Roundtable urges withdrawal of proposal to raise foreign ownership cap in logistics
Policymakers, entrepreneurs and researchers have called for the withdrawal of a proposal in the draft Freight Forwarding Rules to raise the foreign ownership ceiling from 40 to 49 percent. The call came at a roundtable, “Protecting Domestic Investment in Logistics & Policy Reform”, organised by the Center for Strategic Research (CSR) at the BRAC Centre in Mohakhali, Dhaka, on Wednesday. Zonayed Saki, State Minister for Planning, joined online as chief guest; Mahmudur Rahman Manna, President of Nagorik Oikya, attended as special guest.
The concept paper was presented by Saqeeb Anwer, Executive Director of CSR. He said freight forwarding, shipping agency, customs agency and courier-express require little fixed capital to operate. Foreign ownership therefore brings no factories, equipment or technology — only a licence, through which existing cargo flows shift into the owner’s own global network. What takes place in the market, he said, is substitution rather than competition.
The paper noted that Bangladesh spends at least USD 9 billion a year on freight, of which domestic vessels capture only 8 to 10 percent; with a larger fleet, around USD 2 billion could be retained onshore. After the Bangladesh Flag Vessels (Protection of Interest) Act 2019, the domestic ocean-going flag fleet grew from 48 vessels to 80. Section 9(4) of the Civil Aviation Act 2017, which requires a foreign airline’s agent to be wholly owned by a Bangladeshi citizen, has built a fully domestic GSA industry. Saqeeb Anwer said that although many wholly foreign-owned companies operate here, none has invested in a domestic vessel or in infrastructure.
Concern was expressed that the Shipping Agent and C&F Agent Licensing Rules have both cut the 60/40 structure to 51/49; that the current budget has withdrawn the 49 percent cap on ICDs and off-docks; and that courier services carry no cap at all. The 60/40 structure in the freight forwarding rules is therefore the last remaining benchmark for domestic ownership. The validity of licence renewals for wholly foreign-owned companies is also pending before the High Court Division in Writ Petition No. 12489/2019; amending the rules before the rule nisi is disposed of could render the proceedings ineffective, speakers said.
Describing logistics as a sensitive sector tied to national security, Fazle Huda, MP for Naogaon-3, said many foreign firms take large sums of foreign exchange out of the country merely by issuing bills of lading and other documents, without visible infrastructure. “We are not against foreign investment,” he said. “But that investment must go into infrastructure — railways, cold chain, modern trucks and agriculture-based supply systems.” Citing restrictions in Sri Lanka and India, he said a sector tied to trade, ports and internal security must be treated as strategic, and that the practice of running businesses behind nominal local partners arranged through lawyers or consultants must end.
Kabir Ahmed, President of IAEAB and Advisor to BAFFA, said around 80 percent of the country’s freight business is controlled by foreign firms, yet most bring no meaningful FDI. Md. Ariful Ahsan, President of BAFFA, warned that continued over-dependence would weaken the domestic logistics industry. Shafiqul Alam, Editor of Daily Waadaa, said global realities and geopolitics must inform how foreign investment is sought, and that it may not be necessary in every sector.
Mahmudur Rahman Manna said excessive foreign participation is depriving domestic entrepreneurs of opportunity, and that the concealment in this sector needs far more open discussion. ATM Azizul Akil David, former Senior Vice President of the Bangladesh China Chamber of Commerce and Industry, said effective interest rates reaching 23 to 24 percent are forcing domestic entrepreneurs out of business while foreign firms enjoy a comparative advantage.
Six demands were placed from the roundtable: a uniform 60/40 structure across all four sub-sectors, with domestic majority applied to shares, dividend rights and board voting; uniform and strict enforcement of existing rules at renewal; a minimum paid-up capital of USD 5 to 10 million for firms with foreign participation, of which at least 40 percent must be shown within 24 months as real investment in warehousing, equipment and transport fleet; foreign hiring limited to senior management; assessment of foreign exchange outflow as a precondition of licence renewal; and mandatory declaration of beneficial ownership to curb nominee holdings.
Also taking part were Abu Alam Md. Shahid Khan, former Secretary; Barrister M Saquibuzzaman; Mahmud Hosain FCA, former Vice President of ICAB, Hasan Mamun, Consulting Editor of Dhaka Stream; and Kamruzzaman, Head of Finance at Rifline Logistics. Speakers expressed hope that the relevant ministries and policymakers would give the recommendations serious consideration.
