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Bol must simplify investment process

Experts call for more power for the state agency

Staff Correspondent
Calls for revamping the Board of Investment (Bol) are growing louder, with many experts holding its inefficacy responsible for the country's failure to attract foreign investment at a scale that it deserves.
"We will have to empower the Bol. Many investors lose heart and leave because there is no serious problem-solving mechanism," Farooq Sobhan, a former chairman of the Bol, said.
He said the board of Bol, which is headed by the prime minister, has perhaps met only twice in the last six years. So, its capacity to fast-track things is very limited.
Sobhan, who is also the president of Bangladesh Enterprise Institute, a nonprofit research centre, said there is a need to revisit the whole decisionmaking process in order to get more effective response.
"At the end of the day, we really need to make life a lot easier for investors, both local and foreign. And, we need a problem-solving mechanism," he said, while citing the case in Malaysia as an example.
Investors do not need to visit any government agency other than their investment board for permission in Malaysia, whereas in Bangladesh, they have to visit many government agencies to get approvals.
Sobhan said Japanese investors have recently raised the issue of an ineffective Bol. "They were told that there will be renewed effort to empower and activate the Bol — we shall see how that effort turns out."
"If we are to activate the Bol, we have to ensure that it has the necessary power and leadership to really deliver."
A high-level committee should be set up which will meet once or twice in a fortnight to take decision on pending cases, he said.
"For the investors, time is money. If they have to run around from pillar to post trying to get their problems solved - and at the end of the day, they can't — they will go elsewhere."
Sobhan said the litmus test for the government would be to operationalise the Korean Export Processing Zone (KEPZ).
It is now fully developed and ready to take off, he said. The operator of KEPZ, Youngone, has already 20 factories in production. There
could be 100 more factories in production tomorrow if the government gives it the go-ahead.
"If we don't clear the path for KEPZ, it is going to be very difficult to move forward with other countryspecific zones and special economic zones. We really need to fast-track the initiative."
In response, Gowher Rizvi, international affairs adviser to the prime minister, said the Bol was supposed to be an institution to help investors, but it has failed to do that.
So, something more institutionalised is needed, he said, adding that the government plans to revamp the Bol to give it more power to fast-track processes.
Their comments came at a roundtable titled "Breaking through the Frontier" at City Bank Centre in Dhaka on Thursday.
City Bank, one of the leading private commercial banks in the country, and FinanceAsia, Asia's leading financial publishing company based in Hong Kong, jointly organised the meeting.
The roundtable was a follow-up to the third Bangladesh Investment Summit held in Singapore in September last year. The annual event is a private sector initiative with the view to highlight Bangladesh's potential as an investment destination for global investors and pinpoint barriers that put investors at bay.
Rizvi said the extraordinary efforts and energy he saw among the organisers of the Bangladesh Investment Summit to portray the country as an investment destination must be sustained.
The government has addressed the concerns of investors and businesses soon after taking power in 2009. He gave the example of the power sector, which, he said, was in dire straits when the current government first came to power six years ago because of years of under-investment.
Major transport projects are also going on, he said. "We are in a good place, but not in a good enough place that all of us would have liked."
The adviser said some of the country's institutions, laws and regulations are not yet aligned with global practices.
"Definitely, we need some help in these areas. The government's commitment is there. It is because we Often don't have the expertise and experience."
Meanwhile, Sobhan said large Indian IT firms are very interested in Bangladesh. "We need IT parks. We have been talking about IT parks for the past 20 years, but we are still waitingforan IT park to happen."
Rupert Walker, contributing editor of FinanceAsia, while moderating the meeting, said Bangladesh is an attractive venue for investment managers as well as direct investment, which will spur further economic and political development.
He said foreign investment in Bangladesh is less than one percent of the GDP, which is not acceptable for a country like Bangladesh with all its inherent attraction.
Sohail RK Hussain, managing director of City Bank, said in order to graduate to the next level of economic maturity, diversification is critical.
He said Bangladesh should look to Australia, South Korea, Japan and the BRIC countries, where there are strong growth possibilities due to the market size.
The banker said Bangladesh should also look at diversifying into other sectors such as leather, agro products, pharmaceuticals, IT and related services, shipbuilding industry, terry towel and others, if it wants to raise its export income from $30 billion to a much higher level, he said.
He said Bangladesh may need to use broad-based policies to FDI without
imposing too many restrictions. At the same time, more specific measures aimed at attracting quality investment should be applied to meet the nation's long-term strategic needs.
However, attracting quality investment requires that Bangladesh deliver enough satisfactory rewards to make investors agree to transfer technology to local businesses and entrepreneurs.
He said if foreigners want to set up a building, they have to take permissions from 19 entities, which is completely unmanageable. "It might take 19 months to take all the approvals - we have to pay attention to it."
Arif Khan, commissioner of Bangladesh Securities and Exchange Commissioner, said following the Bangladesh Investment Summit in Singapore there has been an influx of foreign investment into the country's capital market, moving up to 10 percent from 3 percent. "This is a direct effect of the summit."
Abrar Anwar, chief executive officer of Standard Chartered Bangladesh, said policy continuity is a critical area. "There has been continuity of policy but there remains always a concern whether it will be continuing."
He said Bangladesh provides fantastic opportunity for all sorts of investors such as debt, capital market and direct investors as the country has 160 million people and the per capita income is growing every year.
The SCB chief said large FT companies
such as Accenture are already in Bangladesh. Incentives have to be given to them so they expand their operations, which will ultimately give positive signal to other investors.
Anwar also added getting land has become crucial for foreign investors. For example, he said he knew five Hong Kongbased companies had to return empty-handed as they could not buy proper land in Bangladesh.
Rubel Aziz, chairman of City Bank, said the government has done some fantastic jobs. "Now, it needs to focus on issues such as transparency and political stability. If we can have these two things, we will do much better."
Salehuddin Ahmed, managing editor of The Daily Star, said Bangladesh is a promising country and has all the ingredients to attract investment.
He said the current political crisis has effect on both local and foreign investors, so the crisis has to be sorted out. "Otherwise the country will not have the future many thought of."
Reaz Islam, managing partner of LR Global, said Bangladesh cannot grow at 8 percent without investment, both foreign and domestic.
"So, both the public and private sector and all other entities that touch an investor will have to change their mentality and policy."
He said there are reforms happening but they are not fast enough. "The Bol has to be a real one-stop service provider."