Allow foreign investors to turbocharge economic growth

Foreign currency reserve was never something a common man had to take notice of in Bangladesh. But as the economic doom and gloom prolonged last year, we suddenly found ourselves looking at this figure like we follow the scoreboard in a tight cricket match.

We were frantically cutting down on import items to reduce our need for foreign currency. The country’s credit worthiness was also getting hammered by the international credit rating agencies. We were very much in the middle of an economic maelstrom midway into last year.

While we were on war footing to prop up our foreign currency reserve, Vietnam in the south-east Asian region, had finished 2024 with around US $80 billion reserves.

Vietnam had managed to draw US $39 billion in foreign direct investment (FDI) in 2023, while Bangladesh could manage only US $3 billion. The question is how come a country with around half our population and the same GDP size can attract 13 times more FDI, even after growing at around 6 per cent per year over two decades!

Samsung alone has invested USD $23.2 billion in Vietnam, and in 2024, the company’s export earnings from its Vietnam operation reached US $54.4 billion, which is bigger than Bangladesh’s entire export earnings for the same year.

The irony is that Samsung had been keen to make this investment in Bangladesh 10 years ago but since we could not give them land mutation papers of the Korean EPZ, Samsung decided to divert the investment to Vietnam. If we look back, we will find many such own goals we have scored against Bangladesh’s interest in the past. Growing up in Bangladesh, we always like to tell ourselves that our country is full of opportunities for foreign investors. Yet, we have evidently done a shoddy job in converting these opportunities into solid investment from the foreign investors. Even when it comes to the existing foreign investors, we cannot confidently say that we have made them feel at home here.

There are many instances where we find that the foreign investors are labelled as culprits for siphoning off foreign currency out of Bangladesh. Every time there is a tax dispute that involves a foreign investor, the foreign investor is painted as the villain even before the due process has been exhausted to solve the disputes.

In the name of propping up local investors, we have seen the country putting up barriers in the telecom industry for the mobile operators who are mostly foreign investors. We have adopted telecom ecosystem model that has induced systemic inefficiency. Such protectionist attitude has held back Bangladesh from realising its full digital potential.

The good thing is that the current administration has clearly shown its intent to address these bottlenecks. Once the tax burden on customers and the mobile operators are brought down to global standards and all the ecosystem related inefficiencies are dealt with, this sector can once again enjoy the glory days and expedite the country’s digitalisation process.

I believe Bangladesh Investment Summit has created a very positive backdrop for accentuating the reform agenda across all the sectors, including the telecom sector. Bangladesh’s future growth trajectory hinges on how the government engages with the foreign investors’ community. Digitalisation of the economy and the society can in true sense work as the catalyst to stimulate the future growth trajectory of the entire economy.

But for that to happen, it is crucial that we reform our regulatory framework for the telecom and the wider digital sector in a way that can deliver the nation’s vision in the quickest possible time. If the foreign investors’ community is convinced that our regulatory framework works as enablers for their business case, they would be happy to pour in the money into the country. There has to be a win-win situation for the country, the foreign investor and the customers.

We have to remember that Bangladesh, despite having many unique features, need to convince the foreign investors that they have a country who is eager to work with them and are pledge-bound to look after their commercial interests. Having a great product with no promotion will always get defeated by an average or even a substandard product with proper attention to promotion.

Aside from promoting the country, there are some thorny issues that continues to jinx our prospect, such as, doubts over smooth repatriation of profit, lack of legal mechanism to exit the market, shortcoming in digitalisation that fails to curb corruption, inadequate infrastructure and energy shortcomings, tax regime that appears less friendly to investment, most importantly the lack of comprehensive backing of the political leadership to embrace an export-led growth strategy. These must be fixed without further delay.

Ashik Chowdhury, the Executive Chairman of the Bangladesh Investment Development Authority (BIDA) has the whole country abuzz with his smart presentation. The good part is that even our dynamic BIDA chair knows that one or two sensational presentation will not win big deals for the country.

Mr Ashik knows all too well that he needs to show tangible results to win the trust of the foreign investors. By solving the 10 years long pending land mutation dispute over the Korean EPZ within only just two months, he has shown that he intends to deliver. What we need now is for the entire government machinery to emulate his pro-foreign investment stance. We need Mr Ashik’s dynamism to spread across the entire bureaucracy.

Unfortunately, the investment climate-strengthening agenda requires time to come to fruition. Vietnam, again, offers a great example for us. First and foremost, Vietnam adopted an export-led growth strategy since the early days of adopting the "Doi Moi" (renovation) reform programme in 1986. Since then, Vietnam has shown unwavering commitment to implementing this export-led growth strategy.

But if we are to successfully follow Vietnam’s example, we need to give the foreign investors far larger space in our economy than we do. As long as the government is clear eyed about its policy visions, it has no reason to worry about letting foreign investors have a much larger space to contribute to our economic development. The process ceding more space to foreign investors often clashes with nationalistic sentiments of people.

Hence, it is crucial that the government constantly engages with the people to convince them that collaborating with the foreign investors serves the long-term interest of the country. Singapore’s per capita GDP in 1970 was only US $620, but at the end of 2024, it reached US $90,000+. If Singapore had not opened up to foreign investment, they would certainly not have been enjoying the level of prosperity they enjoy today.  

- Niaz Mohammad Siddiqui is a strategic communications professional