The role of foreign investment and investment development agencies in growth and job creation.

 

Government investment development agencies are making continuous efforts to attract investors from different parts of the world to invest in Bangladesh, create investment protection and create an investment-friendly environment. Foreign investment is recognized as the regulatory foundation for the economic development of any least developed country. In the current situation, foreign investment is declining all over the world.  According to the World Investment Report 2020, global investment in Corona is expected to fall by 40 percent from $ 1.54 trillion to trillion by 2020.  As a result, in developing countries like Bangladesh, subsequent foreign investment in Corona can be significantly reduced. According to Bangladesh Bank, net FDI inflows in 2019 (FDI is foreign direct investment) was 287.39 million US dollars, which is 20 percent less than the previous year.  In 2019, the FDI inflow in the country was 361 crore 33 lakh dollars. In other words, FDI has decreased by 73 crore 93 lac US dollars in one year.  Foreign Investment (FDI) plays an important role in increasing employment opportunities in the country, alleviating poverty, keeping up the flow of foreign remittances and sustaining GDP growth.

The country's investment development agencies have been working tirelessly to increase foreign investment in the country. Bangladesh Export Processing Zones Authority (BEPZA), Bangladesh Investment Development Authority (BIDA), Bangladesh Economic Zones Authority (BEZA), Bangladesh Hi-Tech Park Authority, Export Development Bureau (EPB), Public Private Partnership (PPP), Central Bank and other concerned ministries of the government work to promote foreign investment in Bangladesh. BIDA is at the forefront of providing investment assistance, legal advice and expediting foreign investment in the country. BIDA is leading the way in providing services to domestic and foreign investors, identifying new areas of investment, and investment management.

BEPZA is the first institution in the country to have a secure infrastructure and incentive package for foreign investors as well as investors. From 1947 to 1970, there were a total of 22 industrial establishments in the country. Later, due to the work initiatives of the government and various organizations, various industrial establishments started to be developed with domestic and foreign investment.BEPZA is widely acclaimed for its role in increasing safe foreign investment in the country, creating employment, earning foreign exchange, playing an important role in GDP growth, a place of reliance for investors at home and abroad and building a golden land that supports industry.

 

 

 

 

The Bangladesh Export Processing Zones Authority (BEPZA) has played a leading role in creating opportunities for foreign investors in the country's EPZs, safe and fast industrialization.  According to the report of Bangladesh Bank (last October 2020), there are 464 industrial establishments in EPZs (data: Bangladesh Bank). In addition, there are 69 more industries under implementation, US 5,371 million has been invested in industrial establishments in EPZs and a total of 440,000 people have been employed in the country and abroad (source: BEPZA).  Directly or indirectly, about one crore people of the country are dependent on BEPZA.  BEPZA has successfully implemented 8 EPZs so far.EPZ contributes about 20 percent of the country's export earnings.  BEPZA's active contribution to women's empowerment as well as poverty alleviation has been widely appreciated due to the establishment and success of EPZs in the manga-affected areas of North Bengal.  Despite the high interest of domestic and foreign investors, investors had to return from the country only due to the scarcity of land (plots) in the EPZ.

In such a context, considering the needs of investors, the government has formed the Bangladesh Economic Zone Authority (BEZA).  The organization is a government agency authorized to establish, license, operate, manage and regulate economic zones in Bangladesh.  Initially, the Bangladesh Economic Zones Authority (BEZA) started its activities with the promise of forming 100 economic zones. Economic zones are being declared in different parts of the country with the support and great interest of the government.  On the other hand, the government decided that no more EPZs would be set up in the country (although the government has recently allowed three more EPZs to be set up in the country).  Due to the scarcity of plots in the EPZs, the newly established Economic Zones (EZs) have continued the land development work in full swing for the establishment of planning industries.  So far, 98 economic zones have been approved, including public-private and EZ, established by BEPZA.( Source – BEPZA ).

