The American Chamber of Commerce (AMCHAM) is one of the most active entities across 60 countries. The role of AMCHAM Bangladesh, in terms of bilateral relations between Bangladesh and the United States, exchange of information, and other facets, is beyond imagination. COLORS Business Advisory Editor Ziaul Karim and Editorial Assistant Arka Dev Biswas speaks to President of AmCham Syed Ershad Ahmed on potential opportunities in Bangladesh.
25 Years and on
The American Chamber of Commerce in Bangladesh (AmCham) was formally established in 1996 having been duly registered as a Non-Profit organization. However, the institution started 33 years back as American Bangladesh Economic Forum (ABEF) to promote economic relationships between Bangladesh and the United States of America. While starting bi-lateral trade between the two nations, the volume was less than a billion. This has multiplied by 9 times over within only 3 decades since the establishment of the chamber. AmCham is still working on increasing these numbers each day. Bangladesh is at present America’s 52nd largest goods trading partner and exports to the USA, the single largest export destination of Bangladeshi products represents almost 20% of Bangladesh’s total export earnings, with bilateral trade worth $9 billion USA is still the ranks among the largest contributor to Foreign Direct Investment (FDI) in Bangladesh and produces a lion’s share of the national energy supply in the country. Interestingly, the USA overtook UAE as the 2nd biggest remittance hotspot for Bangladeshis since July 2020. AmCham Bangladesh holds the full Membership of the AmChams of Asia Pacific (AAP) and accreditation as a member of the U.S. Chamber of Commerce at present. This membership enables Bangladesh to be a part of an elite group of countries and have access to various benefits that now members are unable to enjoy.
The US Roadshow for FDIs
The series of investment Roadshows took place in 4 major states of the US during July-August 2021 organized by BSEC in partnership with AmCham Bangladesh. Partnerships like this between public and private entities would create more dynamic and goal-oriented enablers than previous steps. It is important for all quarters engaged in attracting Foreign Direct Investment (FDI) to remember that it is a major component of stimulating growth in a developing economy like Bangladesh along with other tools that usually play a big role in transferring technology, creating employment opportunities, and transforming traditional skills into the high end. As already, the US is the largest contributor to FDI Stock in Bangladesh accounting for more than 20 percent, expecting it to explore additional sectors yet to untap its potential. FDI usually flows to a country that has a facilitating environment. The roadshow would certainly present Bangladesh’s potential, improve the image through positive branding, spread the story of economic development and growth track record based on the facts and data to attract investors from the USA and non-resident Bangladeshis (NRBs).
The trade deficit of Bangladesh stands at around 18.8 billion USD, as of 2020, and it is crucial for Bangladesh in the New Normal to shift focus from a heavily dependent labor-intensive economy to a knowledge-based one. In addition to RMG/ Textile sectors, recent research (conducted by USAID) identified 6 selected sectors that include the Energy sector (especially renewables), Pharmaceuticals (Health Care, Medical Equipment), Electronics (light Engineering), Agro-Business (Food Processing), ICT (Outsourcing), Tourism. To improve the volume of trade deficit, expanding the export basket and exploring new destinations would improve the country’s image. “We need to rapidly adjust our policies and act on them.” Having ensured strong and steady market fundamentals, multiple sectors are poised to ensure significant growth to enhance trade sustainability and with the expectation of export diversification over time.
Opportunities during Pandemic
Ahmed sees a strong silver lining that could not only help Bangladesh neutralize the downfall from COVID-19 but can help secure a significant and sustained flow of high-quality FDI in Bangladesh over the long term. Apart from the usual stronghold of the USA in Energy & Power, there are potential opportunities in Infrastructure Projects, Real Estate, Construction, Food, Leather, Plastic, Ceramic sectors, and so on. Good policies on paper and a verbal assurance of support by the policymakers will not allure foreign investors. “This calls for preparing and implementing a targeted, time-bound, and focused investment promotion plan that will help identification and targeting of the investors’ group, outreach with Bangladesh’s value proposition, making rapid, sustainable improvements in its investment climate.” More cooperation between the US and Bangladesh may attract more investment in these fields amid growing challenges in the post COVID era. The positives during the pandemic should not overshadow the hard work that is necessary to sustain the growth that Bangladesh was able to maintain.
Rise of Special Economic Zones
The ongoing Pandemic poses multidimensional challenges for us all where the world economy is gradually shifting, and Bangladesh is not an exception to this,” and these dimensions are a concern for everyone, Syed Ershad identifies. Rising tensions in an already strained US-China relationship and massive disruptions in the global supply chain have created prospects of shifts for other Asian countries including Bangladesh. However, the high transaction costs of compliance in Bangladesh, lack of transparency, and predictability are a few fundamental reasons for the low ease of doing business ranking and the relatively minimal investment inflow from the USA. Economic zones will be offering a unique opportunity for a country like Bangladesh where land is scarce in quantity. Whatever favorable policies and friendly rules exist in Bangladesh, it is the proper implementation that matters most. “We at AmCham Bangladesh attempt to develop an approach in our regular advocacy efforts and activities onboarding stakeholders that might help the business & regulatory leadership set the priorities on right strategies making rapid and inevitable remedies. That’s our mandate as a chamber to help build rapport between the two friendly nations going forward.”