path to easier business environment - icab path to easier business environment strategy of bida...

Bangladesh Investment Development Authority 2017

Ajit Kumar Paul FCA Executive Member and Secretary Bangladesh Investment Development Authority

Path to

Easier Business Environment

Strategy of BIDA

Dhaka, March 19, 2017



Greater hopes and optimism

Inspiring hopes and confidence of the people, drives the nation ...

WIN/Gallup International’s Annual global End of Year survey 2015

Reveals BANGLADESH as:-

The Most Hopeful nation of the world

Source: WIN/Gallup International Annual Global Poll/ EOY, December 2015

Most Economically Optimist nation than China and Vietnam

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Growth story of Bangladesh

Parameters What we were As of now

Per capita (USD ) 129.71 (1971) 1466 (2015-16)

Population under the poverty line 82% (1970) 18.5%

Literacy Rate 29.23% (1981) 70% (estimated 2015 )

Female Literacy Rate 27(1971) 77% (estimated 2015 )

GDP growth 4.62% (1976) 7.05%

Export (USD ) 0.4bn (1976) 34.24 bn (2015-16)

FDI (USD ) 7 million (1977) 2235 million (2015)

Forex Reserve (US$) 7.50 bn (2009) 31.20 bn ( Dec ’2016)

Electricity Gen. Capacity 3362 MW (2009) 15,351 MW (Jan’17)

(Mx. Gen. 9036 MW)

To become a Middle Income Country by 2021 we need to move

faster…

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Bangladesh Investment Development Authority 2017 4

Bangladesh has made significant development progress

Poverty rate dropped to 18.5% from 44.2%

Each year Bangladesh creates around 1.2 million jobs

Export reaches to 31 billion in FY15 from 16 billion in FY10

FDI jumps to 2.2 billion in FY15 from 1.2 bil in FY10

The Economist magazine recently dubbed

Bangladesh as the ‘Tiger in the Night’ praising

its’s booming economy

Source: World Development Indicators, World Bank Bangladesh remains ‘Highly competitive’ in RMG becoming the Top sourcing destination

Frontier economies

Harvard Business Review recently

mapped Bangladesh as ‘Frontier economies’; a destination for MNC’s

seeking double-digit growth

Source: World Development Indicators, World Bank and 7th five year plan, GoB

Bangladesh

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Bangladesh Investment Development Authority 2017 5

To become a Middle Income Country by 2021… targets for Bangladesh

7th Five Year Plan major goals, targets and strategy

7.4% Average growth rate target

34%

26.6%

9.6$B

6.4

50%

54.1$B

21%

20%

23000mw 4%

Private Investment% of GDP

Investment% of GDP

FDI in 2020

FDI inflow (% of

GDP)

Trade GDP ratio

Exports

Manufacturing contribution to GDP

Manufacturing sector jobs (% of

total)

Electricity production by

2020

Reduction of extreme poverty

Middle

Income

Country

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355 328 350460

845 793666

1086

700

913

11361293

1527

2236

1599

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

(US$ Mill)

Investment growth is continuous

FDI Inflow in last 15 years

Source: Enterprise Survey, Bangladesh Bank

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Large educated and motivated youth • 57% of the population is under 25 years old • High literacy rate (72%) among youths aged 15-24 • Inspired young, hungry for work and growth • 2 million youth entering in job market each year

Increasing trade integration • Labor cost advantage (less than half the average of

other Asian economies) • Already the second largest garments exporter globally

with other sectors coming up such as IT outsourcing, ceramics, light engineering, etc.