A target has been set to create employment for one crore people in these economic zones.  The government's plans are expected to contribute to achieving the Sustainable Development Goals (SDGs).  Although Beja and BEPZA, under the Prime Minister's Office, were set up for foreign investment and for setting up factories in planned areas, there are differences between the structure and nature of the two organizations.  Many wonders why the government formed Beja despite having a reputed institution like BEPZA. In the Export Processing Zones (EPZs) under BEPZA, 100% of the products produced in the factories are produced for export.  Considering the special importance of the field, 10% of the total exports of the previous year can be sold in the domestic market by paying duty through local LC.  On the other hand, companies established in economic zones will produce products for marketing in both local and international markets.

Beza is also working to bring industries established in different parts of the country under a planned area beyond BEPZA activities.  One of the tasks of Beza is to form a planned industrial zone.  Although made up of two different structures and laws, investors may be a bit hesitant to make investment decisions as the goals and objectives are almost the same.

Beza has been taking ample opportunity to raise and expedite solutions in the policy-making bodies of the government in the areas of taxation, customs clearance and foreign exchange reform, etc. to attract foreign investment to investors in the economic zone of the country.  The country's EZs are working to prepare adequate land for power, ICT, high-tech parks, leather industry, agriculture, telecommunications, tourism, shipbuilding and plastics. Considering the existing size and ancillary facilities in the same EPZ, these industries need to be encouraged to invest more in EPZ. As per declaration Vision 2041 by govt. for building infra-structure including communication, fuel, service, technological sector of the country, huge foreign investment is required. Bangladesh is an attractive destination for foreign investment due to its relatively cheap labor, stable growth, huge foreign exchange reserves, and progress in social indicators.

