Published:  12:00 AM, 18 September 2023 Last Update: 11:56 PM, 17 September 2023

Comprehensive Planning Is Needed for More Foreign Investment

Comprehensive Planning Is Needed for More Foreign Investment

(Part I)

Bangladesh can be one of the main investment attractions of Japan in Southeast Asia. However, 71 percent of Japanese companies are not satisfied with the business environment in Bangladesh. Recently, this information has emerged in a survey of the Japan External Trade Organization (JETRO). According to the news published in a daily, if the business environment improves, Japanese companies will take the initiative to expand their business. In this survey conducted from August to September last year, 74 companies operating in Bangladesh gave their opinion. According to the survey report, 26.2 percent of Japanese companies said that they are dissatisfied with the business environment in Bangladesh. 44.6 percent said they were somewhat dissatisfied. 4.60 percent of companies are satisfied with the business environment.

Despite the dissatisfaction with the business environment, according to JETRO's survey report, 71.60 percent of Japanese companies operating in Bangladesh are interested in business expansion in the next one to two years. Bangladesh is in the second position among various countries in Asia and Oceania region in terms of such attitudes of Japanese businessmen. South Korea, Malaysia, Thailand, Vietnam and Indonesia are behind Bangladesh in this regard. But neighboring country India is slightly ahead. 72 percent of Japanese companies want to expand business in India.

Our dream of development and progress will come true if the skills of the vast population of the country can be utilized by creating an investment-friendly environment as well as infrastructural development under a well-planned development process. This can be said for sure. But the problem is that due to infrastructural problems, corruption, bureaucratic red tape and other reasons, the development of industry and business is slow. Investments are often discouraged due to these reasons. As a result, it is time to consider whether we are falling behind. Especially the fragile position of the financial sector, social unrest, and allegations of money laundering under the guise of imports from the country are often coming to the media. Many say that these things are increasing. If these problems are not solved, it may be difficult to achieve the dream of Bangladesh becoming a developing country in 2026. It is possible to overcome this situation by comprehensively reforming the financial sector, reducing social unrest, developing infrastructure to increase investment, maintaining uninterrupted electricity and gas supply and above all preventing corruption.

Infrastructure development, financial sector management, macroeconomic capacity, institutional capacity, business dynamism, labor market efficiency, innovation and technological readiness can propel our efforts toward success.

According to the report, Japanese companies feel that Bangladesh lags behind neighboring countries in terms of business risks, government licenses or approvals, investment permits, tax-related issues, and obtaining visas and work permits.

In terms of business environment, Japanese companies have put Bangladesh at the top of dislike in two areas. The first is the lack of efficiency in licensing and licensing of businesses, the second is the inefficiency of the tax system. Almost 80 percent of Japanese companies feel that the biggest obstacle to doing business in the country is bureaucratic complexity and 73.4 percent of Japanese companies think that the inefficiency of the tax system is a major obstacle to doing business in this country. In addition, the legal framework or foundation for foreign capital and the complexity of obtaining visas and work permits for foreigners are also major obstacles to the business environment in Bangladesh. However in these two cases, the situation of Myanmar, Singapore and Malaysia is worse than Bangladesh.

Where and why Bangladesh ranks ahead of other countries in terms of business environment in the survey. In response, Japanese companies have put Bangladesh on the list of preferences in four areas. The areas are cheap labor, easy availability of workers and employees, easy availability of specialized manpower and engineers and existing markets. In the survey, 51.7 percent of Japanese companies ranked Bangladesh as the top business environment for 'cheap labor'.

The main challenges faced by the Japanese in doing business in Bangladesh last year were procedural complications in granting customs clearance and volatility in foreign exchange prices. In 2021, there was a shortage of skilled workers and an increase in wages. 73.2 percent of Japanese companies that participated in the survey said that the first challenge was the complexity of the customs system and 72.6 percent of companies said the volatility of foreign currency prices is a major challenge in business.

Hiren Pandit is a columnist
and a researcher.

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