• Progress on SAFTA, BIMSTEC talks

Increasing urbanization • Urbanization rate is fast; will double over the next four

decades • rapid industrialization, infrastructure development and

demographic shifts • Dhaka will be the world’s 5th largest city with a

population of 19 million by 2019 (UN forecasts )

Bangladesh – an attractive investment location

Bangladesh offers a profitable location

both as a market and a production/sourcing base

Faster growth in industry (overtaken

agriculture)

Developing infrastructure – significant

target for infra investment

Export springboard – access to all the

large markets of world

High demand for technology transfer

Continued business environment reforms

On global investors spotlight

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Opportunities Unbounded

In this growing Bangladesh, investment opportunities are unbounded, diverse and long-term

Competitive Services

IT & ITES, BPOs Logistics, Health

Skills Education,

Training, HR development

Infrastructure Communication, Energy, Power, Ports, Economic

Zones

Manufacturing Competitive

Manufacturing supporting global

value chains

All Modes of Investments

100% FDI

Joint Ventures

Partnerships

PPPs

Non-equity modes (Technology transfer, licensing

Franchising, Contracting etc)

• Foreign Lending

NRB preferences

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Opportunities Unbounded

Almost all the sectors are open to private investment and FDI

Reserved Sectors

1. Arms & ammunitions 2. Nuclear Power 3. Security printing and

minting 4. Afforestation and

Mechanize Extraction within the boundary of reserved forest.

Agribusiness &

Food processing

Agro-based & agro-

processing

Jute & Jute goods

Flower cultivation

Commercial plantation

Horticulture

Silkworm &Silk Industry

Furniture

Handicrafts

Integrated shrimp

cultivation

Frozen Food

Textile &

Clothing Home Textiles

Textiles industry

Readymade garments

industry

High value added RMG

ICT &

Electronics

ICT and ITES

Computer software &

ICT goods

Electronics

Light engineering incl.

automobiles

Energy &

Infrastructure

Power

Ports and Logistics

Economic Zones

Oil and gas

Tourism

Transport Infrastructure

Pharmaceuticals

Herbal medicines

Plastics Ceramics

Leather & leather goods

Textile Dye & chemicals

Basic chemicals

Pharma &

Chemicals Health care

Footwear

Cosmetics and toiletries

Jewelry and diamond

cutting polishing

Healthcare

& Others

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However, challenges are diverse

Challenges are diverse, both in reality and perception:

Poor infrastructure

Poor investment climate

Low private investment

Low level of FDI

Institutional weaknesses

Coordination challenges – overlapping mandates

Limited focus on overarching reforms

and also

Growing expectations for quick reforms

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BIDA and its Responsibility

Bangladesh Investment Development Authority

(BIDA) was created under Bangladesh Investment

Development Authority Act 2016 to:

“encourage investment in the industry in private

sector and to promote necessary facilities and

assistance in the establishment of industries”.

The act mandated BIDA as an organization for

promoting and facilitating private sector investment.

BIDA’s Functions are broadly categorized into : 1. Investment promotion;

2. Investment Facilitation (approval, recommendations and aftercare)

3. Policy Advocacy 4. Ensure inclusive investment 5. Creating entrepreneurs and creating

necessary skill to complement local industry needs.

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• Facilitate private investment to make Bangladesh MIC by 2021 and developed country by 2041

• Ensure most congenial business climate


BIDA’s Approach

BIDA focuses on

a coordinated

and

comprehensive

approach

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BIDA

Approach

Investors services &

OSS

Doing Business Reforms

Ecosytem and Agency Coordination

Institutional strengthening

Bangladesh Investment Development Authority 2017 13 13

Policy Levers to Capitalize on Bangladesh’s Competitiveness Potential

Enhancing the business environment

Leveraging agglomeration economies

Connecting to global value

chains

Strengthening firm

capabilities

• Gradual harmonization of tariffs to a lower base and outward oriented tariff policy

• Expand/improved bonded warehouse scheme

• Continuous improvement of customs, ports and trade and transport logistics

• Harmonization of standards and globally recognized testing facilities

• Stronger institutional capacity for export promotion and trade negotiations

• Industrial zones for FDI and SMEs (e.g. Plug and Play zones with Central Effluent

Treatment Plants)

• Facilities to promote women employment (e.g. safe transport, housing and daycare)

• Improved cities to address congestion pressures

• Better licensing provisions

• Environment and social compliance of firms

• Regulatory simplification, public service delivery and governance

• Public Private Dialogue mechanism

• Strategy to attract leading FDI

• Skills development (e.g. supplier development in partnership with leading FDI),

adoption of technology

Source: South Asia Competitiveness Report 2016, World Bank Group

© Board of Investment 2015

Capable Institutional Supports-Bangladesh Mission Abroad

One of the mechanisms of attracting FDI is to direct

Bangladesh missions abroad to exercise rigorous economic

diplomacy.