There is a huge potential to prepare the ground for all kinds of investments by dividing the economic zones into special zones. However, since the Bangladesh Export Processing Zones Authority (BEPZA) is a very successful institution in a government compared to other institutions and the bureaucratic complexity in BEPZA is very low, foreign investors feel comfortable investing in EPZs which in many cases serves as a well-established “BEPZA” brand to domestic and foreign investors. In this context, the government has taken an effort to bring investors into the economic zone by exploiting the reputation of BEPZA establishing BEPZA EZ in the economic zone.  Since its inception, BEPZA, as an active entity of the government has been working tirelessly for the protection of the investment environment in the country, increase investment, export, creation of employment opportunities, etc with great success. In the course of time, there is a need to create a multidimensional field of investment in today's globally competitive market and it has become imperative for states to implement multiple action plans to meet this challenge.  As a result, companies like BEPZA have successfully traveled a long way, but it is normal for old companies to compete with new ones created in the process of need. As the Bangladesh Export Processing Zones Authority (BEPZA) is a pioneer in expanding foreign investment in the country, it is necessary to formulate various programs to attract investment in trade and commerce.  Compared to other countries in the world, one of the advantages of foreign investment in Bangladesh is the low cost of labor.  But at present, it is not possible to increase the supply of the desired foreign investment with a single component i.e. cheap labor. Failure to ensure multidimensional benefits can make it difficult to reach the desired goal of attracting foreign investors.  For that, with the development of information technology, every effort should be made to create trained manpower.  At the same time, the land required for setting up factories, improved infrastructure, suffering-free communication system must be ensured.  The distance between the service provider and the service recipient should be bridged. BEPZA needs to look at those industries that have the potential to increase the country's investment and create more jobs, and look at all those industries separately.  Ensuring investors have a close relationship with the company will be beneficial for both so that the middleman cannot enter between the service provider and the service recipient and disrupt the fair business environment.  The cost of investment increases due to the middlemen and the beneficiaries try to benefit them by tarnishing the reputation of the state institutions.  Those who invest in Export Processing Zones (EPZs) need to be helped to invest and do business in an orderly manner and maintain a friendly employer-worker environment. To establish the Bangladesh Economic Zone in a new structure was the demand of time to create employment for the massive unemployed in a growing populous Bangladesh and to create new investments by overcoming the established garment industry sector, increasing the scope of production and services. Similarly, BEPZA will have to work tirelessly to increase foreign investment in a more organized manner by utilizing the existing skilled manpower, technical skills, management capabilities, training facilities, security framework, investor confidence, etc. BEPZA demands state discretion in all types of investments in the country considering the contribution of these EPZs and their efficiency in management, including investment and national export earnings, employment, role in women's empowerment.  Some of the steps taken by the government for the economic development of Bangladesh such as Metrorail, Padma Bridge, Karnafuli Tunnel, Elevated Expressway, and increase in power generation and development of communication infrastructure are being implemented. Ample foreign investment has come from Japan & China to these projects.  The government has adopted a liberal policy to attract foreign investment in the country, especially by strengthening industrialization, to accelerate the country's economic growth.  The government is creating special economic zones across the country as a strategy to attract foreign investors. Many more countries including Japan, India, and China have already started investing in these regions.  In the last few years, there has been an upward trend in trade and commerce in the world, as a result of which exports have increased by 11 percent in the fiscal year 2018-2019 to a record 40.53 billion.  The garment sector alone accounts for more than 80 percent of exports, but the global corona epidemic has reduced export earnings to 33.67 percent in the 2019-2020 financial year. In today's world, it is not possible to reach the desired goal of economic development without foreign investment.  Despite the adverse conditions, foreign investment in Bangladesh has reached 1.1 billion in the last four years (Source: Kaler Kantho, Date: 01.12.2020).  This is very good news for Bangladesh and developing countries. India is the largest source of FDI in South Asia.  According to the latest data, Singapore and the United States have invested the most in India.  At present, the contribution of foreign investment to the GDP of Bangladesh is about 1 percent.  In order to increase the supply of foreign investment, it is necessary to try to expand various working plans. Economists believe that if Bangladesh's FDI can be raised to 5 to 6 percent, then GDP growth is likely to be 10 percent.  At present, due to the US-China trade dispute and China's monopoly control on Hong Kong, foreign investors from Hong Kong, the commercial hub of Asia, have started winding down their businesses, according to the reports of various newspapers.  Japan has already announced that it will subsidize investors if they move away from China. We have to give opportunities to foreign investors with our own capacity in various planned areas including economic zones, EPZs, high-tech parks.  Despite the immense potential for investment, as there are bureaucratic hurdles to investment in various fields, Bangladesh will have to open the door to overcome them. Only then will we be able to achieve unprecedented success in achieving our goals.  It is possible that the development activities of Japan Economic Zone have started on December 1, 2020, at Araihazar Police Station in Narayanganj.  Ito Naoki, Japan's ambassador to Bangladesh, reassured us that his country would invest heavily in the 25,000 special economic zones, which would be a major investment in Asia. He hopes a free trade agreement (FTA) or a preferential trade agreement (PTA) between the two countries could benefit both countries.  In a recent study by the Japan External Trade Organization (JETRO), Bangladesh topped the list of Japanese investors' preferences for business expansion in Asia and Oceania.  However, corruption and bureaucratic complexities were among the 13 barriers identified by the Japan External Trade Organization (JETRO) to invest in Bangladesh in a previous report in 2014. Apart from this, lack of skilled manpower, infrastructural weakness, and scarcity of land are also considered as one of obstacles to foreign investment in Bangladesh.  In that case, the availability of land in the economic zone and good infrastructure in the EPZ’s,  a conducive investment-friendly environment and easy administrative activities in both places will help to go a long way in addressing Bangladesh's economic challenges.  Integrated multi-pronged initiatives will help establish the fears of our economy in a more robust structure.  According to garment exporters involved in attracting investment, the amount of foreign investment needed to achieve the country's economic growth target even before Corona did not reach the desired investment target (Source: Daily Banik Barta, dated 15.06.2020). The strategy needs to be determined by closely monitoring how other countries or our trade rivals are working to attract FDI.  In order to make foreign investment in visible progress, investment development service providers must always be in tune with the modern world. Otherwise, the prudent vision of the investors will be registered somewhere far away or in the room of the nearest competitors.