Business-friendly policies are boosting foreign investment in Bangladesh
Dhaka, 13 November 2000 - Bangladesh offers one of the most liberal regimes for foreign direct investment in South Asia and these policies are producing results in terms of increased inward investment.
This is the central conclusion of an Investment Guide to Bangladesh released today at an Asian regional conference of the International Chamber of Commerce. The guide - which offers an impartial evaluation - drew on the expertise of leading international companies, among them BAT Bangladesh Ltd., Nestlé, Shell, and Standard Chartered Bank.
The guide, a joint project by ICC and the United Nations Conference on Trade and Development (UNCTAD), praised Bangladesh for the welcome it offers to foreign companies. It noted that the country imposed no prior approval requirements or limits on equity participation, or restr
ictions on the repatriation of profits and income.
The third in a series of investment guides to least developed countries, the Guide stressed that the Bangladesh economy needs major investment to upgrade its infrastructure.
Outlining what it termed "important investment opportunities" for foreign companies, the guide said: "These opportunities are reflected in inflows of foreign direct investment (FDI), which increased from virtually zero in the 1980s to over $300 million in the late 1990s."
UNCTAD's latest World Investment Report, issued last month, shows inward investment never exceeding $14 million between 1988 and 1996, but increasing nearly 10-fold to $141 million in 1997 and then more than doubling to $308 million in 1998. A senior UNCTAD economist noted that these figures were small in relation to gross domestic product "but still an impressive move in the right direction."
The ICC-UNCTAD investment guides are designed to assist least developed countries (LDCs) to benefit from the opportunities offered by globalization and the huge increase in FDI that characterizes today's global economy. Their objective is to bring together companies that are seeking new investment locations and countries that seek new investors.
The Investment Guide to Bangladesh said that, as one of the world's most populous countries, Bangladesh had the potential to be a sizeable market. "Thanks to relatively high growth rates in recent years, there is a growing middle class with increasing purchasing power and a growing demand for various products and services."
A further advantages was the country's major reserves of natural resources, in particular natural gas, a sector that accounted for more than half of the total FDI inflow in 1998. Low-cost labour was the factor most often cited by the private as well as the public sector in Bangladesh when asked to name the country's most attractive features.
The guide said that, as in all developing economies moving towards an increasingly market-based economy, there were important areas that affected the profitability of investment and where improvement was needed.
"According to foreign investors in Bangladesh, this applies to the quality of the transport and communication infrastructure, unreliable energy supply, administrative complexity and non-transparency." There was also a lack of skilled people at various levels. Investors further voiced concern about confrontational trade unions, political strikes and the poor implementation of what were described as "excellent policies."
The guide said that, with half of the population still very poor, poverty alleviation was the government's number one priority for development policy. Stronger economic growth and a dynamic private sector would play crucial roles in reaching this goal.
"In order to attract increased FDI, there is an urgent need for improvements, particularly in the areas of infrastructure, education and technical training, and the rapid and effective implementation of what are generally enlightened policies."
Full conference details
</>