A government adviser yesterday suggested lifting the ban on overseas investment as there are abundant growth opportunities for local companies to expand their footprint internationally.

Mashiur Rahman, economic affairs adviser to the prime minister, said local entrepreneurs should be allowed to invest outside, so that they can exploit the economies of scale.

Discussing the advantages of allowing entrepreneurs to invest abroad, he said there will also be a flow of income back to their home country, which will have a positive impact on the economy.

"There is also a long term impact by way of joining the local economy with the international economy," said Rahman, adding that the government should ensure that there is a flow of income.

He was speaking at a discussion on overseas investment by Bangladeshi entrepreneurs, at The Daily Star Centre. The International Business Forum of Bangladesh (IBFB) organised the discussion.

Bangladesh does not allow an outflow of foreign direct investment. Officially, only two companies, Pran and Nitol Niloy, have been allowed to invest outside the country on a limited scale, said Muhammad Ismail Hossain of Shah & Associates, while making a presentation.

Rahman said the condition of the Bangladesh economy is not constant; rather it is changing.

"If you have a much broader geographical area for investment, your investment produces presumably better return."

"If you operate in a small market, you don't have the economies of scale and scope, while, if you operate in a large market, you produce a variety of goods and produce more and you can keep production costs lower. So you need to have a large market."

He said Bangladesh with its connection with the global economy has a larger market to exploit the economies of scale.

The adviser said entrepreneurs would have to invest their taxed income overseas. "If the money is not taxed, the government will realise tax on the untaxed

money to be invested outside."

"Here is a chance to bring out the money and help entrepreneurs invest the money and the government get revenues. If the entrepreneurs see that they would not be able to use the money, they would put it away."

Syed Nasim Manzur, president of Metropolitan Chamber of Commerce and Industry, said many think that outside investment is a zero-sum game and takes away domestic investment. "It does not have to be so."

"Bangladesh's corporate sector is ready to invest outside." The noted entrepreneur said although Bangladesh's garment sector has grown hugely, the entrepreneurs are still manufacturers and have not produced a global brand.

"But there is a huge opportunity in many countries to invest and grow, tie up with global supply chains and grow global brands."

Manzur said if Bangladeshis, for example, own cotton or palm fields, they can reduce price volatility in the local market.

"By investing outside, we will not only have access to global markets, skills and talents, we will also be able to grow our talent by sending them to work abroad."

M Anis Ud Dowla, chairman of ACI,

said local investors are ready and deserve a leeway to explore business opportunities in other countries.

"They have the required skills to grab market share. So, it is only fair to allow them to explore new markets."

He, however, said there should not be any free flow of outside investment. "It has to be regulated. There has to be a return of income to the country.”

India does not openly welcome investment from Bangladesh and gives permission on a case basis, whereas Bangladesh is offering ample opportunities to Indian businesses to invest here, he added.

The government should take up the issue with the Indian government, he said.

Sohel Ahmed Chowdhury, a former commerce secretary, said good companies should be allowed to go outside and find opportunities.

"We can't live in a shell for a long time. This is the right time to take the step," he said, adding that many North-Eastern Indian states also want to establish good trade and business relations with Bangladesh.

Daniel Keen, economic and commercial officer of the US embassy in Dhaka, said investment is rarely a one-way road. "Today, no country can succeed if it is not

globally integrated."

MS Siddiqui, president of Bangladesh Indenting Agents' Association, said if local businesses are not allowed to invest outside legally, they would find a way to do so illegally.

Arunangshu Dutta, a former banker, said Bangladesh has idle capital and should use it. "If we can send human capital abroad, why can't we send money capital?"

There were opposing views at the meeting as well. Matiur Rahman, a former secretary, said the government should not encourage its investors to invest outside the country.

Nabhash Chandra Mandal, executive member of the Board of Investment, said the local companies should not be allowed to invest outside until the country achieves 8 percent GDP growth and becomes a middle income nation.

"If we open the opportunity for them to invest outside the country now, it will create pressure on GDP growth and foreign currency reserves."

Mahmudul Islam Chowdhury, founding president of IBFB, moderated the discussion, while Hafizur Rahman Khan, president, and Humayun Rashid, vice president for finance, also spoke.