BIDA wavers over permitting tobacco sector investment

A proposed export-oriented joint venture in tobacco sector has put Bangladesh Investment Development Authority (BIDA) in wavering over investment permission because of restrictions from the top court and health ministry.

Officials say the issue came to the spotlight after a proposal was placed to the authority for setting up an export-oriented tobacco company under joint investment from Bangladesh and Turkey.

The Supreme Court's Appellate Division has also issued a directive against licensing new tobacco companies or a company having relations with tobacco products.

Moreover, the Health and Family Welfare adviser of the current interim government in a recent letter asked the BIDA not to register any company in the 'Manufacture of Tobacco Products' sector, according to officials concerned.

However, BIDA has decided to conduct a comparative research on the health risks from tobacco-goods production in a 100-percent export-oriented industry and the economic benefit of the same through the United Nations Development Programme (UNDP).

Also, it has decided to seek permission from the upper court for allowing the aforesaid investment, it was learnt.

According to officials, a company named "Dhaka Leaf Processing Limited" recently applied through BIDA's one-stop service (OSS) system for getting registration of a joint-venture company in 'Manufacture of Tobacco Products' sector under the cent-percent export-oriented category.

To be set up in Mirpur of Kushtia with a total investment of some Tk 2.286 billion, the company would produce threshed leaf and cut rolled stems from tobacco, it was learnt.

The proposed Turkish equity for the company amounts to around Tk 127 million while local equity is Tk 941 million.

Some Tk 1.345 billion will also be invested in the company by taking loans from local sources.

Sources have said BIDA recently held an inter-ministerial meeting to decide on the fate of the proposed investment.

The meeting was informed about the verdict of the Appellate Division of the Supreme Court and health ministry's directives regarding the bar on providing licence to any tobacco company.

However, Abu Saleh Mohammad Imran, Trade Consultant at the Ministry of Commerce, told the meeting that since the entire output of the proposed company would be exported abroad, allowing such foreign investment would have a positive impact on the country's economy.

Manik Uddin, Senior Assistant Secretary at the Ministry of Industries, also gave his opinion in favour of allowing the proposed investment since the company is 100-percent export-oriented one and 100 per cent of its products not be consumed in the country. So, the health risk will be less.

"If the country's economic benefit is given priority, the proposed investment can be allowed," he said.

The officer, however, said if the public-health issues are given importance, then the tobacco sector can be discouraged.

Fahmid Farhan, Director, Chief Adviser's Office, suggests that permission should be taken from the Appellate Division for allowing the investment as the products of the factory will be exported entirely.

On the other hand, Akhtaruz Zaman, Director-General at the National Tobacco Control Cell, the Department of Health Services, has said there is no option to allow investment in the mentioned sector.

"Safeguarding public health should be the first priority while the economy comes next," he said.

Mr Zaman also said anti-tobacco campaigns across the world have led to a decline in tobacco business. In Bangladesh, the prevalence of tobacco use has been reduced from 43 per cent to 37 per cent, he mentioned.

"There is no room for calculating the profit and loss of the economy by putting public health at risk," he said.

Presiding over the meeting, Ariful Hoque, Director-General, International Investment Promotion, BIDA, said although there remained health risks in the production and marketing of tobacco products, there is no alternative to foreign investment for the country's economic uplift.

"There is no research that can help determine the comparative advantages of investment in the tobacco sector and the health risks of the same," he said.

The meeting thus decided to seek permission from the Appellate Division considering that the health risk is low in this case since the company is 100-percent export-oriented.

Besides, the UNDP will be requested to conduct a study to determine the financial gains from the investment in tobacco industry and the possible health risks.

syful-islam@outlook.com