The Future of Foreign Investment in Bangladesh
Although, in the recent World Bank report, Bangladesh has seen minor improvement in providing electricity (ranked 179 from last year’s 185), for paying taxes (from 152 to 151 in 2019) and for registering property (183 from a previous 185), the country’s ranking saw a fall in key indicators such as getting credit, starting a business, protecting minority investors, dealing with construction permits, and trading across borders. The World Bank recommends regulatory reforms and the prime minister has given a mandate to the chairman of BIDA to bring the position of Bangladesh to the top 100 countries in terms of ease of doing business. Based on this, a lot of new initiatives by BIDA is specifically directed towards improving the ease of doing business ranking in Bangladesh.
Overall, the government is keen on implementing its election promise of digitizing the government by making public services more accessible. As part of the digitization process, government has digitized the tax payment procedure, introducing e-tins for simplifying payment cycle.
Bangladesh’s graduation to the middle-income status would negate existing preferential trade benefits currently enjoyed by the country, including GSP plus facilities from EU. However, the government is well aware of the forthcoming challenges after 2024 and has started engaging in bilateral trade agreements with major trading partners. The economic impact of the government’s diplomatic detour would be better understood within the next couple of years. According to Centre for Policy Development (CPD), strengthening of public sector institutions is of paramount importance, which can be achieved through more efficient, transparent and accountable administration. Investment climate can be improved by dealing with bureaucratic inertia, developing infrastructure, digitizing government services, training workforce, strengthening institutional capacity and devising effective policies.
For a country with a growing working age population and large unemployment rates, it is imperative to create employment opportunities for workers in the secondary sector. Although the primary goal would be to foster companies pursuing export markets, growing per capita income would eventually lead to a domestic market driven growth. Incoming investors must therefore keep tabs of the growing domestic market, parallel to serving the export market.