefficient, unproductive and
hazardous. So, rightsizing the government is important. By reducing
the number of officials in the decision making process in various
state organs, transparency and accountability of bureaucracy can be
established. Offering a reasonable compensation package to the
officials retained is also one of the key factors in ensuring
transparency and accountability.
6. Judicial and legal reformsA sound judicial system, which is a
must for good governance, is possible when the judiciary can
exercise its authority independently. In this regard, separation of
the judiciary from executive branch of the government is essential
as influence of the executive on the lower judiciary continues to
be exercised. There is need for capacity building in the judicial
system in order to ensure speedy disposal of cases7. Tackling
corruptionTackling corruption in banking, power, other state-owned
enterprises and tax administration ought to be an urgent priority.
A comprehensive resolution of the corruption problem in banking,
power and other state-owned enterprises will require privatization
along with independent regulatory bodies functioning in the public
sector.8. Fiscal reform
Regarding tax administration, reform option includes
establishing an autonomous tax institution with proper incentive
and accountability. Countries of the region can learn from the
international experience of a number of countries including the
Internal Revenue Service of the USA.
9. Infrastructure reform
The main policy challenge is to redefine the role of public
sector in infrastructure development by gradually allowing the
private sector to play a bigger role. Public sectors role should be
restricted to regulatory functions only. Mention may be made here
that, Bangladeshs existing Industrial Policy includes
infrastructure as a thrust sector acknowledging a lead role of the
private sector supported by special incentives and the Finance
Minister of Bangladesh, in his 2002 budget speech, stressed the
need for more private sector participation in infrastructure
development of the country.Conclusion
In conclusion, it could be said that experiences referred to as
above are based on the same encountered in Bangladesh. But, these
are more or less the same in other countries of the region. If the
respective governments do not take appropriate measures, it would
be difficult to attract the expected level of FDI. The policy
regarding the foreign direct investment should be clear and
flexible and should contain some lucrative options for foreign
investors. This will certainly boast up the health of FDI in our
country. Our country is very much underdeveloped. In the context of
an underdeveloped country the role of FDI is very vital and
essential. We do not have sufficient internal resources to meet up
the growing demand of increasing population at different aspect. As
a result we have to rely greatly on FDI to accelerate our economic
growth and to meet up the demand.
Another point is credible and must have to note is the necessity
of common census of foreign direct investment. Only few months back
the BOI and BB have provided contradictory result regarding the FDI
in our country. But there should not be any discrepancy in regard
to this. This figure represents the condition of the country and
should be accurate in nature.
References
1.
http://www.assignmentpoint.com/business/finance/report-on-foreign-direct-investment-in-bangladesh.html2.
http://www.youngconsultants-bd.org/fdi_policy.php3.
http://www.boi.gov.bd/4. http://www.pc.gov.bd/5.
http://www.epzbangladesh.org.bd/6.
http://www.betelco.com/bd/bdsbus/investmt.html7.
http://www.sdnbd.org/sdi/statisticapocketbook/Chap01/0114.htm8.
http://www.thaibizbangladesh.net/investors_guide.php9.
http://www.bonshai.com/local_industry_permission.html10.
http://profilebd.blogspot.com/2012/11/investment-in-bangladesh-through-boi-bd.html
PAGE 16International Business (ITB 301)