Previous policy reforms for promoting business:
Before recommending the top 10 recommendations for promoting business let’s try to know when the policy reforms started to make a congenial business environment or promote businesses. The 1990s saw major changes in the global economic environment. Developing countries are taking various rapid steps to integrate their economies into global markets. Developing economies in Asia, especially those in the eastern and southeastern regions, are liberalizing their trading regimes and moving towards trade-oriented policies through the liberalization of foreign direct investment (FDI) policies. It also opens the stock and bond markets to foreign investors.Thank you for reading this post, don't forget to subscribe!
The incentive framework for private manufacturing has changed to build a market-oriented economy that caters to the global market. As a result, Bangladesh today enjoys a more or less stable macroeconomic situation. Domestic savings have increased, investment has increased, resources have been used more efficiently, and progress has been made in various areas, including human resource development.
Bangladesh has tried to speed up the development process. The government has designed and implemented various policy reforms to create a more open and competitive environment for foreign direct investment. Considerable reforms and policy changes have been made in recent years to promote a favorable atmosphere for foreign direct investment in Bangladesh. Private investment from foreign sources is welcome in all sectors except four strategic industries which are reserved for the public sector only.
(1) Weapons, ammunition, and other defense equipment and machinery; (2) nuclear power. (3) Replanting and mechanical logging within the boundaries of protected forests; (4) Security printing and embossing of banknotes. The Foreign Private Investment (Encouragement and Protection) Act 1980 was passed, providing legal protection for foreign investment from nationalization and expropriation. It also guarantees the repatriation of capital and dividends. Deal fairly with local investors about compensation, indemnification, reimbursement, or other claims made against their investments. The government has bilateral agreements with 26 of her countries to avoid double taxation, and negotiations are underway with 23 of them.
Investment treaties to promote and protect investments have been signed between Bangladesh with 20 countries, and negotiations are underway with nine other countries.
The government has already passed bankruptcy laws. A judicial commission was established to identify anomalies and weaknesses in the existing laws and legal system. One of the commission’s main tasks is to update existing trade, trade, and business laws. All of these are designed to improve the overall business climate, together with the environment for foreign direct investment. Efforts are being made to reform the bureaucracy to make it more efficient and to support the influx of foreign direct investment and better services for economic development-oriented activities. Update the laws governing the financial sector. Significant changes have been made to facilitate the flow of foreign direct investment into Bangladesh, the Companies Act 1994 and the Labor Act 2006 were enacted.
Several EPZs were established in Chittagong, Dhaka, and Khulna in 1980 under the Bangladesh Export Processing Zones Authority (BEPZA) to improve the environment for foreign private investment and foreign direct investment. The Private Export Processing Zones (PEPZ) Act was also enacted to encourage the establishment of “Private Export Processing Zones” by domestic and foreign investors. These EPZs are fully equipped with the necessary infrastructure facilities and are fully protected from law and order issues.
BEPZA approves all projects to be placed in EPZs and provides “One window same day service” to EPZ investors. The government also approved the Private Power Generation Policy of 1996, allowing tax exemption on company income for 15 years from the date of commercial production.
The government announced a strategy to reduce effective protections in the medium term to make import liberalization and industry deregulation more effective, and continued efforts to reduce and simplify tariffs, It has taken several steps, including announcing a clear tariff plan and developing an action plan on legal action. Develop a blueprint for reform and deregulation, and an action plan to implement the export development strategy. These efforts have improved the investment climate in Bangladesh.
In some countries, democracy creates an environment conducive to investment. Therefore, the most important determinant of investment in a country today is ‘democracy’. According to the IMF, the other five determinants are (1) good governance, (2) macroeconomic stability, (3) openness to the global economy, (4) investment quality, and (5)) workforce skills.
In addition, Bangladesh has other determinants to promote its investment climate. (1) Low cost and abundant labor (2) domestic growth market (3) political stability (4) well-developed capital market.
Existing Business Ecosystem in Bangladesh:
Bangladesh offers an investment-friendly environment compared to other South Asian countries. Here are some salient features:
A largely homogenous society with no major internal or external tensions Bangladesh has a population that is highly resilient to adversity.
The people of Bangladesh, a liberal democracy, have lived peacefully for many years regardless of race or religion.
