Hiren Pandit: Bangladesh Investment Development Authority is responsible for providing all kinds of services to domestic and foreign investors in establishing export-oriented and processing industries in private enterprises. The main objective of this authority is to provide investment and business assistance to all types of investors. The BIDA, headed by the head of government, consists of investment-related ministries, secretariats, and various business representatives as members are working on attracting investments. The authority has already undertaken various programs to attract domestic and foreign investors. BIDA is working to implement new projects and provide multiple services. The government has adopted an open policy to attract foreign investment to accelerate economic growth and significantly strengthen industrialization. Bangladesh Export Processing Authority (BEPZA) is responsible for attracting foreign investment and assisting in setting up industries in the country’s export processing areas.
There are many opportunities for foreign investment in Bangladesh. The Government of Bangladesh has recently undertaken several old business reforms in domestic and international trade and investment policies to create a supportive and competitive environment for private investment. Due to the vital interest of the private business sector, Bangladesh quickly adopted various effective institutional reform programs to introduce a market economy. It has already achieved moderate but balanced economic growth. The basic premise of monetary policy is the reliance on a competitive market economy in producing and distributing wealth and eliminating regulatory economic systems over the private sector.
The government is gradually stripping its involvement in industry and infrastructure and encouraging private participation. In terms of monetary policies, the government has undertaken swift and concrete reform plans and has formulated an open investment policy for all. In this case, the role of the government is that of a catalyst, not a regulator at all. Controls and restrictions have been brought to a minimum. The government has liberalized the trade sector at a moderate pace. Significant achievements have been made regarding duty-free trade facilities, rationalization of tariffs and enhancement of export facilities. Various aspects of tariff structure and import policy have been given utmost importance.
The inefficiency of state-controlled industrial and commercial enterprises, the tendency to misuse resources and the inability to cope with changing market and consumer demands have forced the government to undertake a large-scale privatization program. Various schemes have been initiated with helpful and attractive propositions for international investors. To attract foreign investment in export-oriented industries such as textiles, leather goods, electronics, chemicals and petrochemicals, agro-based industries, raw jute, paper, silk, frozen food (especially shrimp), tourism, agriculture, small-scale industries, software and data processing. Foreign investment is also being invited to establish heavy and IT sectors, which will help reduce domestic import costs. Some Foreign Investment Benefits of Bangladesh. 100% Foreign Direct Investment (DFI) or joint investment in Export Processing Zones (EPZs) or investments outside such zones and listed investment by purchasing shares of public companies through stock exchanges and investment in infrastructure projects such as the power sector, oil, gas and mineral exploration, telecommunications, ports, roads, and highways.
Bangladesh is continuously reforming to facilitate business and create an investment environment. The benefits of this were seen in the last published international survey. US-based research organization Heritage Foundation has released the Economic Freedom Index-2023. This time, Bangladesh has advanced 14 steps. Bangladesh is ranked 123rd out of 176 countries with a score of 54.4 points in the 2023 index, which was 137th last year.
The index defines economic freedom as a fundamental right of every individual to have complete control over the labor and wealth of the citizen. Economically, the extent to which each citizen in society enjoys freedom in labor and business, whether you have the freedom to work, produce, consume, and invest as you please. Governments must ensure the free flow of labor, capital, and manufactured goods in an economically independent country. This index is made with these considerations in mind. According to the report, the foundation of Bangladesh’s economic independence remains essential. As such, the country is on the list this year. Bangladesh’s score in the 2022 index was 52.7 percent out of 100. In 2021 it was 52.5. The previous year, Bangladesh was ranked 120th out of 184 countries with a score of 56.5. Earlier, Bangladesh was ranked 122nd in this index of 2020.
Bangladesh is ranked 26th among 39 countries in the Asia-Pacific region. Bhutan ranks 90th among South Asian countries. India is 131st, Sri Lanka 136th, Nepal 142nd, Pakistan 152nd and Maldives 160th. The top four in the economic freedom index are Singapore, Switzerland, Ireland, and Taiwan. The index places these countries in the ‘fully independent’ category. The ‘moderately independent’ category includes 55 countries, including Japan, Malaysia, Thailand, Philippines, and Vietnam. Sixty-four countries, including Bangladesh, have been in the ‘almost under’ category.
