the global economists as ‘Asian miracle.’ But in Bangladesh things are moving in the opposite direction. The importers also enjoying extra facilities more than the industrialists who are investing with risks. As a result, on the one hand the local industries are being destroyed and, on the other, precious foreign exchanges are being spent for over import. Moreover, local entrepreneurs face hurdles at every step while various facilities are ensured for the foreigners. Analysts are criticizing this discriminatory policy in continuation for long between the local and foreign investors. Because the local industrialists re-invest the profit earned from the investment. As a result the expansion of industries, production, growth and employment continue to increase in a geometric proportion. On the other hand the profit derived from the foreign investment set up in the incubator wrapped in different facilities largely goes back abroad again. In this regard former finance adviser of caretaker government Dr Mirza Azizul Islam said, employment generation results from investment in the country. GDP growth also rises if production is increased. More facilities should be given to local investors. In all countries the policy of giving priority to local investors is followed. Because rise in local investment creates no risk. Moreover, there should be no discrimination for the local investors with the foreign investors. The investment by foreigners creates risk. It was found in the past that foreign investment was withdrawn from a particular country. Then a sort of vacuum is created in investment in that country. Thus, disorder may be created in a country’s economy if the foreign investor withdraws the capital. Local investors alleged that the government ensures the facilities like gas-electricity to the productive sector and even the unproductive sector when any foreign investment is found. On the other hand, the local industrialists are not getting such facilities despite their huge investment in the productive sector rather they are facing harassment at every step by the government’s department concerned. The government has set up EPZ for the arrangement of land for foreign investors while the local entrepreneurs are facing obstruction for the development of the land owned by individuals for investment purposes. In addition, high bank rate creates problem. After taking loan from banks and investing money, factories equipment are being damaged due to lack of gas and electricity for long time. Moreover, the rate of bank loans is becoming high. Under this circumstance, the local entrepreneurs are becoming loan defaulters. There is no positive outcome in this regard though Finance Ministry, Investment Board, Bangladesh Bank and other concerned ministries are aware about the matter. When asked, Navas Chandra Mandal, member of Investment Board and responsible officer of liaison committee for foreign investment said, “We encourage the foreign investors as the demand of foreign currency is met by their investment. And balance sheets are maintained. Also, as a hospitable nation we give them little bit priority. But it is not right that they are given more facilities. All are equal as per the industrial policy. Concerned people said there is no specific policy by which the local investment increases. The local investors face various problems including bribery since the time of registration of the project. But foreigners do not face such problems. The government and concerned departments are ready to assist the foreigners about their investment. Local entrepreneurs said many of the local invertors have lost their interests in establishing new industries due to this discrimination of the government resulting in negative impact on local production, employment opportunity and investment. The number of unemployed people is increasing in such a situation. A former chairman of the country’s apex trade body Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said that the service sector in Bangladesh is the most profitable sector at present. Telecommunication sector is making the highest profit. Local investors did not get enough opportunity in this sector as a result the telecommunication sector has gone to the foreign investor’s hand. Although some risky rental power plants were given to some loyal persons to the government but construction work of big powers plant are not given to local investors. Although local investors have the capability to invest in gas sector but they are not given enough opportunity. These projects are given to commission based businessmen and foreign investors in exchange of large amount of commission. According to National Board of Revenue (NBR) any foreign investor will get 100 percent tax holiday in first two years, for third and forth year the investor will get 50 percent tax holiday and 25 percent on fifth year if makes any investment singly or in partnership. Foreign investors will get 100 percent tax holiday for first three years, 50 percent on next three years and 25 percent on seventh year if makes investment in Rajshahi, Khulna, Sylhet, Barisal and hilly areas in Chittagong. Depreciation on new machineries will be 50 percent in first year, 30 percent in second year and 30 percent in third year. Import of tax free spare parts and bonded warehouse facility is given if 80 percent of the produced products are exported. In addition 90 percent loan against Letter of Credit (LC) and loan facility from Export Development Fund (EDF) is also available. According to a data of Dhaka stock exchange, a Norway based foreign company has been giving 140 percent dividends every year but they have only 10 percent share. Rest of the share is on the hand of entrepreneurs which means these foreign companies have been transferring money rather exploring business. These companies also give dividends breaking company reserve. In 2010, a phone company announced 120 percent dividends and distributed Tk 1620 crore, 36 lakh 260 as dividend. Of them, general investors got TK 162 crore and 3 lakh, that foreign company got TK 904 crore while the phone company got TK 551 crore. They had a net profit of TK 1889 Crore but at the same time they gave TK 2777 crore cash dividend among the share holder. Of the amount, TK 1556 crore was transferred to Norway. Besides, the government is being deprived of taka thousand crore as there is