Building A Strong Investment Climate
COLORS Business Magazine caught up with the Executive Chairman of BEPZA Major General Nazrul Islam for his reflection on the success of the US Roadshow held recently with a high-powered delegation representing three major Investment Promoting Agencies of Bangladesh.
The month-long Roadshow was held in the four major cities of the USA to build awareness of the investment climate of Bangladesh for interested investors abroad. Apart from sharing his views on the significance of the Roadshow, the Executive Chairperson of BEPZA also provided knowledgeable insight on the challenges Bangladesh faces and solutions that can be taken to motivate more investors’ choose Bangladesh as their investment destination.
When asked about the significance of the International Road Show, Major General Islam said that the roadshow actually was not about immediately ensuring a large number FDIs to invest in Bangladesh but was more about creating a long term impact through informing the investors of possibilities and letting them know why Bangladesh can be the right choice for investment. He said, “Mathematically after a fair or an Expo, we can measure the success saying a lot of buying and selling took place, but for this Roadshow that wasn’t the objective. We all understand that bringing in new investment is a long-drawn issue and that is why it was needed for us to tell the investors the true story of rising Bangladesh through this event.”
General Islam was very optimistic about the possibility Bangladesh holds as a nation to cater to the needs and demands of the investors who might be happy to enjoy the services and facilities of Bangladesh Export Processing Zones Authority (BEPZA), Bangladesh Economic Zones Authority (BEZA) and the high tech parks. In the last 12 years, Bangladesh has come a long way in achieving remarkable economic growth. In the past, Bangladesh was often termed as the bottomless basket and a country of floods and natural disasters to the Western world. Under the guidance of Bangladesh’s Honorable Prime Minister Sheikh Hasina, the country has now arrived in an admirable position showing a steady economic growth rate of 6.8%. He added that Bangladesh has transformed at many levels and the progress in digitalization definitely played an important role in removing the previously existing bottlenecks that discouraged many investors. The main aim of this roadshow, therefore, was about portraying this positive and real image of the country that has a lot to offer to the world.
He further elaborated on the significance of the Summit saying how this event allowed the delegates and representatives from all major sectors of investment to explore the existing expectations and possible rewards for attracting new investors both who are foreigners and NRBs. He found that there is a gap of understanding and knowledge on what Bangladesh now has to offer to the world. NRBs who have not visited Bangladesh in recent years also had very little idea of Bangladesh’s progress. Many in the past did experience a lot of difficulties starting from the airports to reaching the capital for investment. But he acknowledged that those who are in the business sectors at present have come a long way.
The Chairperson of BEPZA felt that through this event, they were able to inform the world about such advancement. He saw the NRBs as the ambassador of Bangladesh and this opportunity to provide them with the needed information on our country surely was significant as they too can proudly represent the new rising Bangladesh and become the voices that are heard.
During COVID times, while the growth of FDI across the world fell 42% less than the normal time, in Bangladesh the reduction of FDI flow was only 19.5%. This is undoubtedly a significant achievement for our country. It shows that we are able to build a strong foundation from which we are continuing to keep the wheel of the economy moving and let the world know what we are capable of. In joint collaboration with BSEC, BIDA, BEPZA, and a few other private organizations. The Road Show thus wanted to convey the information of the success stories to those who were not aware of such dynamic changes that are taking place in Bangladesh.
“We managed to reduce the fear of the unknown for investors. If anyone invests in the EPZs then in accordance with international investment policies, no matter what worldwide crisis the investors face, they will be able to take back whatever they invested to its entirety. This is undoubtedly an important step towards building trust”
CHALLENGES AND SOLUTIONS
As we discussed the challenges, General Islam mentioned how many Bangladeshi NRBs often are not able to see the positive picture and feel they are being deceived and often justifiably so due to the NRBs making wrong decisions and poor choices to take the short cut avoiding the actual legal procedures. He said, “Many NRBs fail to get the appropriate incentives as NRB investors in Bangladesh as many transfer money in some other people’s name who are residing in Bangladesh and also start the business in the name of those relatives instead using their own names. Sometimes these investments experience mismanagement and loss that results in NRBs feeling betrayed by their own chosen people due to greed and inadequate information”.
Another challenge is corruption tends to exist mostly at lower administrative levels and has been curbed largely in his organization after Major General Islam joined BEPZA. He has enforced policies to digitize all tasks reducing the use of paper into nonexistence. This in turn eliminated the corruption that usually happened through the paper trails. Other major challenges exist in two areas which are those who grow the investment in the country and those who will invest.
