Rise of the Bengal Tiger

Professor Shibli Rubayat-Ul-Islam, Chairman of Bangladesh Securities and Exchange Commission (BSEC), recently led a high-powered Bangladesh delegate to the US Road Show titled The Rise of Bengal Tiger to let the world become aware of the potentials of trade and investment in Bangladesh. COLORS Business team spoke to Professor Rubayat to get his perspective on the mega event.

Professor Shibli Rubayat-Ul-Islam, Chairman of Bangladesh Securities and Exchange Commission (BSEC). Photographer: Kazi Mukul.

Answering the question of why he thought this type of event was needed to be organized abroad, Professor Rubayat-Ul-Islam stated the importance of shifting the wrong perception of Bangladesh that often can deter potential foreign investors from investing in our country. Despite the tremendous growth of the country’s economy, sadly the Western and developed part of the world still holds misconstrued and negative ideas about Bangladesh as a country that is always looking for loans and aid, disaster-prone, densely populated, and a country in which nothing happens. This is why; he said that to build a new image and to encourage productive partnerships with the developed nations such as the USA Roadshow 2021 was organized with a strong set of agenda.

While discussing the reason for seeking partners for investment. The Chairperson talked about the strengths Bangladesh holds to attract potential investors from all around the world. He said that Bangladesh is geographically in a prime location to connect with major markets such as India, China, Malaysia, Indonesia, Vietnam, and more. Apart from the strategic location, another resource Bangladesh has is the human capital which consists of a skilled, semi-skilled, and educated labor force in abundance. This resource easily supports any industry in the world. Another attractive component for investors would be the return on investment that is one of the highest in the world. So information like these in attractive packages was promoted at the Road Show so we can partner with one of the largest economies of the world who have the ability to invest. Also from the geopolitical standpoint, as the US might be shifting many of the businesses away from China to other countries based on the global competitive index, Bangladesh could be an ideal place for them to explore. He also added how BIDA and BEPZA are also playing an important role in providing and building services and proper infrastructure to support all investors. Professor Rubayat thus said, “We were there to tell them that we are not there to look for money, loan, or aid. We are here to look for partners who can take us to the next level.”

“Out of 59 billion dollars the Ready Made Garments industry is contributing to the economy bringing in 40 billion Dollars and remittances are adding 15 to 20 billion Dollars. All of which has supported the Bangladesh economy to attain a surplus in current account and also increased the reserve”

When asked what Bangladesh can do to improve its ranking in the “ease of doing business index,” Professor Islam provided a logical explanation of why the index is not an appropriate reflection on Bangladesh’s actual performance level. He said, “Actually the Index point that was used to measure Bangladesh and other Asian countries was not appropriate and all-inclusive. The index failed to include measurement indicators and factors in which Bangladesh is doing well and can cater to businesses with low or no difficulty. So no matter how well we do this information was not found through the index.” This is why; according to him, there is a large room for improvement in this biased measurement index that is geared more toward measuring items that are embodying criteria that work for developed nations.

He also explained that to reach a global competitiveness level, Bangladesh now has developed a highly skilled workforce. He said, “When we were in school our major concerns were food, shelter, and clothing. Having a permanent shelter was a luxury in those days. Nowadays, we have met the primary requisites, reaching a position in which Bangladesh is sufficient in food, housing in Dhaka is saturated and in the clothing industry, we are the second-largest producers in the world. Out of 59 billion dollars, the Ready-Made Garments industry is contributing to the economy bringing in 40 billion Dollars and remittances are adding 15 to 20 billion dollars. All of which has supported the Bangladesh economy to attain a surplus in the current account and also increased the reserve. But this too may not sustain when the Per Capita Income reaches at 4000$ or $5000 level from the present $2000 dollars. When it happens, the garment industry will then become pretty expensive.”

This is why according to the Chairperson of BSEC, Bangladesh has to prepare immediately for the 4th industrialization revolution acknowledging that the new shift will be happening in computer, mechatronics, engineering IT, AI, and robotics. Along these lines, he said, “We have the youth population who could be taught and prepared to meet these challenges right now without delay. The education ministry should immediately analyze what type of labor force we would need in the coming 3 to 5 years, and where they can work”. Realizing these upcoming shifts in professions and job industry, Rubayat could not have emphasized enough to start training the youth now to get them ready for the future. He was disheartened to see how Bangladesh does not have enough high skilled workers to meet the demand of the existing industries and this is why Industries have to bring in thousands of foreign workers to fill the gaps. He talked about the urgency to address the problem to start taking action to prepare and educate the labor force with proper skills and training to face the future in 10 years.