At the beginning of the new year, the economy started to flourish. The country’s foreign exchange earnings have been boosted despite the fear of global crisis and recession. Export income, the leading sector of foreign income, has set a record. In January, the export sector achieved the milestone of $5.13 billion in revenue for the first time. It earned 509 million dollars from exports in a single month for the first time. That record was broken the following month. With the foresight of Prime Minister Sheikh Hasina, the product export sector of Bangladesh has turned around quite well after overcoming the shock of COVID-19. One record after another. New record. With two months remaining of the last financial year 2021-22, the export earnings of goods have reached close to the target. In these ten months of July-April, products worth 4 thousand 334 million US dollars have been exported. In local currency, it is equal to 3 lakh 76 thousand crore taka. The amount of products has never been exported in the country’s history. As such, it is the highest so far. By the end of the current financial year, the country’s history of exports will be the highest. If this trend continues, product exports will reach the milestone of five thousand billion dollars by the end of the year. The highest annual export was in the 2018-19 fiscal year of 4 thousand 53 crore dollars. Along with the Covid stagnation, Bangladesh has turned around economically despite global unrest.
Globally, Bangladesh’s main export product is increasing the demand for ready-made garments, and the overall export shows great enthusiasm. According to the Export Promotion Bureau (EPB), the export target for the entire fiscal year was achieved in the first ten months of the last fiscal year 2021-22. As a result, exporters and EPB officials expect product exports to exceed 50 billion dollars by the end of the financial year. The Prime Minister has set four milestones for the country to achieve. The first is the vision of Digital Bangladesh in 2021, which is now in a good position; the second is achieving the Sustainable Development Goals (SDGs) in 2030; the third is building a developed Smart Bangladesh in 2041; and the fourth is Delta Plan in 2100. All citizens must work for a developed Bangladesh free from hunger and poverty (achieving SDG-1 Poverty Eradication and SDG-2 Zero Hunger). Bangladesh has limited resources; the population is more than land. Despite this, Bangladesh is a role model of development today.
Apparel exports to Europe increased by 15 percent in seven months. Bangladesh’s garment exports to the global market increased from July to January during the recession. Most of these garments are exported to the European market. The second position is in the US market, the third is in the UK, and the fourth is in the Canadian market. This figure emerges in the latest data from the EPB.
According to EPB data, Bangladesh’s garment exports to the European Union increased by 15.4 percent in the January 2022-23 fiscal year, i.e., in the last seven months. During the fiscal year 2021-22, apparel exports to the European market amounted to $11.94 billion. From there, it rose by nearly $2 billion to $13.73 billion. That is, 1 thousand 373 crore 97 lakh 40 thousand clothing products were exported in 7 months of the current financial year, which was 1 thousand 194 crore 3 million 40 thousand dollars in the previous year. Most of these are exported to Germany. The country’s garment exports rose by just 0.83 percent to $4.06 billion in the same period last year. After that, exports to Spain and France increased by 18.18 and 18.74 percent respectively. Other major EU countries, such as Italy, 57 and a half percent, Austria, 32.93 percent, Netherlands, 32.41 percent, and Sweden, 23.28 percent increase in apparel exports.
In addition to Europe, exports have increased to the markets of the UK and Canada. However, it has decreased in the US market. According to statistics, exports of Bangladesh products to the UK and Canada increased by 14.47 and 19.25 percent. In the seven months of the current financial year, 293 crore 22 lakh 70 thousand dollars worth of products were exported to the UK market, 256 crore 16 lakh 40 thousand dollars in the previous year. The Canadian market has exported 865 million, 54 million 20 thousand dollars worth of products in the current year, and 72 million 57 million 40 thousand dollars in the same period of the previous financial year. On the other hand, in the seven months of the current financial year, the United States has exported 498 billion dollars in the same period of 2021-22 fiscal year is 508 billion 77 million 40 thousand dollars. Compared to the previous year, the export income has decreased by 1.98 percent.
Bangladesh has progressed at a breakneck speed during the last era. Several social indicators, as well as economic indicators, have improved significantly. MDGs successfully implemented, SDGs on track. With various positive government initiatives, the country’s export income has increased. At the same time, expatriate income is also growing. Besides, the dollar crisis is slowly disappearing due to various steps taken to stop importing luxury goods. Inflation is coming down gradually. The country’s economy is well under control. For economic prosperity, we need to focus more on revitalizing the economy. This requires political stability. But economists say there is room for improvement in exports and remittances. They suggest tariff concessions in promising sectors like ready-made garments to diversify exports. The country’s export sector has maintained momentum. Remittance inflows need to increase further to cope with the current boom in the economy. Besides, experts are suggesting diversification in export products.
Hiren Pandit is an essayist, researcher, and columnist based in Dhaka, Bangladesh. He can be contacted at hiren.bnnrc@gmail.com