Bangladesh enjoys broad bipartisan political support for market-oriented reforms and offers the most investor-friendly regulatory regime in South Asia.
The country has a large trainable, enthusiastic, hard-working, low-cost workforce suitable for labor-intensive industries.
As a bridge between ASEAN and her SAARC countries, Bangladesh’s geographical position is ideal for global trade with highly convenient access to international sea and air routes.
Bangladesh is rich in natural gas, coal, water, and very fertile soils.
Bangla is the official language. English is widely used as a second language.
All Bangladeshi products, except weapons, enjoy full tariff- and quota-free access to the EU, Japan, Canada, Australia, Norway, and most developed countries. However, for garment exports to the United States, Bangladesh has a quota system that ended on 1 January 2005.
Export earnings continue to increase.
The situation for foreign investment has generally been good since the independence of Bangladesh. The government has passed various policy reforms to create a conducive atmosphere for investment. However, government-decided investment initiatives are inappropriate and sometimes inappropriate for various reasons such as lack of proper governance, lack of law, and order/political instability.
The government has developed and implemented different policies to create a more open and competitive environment for foreign direct investment. Sectors, such as energy and power, coal, and solar energy. Telecommunications and ICT, and lighting technology may attract foreign investment.
Telecommunications and ICT, pharmaceutical raw material production and herbal medicine, lighting, education and energy and power, coal, and solar energy are the preferred sectors for investment in Bangladesh. The private manufacturing incentive framework is tailored to build a market-oriented economy that caters to the global market. As a result, Bangladesh has maintained a stable macroeconomic situation despite the global economic crisis.
Agriculture is the most important sector for Bangladesh. The country earns significant foreign exchange from the export of agricultural products and agro-processed products. We need to increase investment in seeds and other agricultural inputs to boost production and help countries solve their food import problems.
Education is the backbone of the nation and primary education is the backbone of the education system. Investment in education should be increased to 3% of GDP. It is necessary to expand the scope of the introduction and utilization of ICT. User-friendly investment in ICT helps people to use ICT for economic development.
Investment in infrastructure, especially in the railway sector, is significantly inadequate compared to the needs of Bangladesh’s transport system. We should invest more in this area.
Land ports play an important role in regional trade. Investments in land ports are aimed at minimizing operating costs for regional trade.
Electricity is the most important component of the national economy. Investments in power, gas, and related sectors must be made so that electricity can be produced in the shortest possible time. Research into the use of renewable energy, such as solar power and biomass, can solve all power generation problems.
Counseling / Consulting is not well developed in Bangladesh. Young talents do not dare to make a career in consulting. The country’s consulting industry has become dependent on foreign consultants. Developing the consulting sector in Bangladesh requires pursuing a pragmatic approach through appropriate investments.
Overall, the country is very weak in research and development activities. Funds should be invested through appropriate organizations to expand the domestic research base.
Top 10 recommendations for Promoting businesses:
1. Electricity demand will continue to grow. Installed power generation capacity must be managed efficiently.
2. Bangladesh suffers greatly from a shortage of skilled labor. Support can be extended to industrial enterprises to develop the skills of technical workers through on-the-job training.
3. Farmers need support to develop their entrepreneurial skills, which can contribute to national anti-poverty strategies.
4. Animal husbandry plays an important role in the economic activities of Bangladesh. The fisheries subsector generates significant foreign exchange income from exports. More support is likely to boost exports to sustain sector growth.
5. Infrastructure is a key sector to attract foreign investment. The most important infrastructure support should be in import and export activities at ports. Customs procedures should be simplified. Bangladesh’s railway capacity needs to increase to make international trade cheaper in the future.
6. There are many development projects in the field of education. It is necessary to improve the management capacity of sectoral projects.
7. Telecommunications and ICT are two interrelated sub-sectors that influence modern life. Steps should be taken to simplify business in these two subsectors.
8. Bangladesh has become an exporter of medicines. Large companies use vegetable raw materials. The sector should support research and development through liaison with the Bangladesh Scientific and Industrial Research Council.
9. The Business Consulting profession is underdeveloped in this country. Business Consultants should be developed through training.
10. People’s health care is still inadequate. Investing in hospitals and medical facilities has multiple benefits for the beneficiaries and the national economy.