The biggest challenge for Investment Promotion Agencies (IPA) is to build a place for trust. For the last 12 years, under consistent political stability, Bangladesh has reached a state in which investors can be assured of their investment to be protected and secured. He said, “We managed to reduce the fear of the unknown for investors. If anyone invests in the EPZs then in accordance with international investment policies, no matter what worldwide crisis the investors face, they will be able to take back whatever they invested to its entirety. This is undoubtedly an important step towards building trust.”
Another challenge was with managing the ‘lead time’ that was often created due to the bureaucratic chain of commands at the customs, the congestion in port, delayed processing with shipping agents, etc. Although this too has been reduced a lot, these areas can be improved further. The Executive Chairperson stated that with 532 industries under BEPZA and everyone having a concern about speeding up the process, systems such as One-Stop Service (OSS) is established to help investors navigate through these unknowns.
One other challenge is the need to build more homegrown skilled workers to operate the machinery that will be used by the factories as we step into the 4th industrial revolution. He wisely pointed out that it is not really financially viable to hire foreign experts and technicians for these jobs to run the machinery. And this is a big challenge now and the
The government too has acknowledged this issue and is working diligently to address the problem. Technical institutes across the country are being built and exist but unfortunately, we are still struggling in this area of building skilled workers across the country.
Another challenge that needs to be addressed is to help investors understand the appropriate investment that meets their respective needs. Investors often get confused on whether they would choose BEZA and BEPZA for their investment sites and now in Bangladesh, we have another business zone which is the High-tech Park. An investor has to be informed about what criteria qualify his or her business to be at BEPZA, BEZA, or at High Tech Park. While BEPZA caters to the need for Export Processing Industries, besides foreign investment, BEZA is supporting homegrown and home-focused industries to expand without impacting the arable lands of Bangladesh through their unplanned development. Once these clear directions are provided to the investors, investment decision-making also becomes easier. BIDA is working along with BEPZA actively to bring all these under one umbrella to make the flow of information to the investors more accessible. He said that “We are planning to bring at least 44 agencies under the same platform to make things easier for the investors. Customs will also be one of them.”
Developing skilled workers for these industries is another big challenge. According to the General, the Government has taken an excellent initiative building technical training centers for women investing 400 Crore with the support of the World Bank. These facilities are in Dhaka, Chittagong, and in Ishawardi to train 1200 female workers in each place, and then they can directly join the workforce as skilled workers. He was disappointed to say that the motivation of the female workforce to become highly skilled is still not there as most of them want short-term gains by starting to work immediately instead of being trained up for six months. He said, “They don’t want to give that time and do not understand the positive impact in the long term of being highly skilled. The government is also providing 1,200 BDT stipends and beautiful residential facilities. Truly to meet this challenge, we need to do more work focused on the Human Development Index.”
“An investor has to be informed about what criteria qualify his or her business to be at BEPZA, BEZA or at High Tech Park. While BEPZA caters the need of Export Processing Industries, besides foreign investment, BEZA is supporting home grown and home focused industries to expand without impacting the arable lands of Bangladesh through their unplanned development”
PRIORITIES TO FOCUS ON TO BRING ROBUST INVESTMENTS
The lively discussion was concluded by asking about his three top priorities for encouraging robust investments to the country as BEPZA’s Executive Chairperson. General Islam identified three major priorities for him to focus on with intention and determination. These priorities are a draw-in investment, creating diversified products, and creating jobs.
Drawing investment was in the top list of his priorities. Based on that context the chairperson’s primary focus is to create a transparent, secured and trustworthy investment platform. This means that those who are already existing investors are comfortable with the investment process in Bangladesh and will be ready to invest more.
Secondly, he is focused on Product Diversification. He consciously selects investors based on quality and the things they offer. In Mirsarai, Chittagong BEPZA has 140 industrial plots ready, and 66 plots have already been allotted to the investors. Bangladesh now has a good financial base and at present, the General is not focusing on Ready Made Garments but on high-end product capability. So the focus has moved away from single sector products and due to these diversification efforts, during this COVID times, 15.5% export growth happened. He mentioned that there are now 38 different categories of products.
Finally, one major priority for him is to create more job opportunities for women as he has seen women influence the family structure and overall development process in a positive way. He said, “You will be happy to know that in our business zones, 67% of the total 4 lacs and 47 thousand workers are female.”
Despite the challenges and barriers, Major General Islam sees great shifts both economic and social happening to put Bangladesh at the top as an ideal place for investment. He believes if we can work diligently and give more effort to shape the way we all think the progress of Bangladesh will be unstoppable.
