Like many other countries in the world including the investors of neighboring countries such as India, Malaysia, Pakistan, Srilanka etc., Bangladeshi entrepreneurs should be allowed to explore the enormous investment opportunities prevailing in South Asia, Southeast Asia, Central Asia, Africa, and the western countries as well.
Overseas investment has numerous potentialities to increases the efficient use of productive resources and being more competitive in the international market. Time has come now for Bangladesh to invest abroad especially when home country has a good amount of foreign currency reserve and faces infrastructural inadequacies including shortage of adequate power and energy. If Bangladesh fails to take advantage of such opportunities, then other countries will definitely do so for which it will limit the scope of increasing GDP growth and poverty alleviation at least to some extent.
The suggestions came in a seminar on “Overseas Investment by Bangladeshi Entrepreneurs” organized by the International Business Forum of Bangladesh (IBFB) at BRAC Centre Inn, Mohakhali in Dhaka on Thursday, 17 November 2016.
Dr. Mashiur Rahman, Honorable Adviser to the Prime Minister (Economic Affairs) was present in the seminar as the Chief Guest, while Mr. Abdul Matlub Ahmad, President of the Federation of Bangladesh Chambers of Commerce & Industry (FBCCI) was present as Special Guest. In addition, Dr. Ahsan H. Mansur, Executive Director, Policy Research Institute of Bangladesh, and Dr. Md. Mozibur Rahman, Director, IBFB and former Chairman, Bangladesh Tariff Commission also attended the seminar as Designated Discussants and expressed their views from different perspectives.
Dr. Mashiur Rahman said, three years back attempts had been initiated by the govt. to liberalize the investment abroad but Bangladesh Bank felt hesitation that time as the reserve was not much higher. Now $32 billion reserve and current account surplus give us the hope to open up overseas investment abroad by the domestic entrepreneurs.
Mr. Abdul Matlub Ahmad stated that the Bangladeshi investors are now much experienced and skilled to carry out diversified business activities which will allow them to invest abroad and harness the maximum benefit. It will be unfair if the restriction still remain on the Bangladeshi investors for investing abroad.
Further, Dr. Ahsan H. Mansur said that as per existing policy 100% export earnings are ultimately deposited to the central bank. Exporters should be allowed to hold and utilize some portion of the export earnings, and open capital account for investing abroad.
Dr. Md. Mozibur Rahman, Director of IBFB urges large reserve can impose adverse impact to the economy by increasing money supply, and triggering the inflation. Allowing overseas investment can mitigate such risks and ensure optimum usage of savings and reserves.
Mr. Hafizur Rahman Khan, President of IBFB chaired the seminar, while Mr. Mahmudul Islam Chowdhury, Founding President of IBFB gave a concluding remark. Mr. M. S. Siddiqui, Director of IBFB moderated the seminar.
The Keynote Paper titled “Policy Guidelines on Overseas Investment by Bangladeshi Entrepreneurs” was prepared by a group of consultants headed by Dr. A. K. Fazlul Haque Shah, Professor, University of Dhaka and was presented in the seminar by Dr. Muhammad Ismail Hossain, Asst. Professor, University of Dhaka.
It was mentioned in the Keynote Paper that global FDI flows are projected to surpass $1.8 trillion in 2018. Many firms from developing countries have gone to the foreign shores in 1960s, 1970s and 1980s (e.g., the first outward venture of India was in 1956), but in case of Bangladesh, things are a bit different. There are some restrictions on overseas investment by Bangladeshi entrepreneurs since its birth, which contradicts with government policy of pursuing free market economy.
Until recently, legally overseas investment was effectively restricted following the Foreign Exchange Regulation Act 1947. However, in September, 2015, the government amended the Act that provides “conditional provision” for opening up overseas investment from the current and capital accounts. Critically, according to Section 5(V) the scope of FDI is strictly limited to those investors, who are only in the export business; other potential investors are effectively erased from availing the said opportunity.
Against such backdrops, IBFB took this initiative to highlight the importance of liberalizing the policy relating to overseas investment by Bangladeshi entrepreneurs further. Over the last four decades, the country lost about $800 million a year on average in capital flight. Money is transferred from Bangladesh to such countries as Malaysia, Canada, India, Singapore, UAE, Thailand, Australia, Hong Kong, Switzerland, the USA and the UK through informal channel. These result in the NBR (National Board of Revenue) to lose huge amount of tax revenues, deprive foreign investment opportunities and learning curve advantages of local multinational companies. The panelist urges if overseas investment would be legally and competitively allowed, then Bangladesh can enjoy numerous benefits such as potential higher rate of return available in overseas market, reduce transport cost which will make the product/service more competitive, gain easier access to cheap or skilled labor, and learn valuable skills, increased overseas investment income for a country.
In order to promote, facilitate, and deal with all the relevant issues of overseas investment, a strong suggestion has been raised from the seminar to form an independent Overseas Investment Cell. In addition to this IBFB suggested to amend the Foreign Exchange Regulation Act, 1947 to liberalize the overseas investment, establish global financial integrity and electronic dashboard system for effective and strengthening the Financial Intelligence Unit with a view to minimize/reduce capital flight.
The seminar was attended by eminent business leaders, academia, civil society members, dignitaries from different foreign missions and international agencies etc. Among the members of IBFB, Ms. Lutfunnisa Saudia Khan, Director, Ms. Priti Chakraborty, Director, Mr. Iqbal Hussaiyn, Director, Mr. Mohammad Ali Deen, Director, Mr. Mohammed Ershad Hossain Rana etc. were present in the seminar.