no rule on personal investment tax in case of foreign investors. An industrialist said that if the existing complexities on investment continue the local industrialists would not come forward to invest. They would prefer to invest abroad in lieu of own country by transferring money. It is alleged that some industrialist already invested using alternative identity in India, Myanmar and some other country through money laundering. A former banker said that banking sector is the hub of country’s economy and investment but banks are more interested in banking with plunderer and importers in lieu of actual investors. Bangladesh Bank did not play any role against bribing or 18-20 percent interest rate. He also said the banks are taking high service charge in absence of Bangladesh Bank’s poor monitoring. Though the banks reduced interest rate on deposit according to the direction of Finance ministry but they did not reduce interest rate on loan. Officials of Bangladesh Bank said functional interest rate is more than the interest rate that are shown by the banks. The bank has added the interest of loan with the main loan amount after three months. For this the interest has gone to 23 percent. But, the interest rate is half that the amount in India and other neighbouring countries. For the high interest rate most of the industrialists have not the courage to take loan though they have plan and eagerness to invest. As a result the idle money reserve has reached near Tk 1 lakh crore that create negative effect to out economy. However, Bangladesh Bank has given so-called advice to reduce interest rate but did not take action against the bank, who have been maintaining the high interest rate violating Bangladesh Bank direction. Bangladesh Bank Deputy Governor SK Sur Chowdhury said, “We could not fixed the interest rate but we asked several Bank to reduce their interest rate in logical level.” Some local investors have been investing in production sectors after taking risk but foreign investors did not invest in the sector. They only invested in less risky and high profitable sector. Most of the direct foreign investments in the country are only telecom sector. According to the information of Bangladesh Bank, amount of loan to industrial sector was Tk 1, 22,356 crore in July-March in 2013-14 fiscal year. As in 2013-14 fiscal year, amount of industrial loan has been increased to 12.14 percent. According to the information of UNCTAD, although, domestic investment was not in satisfactory situation in 2013, but the Direct Foreign Investment (FDI) has been increased by 23.66 percent than the previous years. By this time the total foreign investment was 159 crore and 90 lakh dollar, while in 2012 it was 129 crore and 25 lakh dollar and in 2011, it was 113 crore and 63 lakh dollar. Although, total foreign investment was enlarged in profitable sectors, but there was not the same scenario in labour intensive industry sector. Following to UNCTAD information, the countries which have invested more are France, Australia, Japan, China, Italy, Germany, South Korea, India, USA, Spain, Thailand, Singapore and UK.
Sunday, August 10, 2014
Local investment stalled by obstacles, discrimination:Daily Sun
the global economists as ‘Asian miracle.’ But in Bangladesh things are moving in the opposite direction. The importers also enjoying extra facilities more than the industrialists who are investing with risks. As a result, on the one hand the local industries are being destroyed and, on the other, precious foreign exchanges are being spent for over import. Moreover, local entrepreneurs face hurdles at every step while various facilities are ensured for the foreigners. Analysts are criticizing this discriminatory policy in continuation for long between the local and foreign investors. Because the local industrialists re-invest the profit earned from the investment. As a result the expansion of industries, production, growth and employment continue to increase in a geometric proportion. On the other hand the profit derived from the foreign investment set up in the incubator wrapped in different facilities largely goes back abroad again. In this regard former finance adviser of caretaker government Dr Mirza Azizul Islam said, employment generation results from investment in the country. GDP growth also rises if production is increased. More facilities should be given to local investors. In all countries the policy of giving priority to local investors is followed. Because rise in local investment creates no risk. Moreover, there should be no discrimination for the local investors with the foreign investors. The investment by foreigners creates risk. It was found in the past that foreign investment was withdrawn from a particular country. Then a sort of vacuum is created in investment in that country. Thus, disorder may be created in a country’s economy if the foreign investor withdraws the capital. Local investors alleged that the government ensures the facilities like gas-electricity to the productive sector and even the unproductive sector when any foreign investment is found. On the other hand, the local industrialists are not getting such facilities despite their huge investment in the productive sector rather they are facing harassment at every step by the government’s department concerned. The government has set up EPZ for the arrangement of land for foreign investors while the local entrepreneurs are facing obstruction for the development of the land owned by individuals for investment purposes. In addition, high bank rate creates problem. After taking loan from banks and investing money, factories equipment are being damaged due to lack of gas and electricity for long time. Moreover, the rate of bank loans is becoming high. Under this circumstance, the local entrepreneurs are becoming loan defaulters. There is no positive outcome in this regard though Finance Ministry, Investment Board, Bangladesh Bank and other concerned ministries are aware about the matter. When asked, Navas Chandra Mandal, member of Investment Board and responsible officer of liaison committee for foreign investment said, “We encourage the foreign investors as the demand of foreign currency is met by their investment. And balance sheets are maintained. Also, as a hospitable nation we give them little bit priority. But it is not right that they are given more