'Archaic forex rule deters foreign investors'

Bangladesh needs to make progress in five key areas in the coming days to attract both domestic and overseas investments, business leaders and economists say.

The five factors are further facilitate investment, promoting greater coherence between trade and investment policy, fine tuning incentives, a proper retention strategy and domestic-FDI linkage.

The recommendations came at the third resurgent dialogue on 'private investment in uncertain times; Covid-19 impact and policy implications for Bangladesh'.

The Metropolitan Chamber of Commerce and Industry, MCCI, Dhaka, Policy Exchange, the Dhaka Chamber of Commerce and Industry, DCCI, Chittagong Stock Exchange, CSE, Business Initiative Leading Development, BUILD, jointly organised the virtual discussion on Sunday.

MCCI president Nihad Kabir moderated the event where chairman of Policy Exchange Dr Mashrur Reaz made a PowerPoint presentation.

Mr Reaz said the pandemic has hit the global economic order hard, badly affecting economic growth and business expansion in the country and elsewhere.

Citing data from various institutions, he said Bangladesh's growth will likely to go below 2.0 per cent the year ahead. The export dropped by 18 per cent in FY'20 cent while remittances to go down by 25 per cent by end of the year.

Talking about the early signs of fading business dynamism, he said half of the SMEs had to completely halt their business operations for more than two months since the nationwide shutdowns were enforced on March 26.

Listing agriculture, exports and remittances as three major drivers of the economy, managing director of Apex Footwear Ltd Syed Nasim Manzur said, "Two of them are in trouble because of the pandemic,"

"Covid-19 also creates opportunities. I think we need to come out of our comfort zone where people are queuing up across the world to come to Bangladesh for investments," he said.

Terming existing foreign exchange regulation a major obstacle to foreign direct investment, Mr Manzur, a former MCCI president, said the outdated law needs to be thrown out of the window.

"If you are not going to allow exporters or companies here to transact international deals to be able to be more competitive as the market responds, you'll get left behind," he said.

He also put an emphasis on reforms in the existing customs rules alongside suggesting the local enterprises open up their windows to welcome global investors as their partners and healthy competitors.

Chief operating officer of Unilever Kedar Lele highlighted the importance of a suitable regulatory environment and predictable tax regime for both local and overseas firms.

"We don't want the government to reduce taxes because we expect you to make the implementation simpler," he said.

He said the country requires expanding the tax net and bringing other people into it instead of going to the taxpayers with more taxes. "It's not working, "he added.

CEO of Grameenphone Yasir Azmansaid the success story of telcos could be a great example to showcase while talking with the potential global investors.

Echoing Mr Lele's remarks on tax reduction issue, he said they want predictability of the regulatory regime like dispute resolution.

"Each global company has disputes in the local market. How we deal with that, it is the question," he said.

Former NBR chairman Mosharraf Hossain Bhuiyan said the policy the revenue board adopts does not continue for a long. It changes too frequently, which is a problem for businesses

Mr Bhuiyan said they had tabled the customs law to parliament twice in FY'19 and FY'20. "If the law is enacted, it will give some sorts of relief to the business communities."

Parliamentarian Nahim Razzak said the lack of coordination among various state-run departments dealing with private investment causes problem.

"I think BIDA (Bangladesh Investment Development Authority) needs to step up and have the executive power to talk with the department concerned if it is necessary for the investors," he said, expressing his frustration over the non-coordination.

Parliamentarian Waseqa Ayesha Khan, BIDA executive chairman Sirazul Islam, CSE chairmanAsifIrahim, among others, spoke at the dialogue.

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