Factories moving from China: Possibilities for foreign investment in Bangladesh

Foreign investment in Bangladesh
The global Corona pandemic has sparked a trade war between China and the United States. Multinationals from the United States, Europe, and Japan have set up industries in China over the past three decades to produce low-cost products. As a result, China became the sole reliance on global production. But the United States and its allies have been working hard to reduce China's monopoly power on global production recently. 

Donald Trump's administration imposed an additional 25 percent tariff charge on importing Chinese products in the US market already. Therefore various countries have taken the goal of reducing their dependence on China for security and strategic reasons.

Many countries are using this Covid-19 crisis to remove industrial plants from there. New bases are being set up in South and South-east Asian countries including Vietnam, Thailand, Malaysia, Indonesia and India. In relocating factories, These multinationals are mainly giving priority to the countries that are easy to invest in.

This could be a special opportunity for the economy of Bangladesh, which has been hit by the Corona pandemic. Bangladesh will benefit greatly if it can attract these multinationals for investment. But the question is, will Bangladesh be able to take that opportunity at all?

Foreign investment in Bangladesh has been stagnant for a long time. Drought of foreign investment can be cut by grabbing this opportunity. Economic activity around the world has stagnated for the past seven months due to the outbreak of the Corona epidemic. 

Like other countries of the world, the same situation is prevailing in Bangladesh. Production has declined in various industrial sectors. About one crore people have lost their jobs. The role of domestic and foreign investment is very important in the economic development of the country as well as in increasing the national income.

As foreign investment increases, new industries will emerge. Along with economic development, new jobs will be created. As a result, the country's economy will recover quickly after overcoming the loss of corona. One of the positive aspects of attracting investment is that there is relatively cheap labor in Bangladesh.

Industry in Bangladesh

However, Bangladesh has always been neglected in terms of large foreign investment. There are a number of problems, including bureaucratic complexities and infrastructural weaknesses.

Bangladesh ranks 168th out of 190 countries in the World Bank's Business Facilitation Index. In this case, Vietnam is in 60th place, Thailand is in 21st place and Indonesia is in 73rd place. Even Myanmar's position is three steps ahead of Bangladesh's, 175th. In terms of investment, this is a major reason for the lack of image of the country abroad.

According to media reports, the Bangladesh government is taking steps to remove these barriers to investment. In the case of foreign investment, 11 barriers have been identified by the government in bold.

These include lack of incentives for corona virus relocated investments, signing of investment agreements with projects or other agencies without vetting from the National Board of Revenue, corporate tax inequality between domestic and foreign companies, different investment policies, image deficiency in abroad, tax and VAT complications related to investment in PPP etc.

Bangladesh needs foreign investment to strengthen the economy in a post-pandemic situation. So the existing obstacles must be removed as soon as possible. To attract foreign investment land can be provided at a nominal price for a certain period of time in a public economic zone. New economic zones can also be established if necessary.

Discussions should be intensified at the diplomatic level with the concerned countries. The focus should be on infrastructure development, land registration facilitation, availability of electricity and giving some institutional benefits.

Bangladesh is an emerging Country. The rapid growth of the last three decades and the transition from a least developed country to a middle-income country has given a new dimension to the country’s economy. It is hoped that due to the stable political and economic situation, Bangladesh will soon be able to overcome the economic crisis caused by the Corona epidemic and attract foreign investment.  As a result, Bangladesh will be prosperous in industry.

Anik Ahmed
Anik Ahmed
Student, Department of Law
Rajshahi University, Bangladesh.

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