Bridging the Gap: The UK’s Investment In Bangladesh’s Future
British High Commissioner to Bangladesh, Robert Chatterton Dickson, sat down with Colors Magazine to discuss the evolution of the relationship between Bangladesh and the UK.
A Retrospective on the UK-Bangladesh Relationship
According to Dickson, the relationship between the two countries has always been strong and deep, dating back to the liberation war of 1971. He notes that the relationship has evolved from being primarily focused on development to encompassing a wider range of areas such as trade, education, and defense.
He said, “I think it’s very important that when Bangladesh’s founding father was released at the end of the liberation war to London he did his first press conference as a free man from Claridge’s hotel in London he called on our Prime Minister Edward Heath and then he was flown back by the Royal Air Force to an independent Bangladesh. Right from the start there has been a very strong relationship between the countries based on a whole range of factors including trade, recently prosperous and confident Bangladeshi diaspora in the UK, strong links on defense, and in particular strong links on development.”
The British High Commissioner sees the relationship naturally evolving to one where both countries work together on meeting global challenges like Climate Change or some form of Humanitarian crisis.
“We are working with the Bangladeshi government to try and resolve this very difficult crisis, enabling the Rohingyas to return home to Rakhine, which is what everyone wants, but also to support them with whatever they need during their stay here.”, he added.
He went on to acknowledge the pivotal role that the Honorable Prime Minister of Bangladesh played at the COP 26 Climate Conference in Glasgow last year. He insisted that through her interactions with the then Prime Minister of the UK, Boris Johnson, and King Charles the 3rd, she has reaffirmed the growing influence of Bangladesh in global debates, not to mention the warm relationships between the senior level of the countries.
Moving forward with Bangladesh’s trajectory towards graduating the Least Developed Country status, the relationship is also set to evolve.
With Bangladesh no longer an LDC, UK will seek to promote growth in Bangladesh via different instruments like private sector investments in a more diverse economy.
“It will be a different relationship that’s still a very strong one.”, said Robert.
Bangladesh’s Upcoming LDC Graduation
According to Robert, the most crucial issue at the moment is Bangladesh graduating from the LDCs in 2026. It is just the beginning of a development tale and Bangladesh needs to thrive as a middle-income country.
He emphasized the UK’s role in helping Bangladesh to achieve its status as a developing country, stating, “Bangladesh has been extremely successful in development over the last 50 years, but it’s gone from a very difficult start to being on the verge of graduating
from the least developed country status which is a stunning national achievement and I’m very proud that the UK has provided funding and expertise that helped Bangladesh achieve that.”
He briefly discussed the UK’s recent investment commitments -including a £450 million investment in Bangladesh’s private sector through British International Investment and an increase in capital available for UK exporters to Bangladesh through UK Export Finance.
The development scene currently has a strong foundation built around the garment industry, diverse exports, and foreign remittances in Bangladesh.
“One of the world’s best Leed Platinum-certified factories is right here in Bangladesh. Bangladeshi suppliers also play a key role in the supply chains of really iconic
British companies like Marks and Spencers.”, added Robert following his visit to a Leed Platinum-certified garment factory in Bangladesh.
The same level of success that the garments industry has seen needs to be replicated and extended to other potential industries like Ceramics, Pharmaceuticals, and other light manufacturing industries.
After LDC graduation, Bangladesh will continue to enjoy Duty-free and Quota free access to the UK market. This is especially beneficial as the UK is the third largest exporter of Bangladeshi garments. This is also a welcoming gesture for Bangladesh to diversify its exports into the UK market.
Attracting Foreign Investments
Robert emphasized the need to draw in more foreign direct investments (FDI). To increase foreign direct investment in Bangladesh, the government should focus on attracting new British investments and promoting the development of special economic zones, as this will help to raise the overall FDI contribution to the Bangladesh economy, which currently stands at less than 1%, closer to the average for the region and for middle-income countries of around 2%.
“There are big British companies who’re already major investors here like Unilever, HSBC, Standard Chartered Bank, and Bangladesh American Tobacco (BAT).”, he added as he contemplated the growing interest of investors from the UK in Bangladesh’s Economy.
It’s important for Bangladesh to create enabling conditions for foreign investors, allowing them to feel confident in their investments. In order to achieve that, it needs to focus on forming better Economic Zones and ensuring institutional quality. This can help Bangladesh in gaining an edge over its South Asian counterparts.
“There are a variety of reasons why Portfolio investment is difficult in Bangladesh”, said Chatterton addressing the challenges of Bangladesh in attracting foreign investments.
The British High Commission has consulted the Chair of Bangladesh, Security and Exchange Commisions and others regarding this matter and identified two aspects that could potentially improve the foreign investment scene in Bangladesh.
Number one, reforming the capital markets in a way that makes them more attractive to International investors. This could increase the favorability odds of Bangladesh for foreign investors amongst other growing markets. Number two, making the Dhaka and Chittagong Stock Exchange more attractive to international investors.
“There’s also an issue around, you know, currency access to foreign currency ability to repatriate profits, but I think it’s very important for the, for the longer term. And the second thing I think is that we have seen some very initial Bangladeshi companies, raising capital in the London market. So I think these are sort of toes in the water but it will be a very good thing.”, added Dickson.
According to Robert, more companies should seek out these investment opportunities and explore their options in raising money.
“But of course to do that, you know, it comes back again to institutional quality; Whether companies have the transparency, the report and accounts, the legal frameworks that enable International Investors to be confident about putting their resources into those companies.”, he added.
Dickson notes that the private sector is key to driving growth in both the UK and Bangladesh. “It’s companies that make the investments, create the jobs, create the growth,” he says.
Reforms Towards a Thriving Business Environment
Robert specifically calls for fiscal reform, noting that the current tax take in Bangladesh is less than 10%, compared to the regional average of 15%. He also emphasizes the importance of a fair and credible election at the end of next year and improvements to the rule of law to ensure that investors have confidence in the country. He emphasized this because of the natural correlation between democracy, rule of law, and a thriving business environment.
As the conversation drew to an end, he insisted that Bangladesh should get its story out there and demonstrate its growing potential for foreign investments, as well as focus on creating a great investor experience.