facilities. All are equal as per the industrial policy. Concerned people said there is no specific policy by which the local investment increases. The local investors face various problems including bribery since the time of registration of the project. But foreigners do not face such problems. The government and concerned departments are ready to assist the foreigners about their investment. Local entrepreneurs said many of the local invertors have lost their interests in establishing new industries due to this discrimination of the government resulting in negative impact on local production, employment opportunity and investment. The number of unemployed people is increasing in such a situation. A former chairman of the country’s apex trade body Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said that the service sector in Bangladesh is the most profitable sector at present. Telecommunication sector is making the highest profit. Local investors did not get enough opportunity in this sector as a result the telecommunication sector has gone to the foreign investor’s hand. Although some risky rental power plants were given to some loyal persons to the government but construction work of big powers plant are not given to local investors. Although local investors have the capability to invest in gas sector but they are not given enough opportunity. These projects are given to commission based businessmen and foreign investors in exchange of large amount of commission. According to National Board of Revenue (NBR) any foreign investor will get 100 percent tax holiday in first two years, for third and forth year the investor will get 50 percent tax holiday and 25 percent on fifth year if makes any investment singly or in partnership. Foreign investors will get 100 percent tax holiday for first three years, 50 percent on next three years and 25 percent on seventh year if makes investment in Rajshahi, Khulna, Sylhet, Barisal and hilly areas in Chittagong. Depreciation on new machineries will be 50 percent in first year, 30 percent in second year and 30 percent in third year. Import of tax free spare parts and bonded warehouse facility is given if 80 percent of the produced products are exported. In addition 90 percent loan against Letter of Credit (LC) and loan facility from Export Development Fund (EDF) is also available. According to a data of Dhaka stock exchange, a Norway based foreign company has been giving 140 percent dividends every year but they have only 10 percent share. Rest of the share is on the hand of entrepreneurs which means these foreign companies have been transferring money rather exploring business. These companies also give dividends breaking company reserve. In 2010, a phone company announced 120 percent dividends and distributed Tk 1620 crore, 36 lakh 260 as dividend. Of them, general investors got TK 162 crore and 3 lakh, that foreign company got TK 904 crore while the phone company got TK 551 crore. They had a net profit of TK 1889 Crore but at the same time they gave TK 2777 crore cash dividend among the share holder. Of the amount, TK 1556 crore was transferred to Norway. Besides, the government is being deprived of taka thousand crore as there is no rule on personal investment tax in case of foreign investors. An industrialist said that if the existing complexities on investment continue the local industrialists would not come forward to invest. They would prefer to invest abroad in lieu of own country by transferring money. It is alleged that some industrialist already invested using alternative identity in India, Myanmar and some other country through money laundering. A former banker said that banking sector is the hub of country’s economy and investment but banks are more interested in banking with plunderer and importers in lieu of actual investors. Bangladesh Bank did not play any role against bribing or 18-20 percent interest rate. He also said the banks are taking high service charge in absence of Bangladesh Bank’s poor monitoring. Though the banks reduced interest rate on deposit according to the direction of Finance ministry but they did not reduce interest rate on loan. Officials of Bangladesh Bank said functional interest rate is more than the interest rate that are shown by the banks. The bank has added the interest of loan with the main loan amount after three months. For this the interest has gone to 23 percent. But, the interest rate is half that the amount in India and other neighbouring countries. For the high interest rate most of the industrialists have not the courage to take loan though they have plan and eagerness to invest. As a result the idle money reserve has reached near Tk 1 lakh crore that create negative effect to out economy. However, Bangladesh Bank has given so-called advice to reduce interest rate but did not take action against the bank, who have been maintaining the high interest rate violating Bangladesh Bank direction. Bangladesh Bank Deputy Governor SK Sur Chowdhury said, “We could not fixed the interest rate but we asked several Bank to reduce their interest rate in logical level.” Some local investors have been investing in production sectors after taking risk but foreign investors did not invest in the sector. They only invested in less risky and high profitable sector. Most of the direct foreign investments in the country are only telecom sector. According to the information of Bangladesh Bank, amount of loan to industrial sector was Tk 1, 22,356 crore in July-March in 2013-14 fiscal year. As in 2013-14 fiscal year, amount of industrial loan has been increased to 12.14 percent. According to the information of UNCTAD, although, domestic investment was not in satisfactory situation in 2013, but the Direct Foreign Investment (FDI) has been increased by 23.66 percent than the previous years. By this time the total foreign investment was 159 crore and 90 lakh dollar, while in 2012 it was 129 crore and 25 lakh dollar and in 2011, it was 113 crore and 63 lakh dollar. Although, total foreign investment was enlarged in profitable sectors, but there was not the same scenario in labour intensive industry sector. Following to UNCTAD information, the countries which have invested more are France, Australia, Japan, China, Italy, Germany, South Korea, India, USA, Spain, Thailand, Singapore and UK.
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