Another big challenge that Bangladesh is facing is a lack of innovation and research. This inadequacy, therefore, is leading to our dependency on other countries to help us get new technology spending our money. This is another reason why according to Professor Rubayat, Bangladesh needs to build partnerships with the countries advanced in technology and in innovation. In the 80s Bangladesh’s success in RMG was obtained from getting support from South Korea as they provided the know-how and technology for the garments industry through partnerships. The reason for this is to connect and develop partnerships with those countries that are leaders in the field of innovation and research so that we can bring them to Bangladesh and learn from them to be at the right pace with the changes that will be happening at the 4th industrial revolution. The partnerships can then motivate leading countries in high-tech industries to come and invest in our country. And that is when Technology transfer can occur when the investors bring their technology into our country through and we can learn and grow from the exchange.

“It’s time we create new paths of development breaking away from the traditional problem-focused mindset. We have to think broadly if we want to reach out to foreign investors to change their perception about Bangladesh”

The Chairperson of BSEC also discussed the new developments in the areas of Mutual funds and the Bond market that can bring in more investments in the capital market from abroad. Under his leadership, Mutual funds which previously didn’t have any structure for paying dividends have shifted to paying 10% to 15% dividends. More than 95% have already been paying 10 to 15% dividends on average. Both banks and insurance companies are giving more than 10%. Previously the companies were only limited to bonus shares and didn’t give cash but BSEC intervened and now companies do have to comply. All these new regulations resulted in more people being interested in holding shares of good companies for a longer period of time. The shareholders at the end of the day now are getting good returns and prefer to invest in these markets instead of keeping them in banks.

A mutual fund is also making a comeback and according to the Chairperson Professor Rubayat-Ul-Islam, should be the alternative to FDR. Banks are getting on board with this as if they had to pay such a high-interest rate against FDR then it can be difficult for them to sustain in the long term. If the Banks paid high interest then they also have to ask for high interest in loans, both of which are unhealthy. Professor Rubayat said, “Banks should keep their desired spread to generate income. We can keep the businesses healthy within the present climate keeping the spread close to the inflation rate that is around 5% and 7%. ”

During the conversation on the capital market, Professor Islam also mentioned the significance of the Sukuk bond, which reflects the core ideology of Islamic Banking without interest. According to Islamic Shariya law, the majority of Muslims prefer to avoid any kind of transaction involving interest rates or RIBA. RIBA can be roughly explained as unjust exploitative gains made in trade and business and often this system can lead to people becoming destitute. Due to this ideology, there are people and businesses that have the money to invest but are not interested in investing in conventional banking systems due to the system of interest rate. He added that more than 70 to 80 Crore Taka is ideally sitting within Islamic Banks as investors are unable to find the right options for them to invest in. Even the Islamic Banks are unable to invest their Statutory Liquidity Ratio or SLR fund adequately. This is where people can encourage purchasing the SUKUK bonds which are Islamic income-producing investment certificates. Therefore trading SUKUK bonds can be a win-win situation for both. There are also trillions of dollars abroad and waiting to be invested in the businesses that work according to Shariya. Many Middle-Eastern countries have shown interest in SUKUK which is also a positive sign for Bangladesh.

“The first challenge is the mindset of Bangladeshi people to see things positively and think out of the box.” Professor Rubayat was cognizant about changing the mindset of Bangladeshi people to embrace new and productive thinking. He said, “It’s time we create new paths of development breaking away from the traditional problem-focused mindset. We have to think broadly if we want to reach out to foreign investors to change their perception about Bangladesh.” For example, we are heading for Switzerland with the Roadshow in September. It is the largest financial market from which high volumes of foreign investments are channeled. We look forward to building a link with them. The goal is very simple. Even if we can bring 0 .1% of their huge fund, it will be a significant addition to our country. We need to improve our PR so that the perception of Bangladesh to foreign investors changes. The changes in the horizon for Bangladesh and the increased investment potency of the nation is something that investors should be made aware of. A land of opportunities for the opportune.

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button

Ad Blocker Detected!

Advertisements fund this website. Please disable your adblocking software or whitelist our website.
Thank You!