There is Scope to Increase German Investment in Bangladesh: Envoy

In 1981,  the two countries signed a bilateral investment treaty to improve and boost trade relations between the two countries. Although Germany is the second largest exporter in the Bangladeshi market and earned $879.3 million from export proceeds in 2022, its investments are still not very remarkable in the southeastern delta, according to United Nations data. 

As a result, the Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Investment Development Authority (BIDA) are going to organize trade, business, and investment summits in France, Germany, and Belgium to boost bilateral trade and businesses and attract foreign investment in Bangladesh. 

The German Ambassador to Bangladesh, Achim Tröster, to understand the current situation of German investment in Bangladesh. During the interview, Achim Tröster said that although his country made fewer foreign direct investments in Bangladesh, those who invested are running their businesses smoothly. “Those who [German companies] are doing business with Bangladesh are very satisfied and would recommend others to come here and invest,” he said. 

However, he said that the reason for the low investment by Germans in Bangladesh is their perception of the Southeast Asian delta. “Bangladesh is very popular in Germany, but people over there have a wrong idea,” he said, adding that Germans picture Bangladesh as a poverty-stricken, war-torn country they saw many years ago. 

Achim Tröster said that the embassy has talked to investors who are not willing to invest in Bangladesh, other embassies, and the European Union (EU) to understand the reason for low investment in Bangladesh.

He said that the authorities introduced a business-climate dialogue a few years ago with the EU, through which many proposals have been made to boost, improve, and increase trade between Germany and other countries. The recent business-climate dialogue between Bangladesh and the EU revealed that businesses progressed less than expected in the last three years due to many other factors, including the COVID-19 pandemic, he also said. 

The ambassador highlighted customs procedures and logistics as two prime gaps in international trade. He also said that the recent dialogue came up with some concrete ideas about fixing these problems and increasing trade. Stating that there are some hidden reasons for trade difficulties between Bangladesh and Germany, the ambassador also stressed the importance of “concrete good news” from the current businesses to motivate further German investment in Bangladesh. 

“Customs is very complicated, and we have [in the dialogue] proposed some concrete proposals in detail,” he said, adding that a smoother and faster procedure for customs clearance is needed. He also said that businessmen have sought predictability and equity in applying current customs rules. 

Some equipment required for the ready-made garments industry is not produced in Bangladesh and is often highly taxed when it is imported. In this regard, Ambassador Achim Tröster said that reducing these taxes would help the RMG industry grow.

The ambassador also talked about the problems in the logistics business. He said that many countries, including Germany, have complained about a retrospective law that demands that of all the ships that transport goods to Europe from Bangladesh, 60% will be from Bangladesh. He termed it inequitable treatment and a hindrance to trade. 

Ambassador Achim Tröster also talked about how the perception of Germans about Bangladesh is changing. The ambassador said that Bangladesh is making its mark in Europe with its high-quality RMG products. He said that Bangladesh’s collaboration with big brands is playing a key role in changing perceptions of Germans. He also stressed the role of media in changing the perspectives of people and said that avoiding publishing too much bad news will improve the image of the country to the outside world. 

He said that the memory of the Rana Plaza tragedy has contributed to these negative perspectives. “The German Development Cooperation since then has helped the BGMEA quite a lot to improve the working conditions of workers,” he mentioned. Stating that Bangladesh has come a long way since then, he suggested that Bangladesh should highlight all the positive things that have been done over the years, mainly in the RMG industry. 

Asked about the German Business Council, Ambassador Achim Tröster said the council, established in 2019, acts as the bilateral chamber of commerce as the BGCCI is not the official body. That is because the latter, back in 2019, consisted of Bangladeshi companies that were exporting heavily to Germany. As a result, the German Business Council was formed as an association for the German companies working in Bangladesh. 

One of its functions is to exchange information, provide certain services, and act as a forum or platform for German investors, he also said. Therefore, the council is the bridge between the Bangladeshi business ecosystem and the German ambassador. Companies can become members of GBC in exchange for a fee, and then the council will help German companies with legal paperwork and setting up offices in Bangladesh, he also said. 

According to HSBC, by 2030, Bangladesh is expected to become the 9th largest consumer market. In this regard, Achim Tröster said the German authorities have been informed about the growing market for German products in Bangladesh. However, he could not hint at increased investment from Germany in Bangladesh. The ambassador said that so far, the investments made by Germany in Bangladesh have been fruitful and also mentioned the success of electronic passports in this regard. 

Japan and China are developing economic zones in Bangladesh. As he was asked if German companies have any plans to do the same, the ambassador said that he is not aware of new factories being set up in Bangladesh by Germany; however, he said that the idea cannot be ruled out. Stating that there is a lot of communication gap, the ambassador also said that the flow of information would have been smooth if an official chamber of commerce existed. 

“We think it is high time to establish a bilateral chamber of commerce to help bilateral business growth,” he said, adding that the authorities can only establish one if they have available funds and resources. 

Ambassador Achim Tröster said that Bangladesh has been extremely successful in exporting RMG products to Germany so far. In the past year, the countries reached 11 billion euros in trade. However, he also said Germany has a huge trade deficit with Bangladesh. 

He went on to say that in the coming years, Germany will not be a safe growth market for Bangladeshi RMG products because imports from Germany may go down due to the ongoing recession. However, he also said that if all the hiccups and difficulties in bilateral trade can be solved, then Germany can be a good place for Bangladeshi products. “As long-standing development partners, we support the efforts of Bangladesh, and we see the necessity to diversify its exports,” he said. 

He said that there is scope for Bangladeshi light machinery in Germany. He also said that agricultural products may have some scope in Germany if they assure good quality.