Hopeless domestic and foreign investment scenarios

A B Siddique :

In the year 2018, foreign direct investment proposals that came to Bangladesh was 3 thousand 213 decimal 33 million dollars. In 2022, it decreased to 2 thousand 651.29 million dollars.

In BIDA, private investment proposal was registered against 1 thousand 956 projects in 2011-12 financial year, which was registered at 87 thousand 893 crore 70 lakh rupees, which came down to 75 thousand 683 crore 6 million rupees in 2022-23 financial year.

At the same time growth has fallen from minus 10 percent to over minus 115 percent.

Now let’s talk about local investment. In the financial year 2014-15, local investment was registered at 91 thousand 273 crores, which decreased to 50 thousand 416 crores in the financial year 2022-23.

Foreign and joint investment registration in industrial sector was 1 thousand 37 crore 70 lakh 64 thousand taka in the financial year 2016-17 which decreased to 255 crore 80 lakh 11 thousand taka in the financial year 2022-23.

Employment opportunities were created in the registered projects of 4 lakh 11 thousand people in the financial year 2011-12 which decreased to about 2 lakh in the financial year 2022-23.

This is the picture of investment. But these are only recommendations, not implementation. Note that these data are taken from the Economic Survey 2023.

According to the results of a recent survey conducted by the Japan External Trade Organization (JETRO) on 214 Japanese companies operating in Bangladesh, 70.80 percent of those companies are dissatisfied with the business environment in Bangladesh.

Japan tops the list of foreign companies investing in Bangladesh in terms of investment volume, dividends, employment, reinvestment, etc. If 71 percent of those top investors are not satisfied with the business environment in Bangladesh, then there is reason to believe that there is at least some element of concern!

When foreigners are urged to invest in the country with assurances of a good investment climate, and when a JETRO survey shows the opposite, how much credibility is left in that call! However, it can be said almost certainly that no one in Bangladesh was surprised by the results obtained from the said survey.

Because almost all the citizens of this country are more or less informed about the working environment and the behavior of the officers and employees of the investment related institutions.

In that case, it would not be surprising if 91 percent of Japanese companies expressed their dissatisfaction instead of 71 percent.

If the behavior of the Bangladeshi bureaucracy has not been satisfactory for Japanese companies operating in the country, it should not be the same for companies from other countries.

That means, the investment environment of Bangladesh has not yet become satisfactory and attractive for foreign investors.

In this situation, our leaders and bureaucrats carry all the huge baggage that they call foreign investment search in the country and abroad.

Before doing that, isn’t it more important to make the business environment of your country favorable for both domestic and foreign investors?

At the same time, the question is why that kind of investment supporting environment has not been developed in the country in the last 52 years? So what and who have we developed in the gap of half a century?

Now let’s see, what are the bureaucratic complications mentioned by the JETRO survey respondents or which fall under the big spots mentioned by them?

Among the mentioned complexities are first and foremost industrial registration, trade license, approval as a capital company, obtaining environmental clearance, procurement of import authorization certificate etc., which are mainly state statutory activities.

The second phase of investment includes allocations from infrastructure service providers, which include essential services like electricity, gas, water, land, etc.

At the next level is the use of services such as the use of ports for import-export, which is actually part of direct international trade.

On the other hand, other intermediate level services include acceptance of quality certificates, registration of trademarks and properties, payment of taxes and duties, etc. And the final stage is the repatriation of dividends for foreign investors.

All in all, almost every part of these matters which are desirable for foreign investors has a direct involvement of bureaucracy.

The unsavory but true fact is that at almost every level of these affiliations there is unmitigated corruption, irregularities and appalling enormity of harassment. This horror is bureaucratic complexity in the words of the Japanese companies covered by the JETRO survey.

Now the question is, why is this bureaucratic complexity increasing day by day instead of decreasing? Is there no way to control or minimize it? The main reason why this complexity is increasing rather than reducing it is that the state does not want to reduce it on purpose. Rather, it wants the concerned bureaucrats to become more involved in corruption, so that they help the incumbents to stay in power because of such benefits and weakness.

In 2015, the salaries and allowances of government employees were more than doubled in one jump with the official announcement that the bureaucrats would no longer commit corruption if the salaries and financial benefits were increased. But the corruption did not decrease, rather it increased.

Because the reason behind that growth was not actually a reduction in corruption, it was to ensure the loyalty of the privileged class by inflating the share of the benefits. In such an environment, there is no room for doubt that not only the Japanese, but also all investors will grow dissatisfied.

Meanwhile, to answer the second question, whether there is any way to control or reduce bureaucratic corruption and complexity, I would say that there is a way, but it is not possible in the existing state system and it is not It is clear that there will be no improvement in the investment environment.

In this situation, investors have to deal with all kinds of corruption and complications and they seem to have that mental preparation, which also came out from Jetro’s survey.

Despite such corruption and bureaucratic complications, about 72 percent of Japanese entrepreneurs want to expand their business in Bangladesh. This is because the profit rate is high here. And it is a proven fact from country to country that the higher the corruption, the higher the rate of profit.

Therefore, in such a corrupt and bureaucratic investment environment, foreign companies will have to operate in the country for some time, at least that is what the Jetro survey data suggests. But is it dignified for a state that has passed almost 52 years? Let’s talk about that.

When investing in a country, foreigners first check whether the country has a stable government, then the bureaucratic tangle, law and order situation, democratic situation, etc. All in all, foreign investors want a fair and beautiful environment.

(The writer is a journalist.)