At present, only trade wings are performing the task and most

missions there is no economic/trade wing.

Diplomatic wing can play a major role in establishing liaison

with chambers, business communities, big companies and

major investors since there is more human resource.

Missions should come under the network of BIDA so that they

can take direct guidance from us to target specific investors in

specific countries and set strategy to attract them here.

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Successful IPA- an example

BIDA can play the role that was played by MITI (Ministry of Industry &

International Trade) of Japan during 1950-60, Right after world war II, it was

one of the most powerful agency in Japan and the main driver of Japan’s

today’s success in trade and investment.

MITI was responsible not only in the areas of exports and imports but also

for all domestic industries and businesses that were not specifically covered

by other ministries. It was also a major coordinating agency in the areas of

investment in plant and equipment, pollution control, energy and power,

some aspects of foreign economic assistance, and consumer complaints.

This span has allowed MITI to integrate conflicting policies, such as those

on pollution control and export competitiveness, to minimize damage to

export industries.

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Research and Development

BIDA also may take a pilot project in funding research in

universities and directing investment in emerging technologies

as nano tech, biotech and genetics, 3-D printing for promoting

investment both domestic and foreign in advanced technology.

BIDA in similar fashion can serve as a catalyst that will take up

the issues now obstructing our progress in the area of

increasing investment, export diversification, promotion of

SMEs etc. To this end, numerous govt departments have to

come under BIDA’s umbrella.

BIDA can be the overarching institution and it will play the role

of an arbitrator on investors’ problems, disputes and a

regulator.

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Indicator of Doing Business Proposed Reforms

Starting a Business All Process of Starting Business completed by 7 days.

Dealing with Construction

Permits

All approval from RAJUK will be given within 60 days

from 278 days

Getting Electricity All process to be completed by 28 Working days from

428 days

Registering Property All process to be automated, redounded process to be

delated, All registered deed to be made publicly

available.

Getting Credit • CIB to be made more resourceful

• Collateral registry will be created

• ADR will be created in collaboration with Bangladesh

Bank, Ministry of Commerce, Ministry of Law &

Parliamentary Affairs

Reform Initiatives based on ‘Ease of Doing business

Indicators of World Bank :

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Indicator of Doing Business Proposed Reforms

Protecting Minority

Investors

Companies Act, 1994 to be completely revised to

accommodate minority interest and other related issues.

Paying Taxes Process, Time, Cost will be reduced in line with the

international best practice.

Trading across Borders Process, Time, Cost related with export and import will be

reduced in a coordinated way.

Enforcing Contracts All related legislation and procedures will be streamlined to

ensure enforceability.

Resolving Insolvency Insolvency related legislation will be reviewed and

associated courts will be consulted.

Reform Initiatives based on ‘Ease of Doing business

Indicators of World Bank :

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Capable Institutional Supports

Extending investor’s approval and facilitation services by a host of professionally capable institutions

Prime Minister’s Office

Key Services Counseling/ Advisory

Regulatory Approvals

Operational facilitation Visas & Work Permits Foreign borrowing Investors aftercare

Key Services Policy Advocacy

Investment promotion

Match-making Sector briefings

Project Structuring

Transaction Advisory

Special Projects Fast Track Services

Inter-ministerial Coordination Public-Private Dialogue

BIDA

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Bangladesh – a winning combination

BIDA requires stronger support and participation of private sector to realize reforms

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THANK YOU

bangladesh.gov.bd boi.gov.bd pppo.gov.bd beza.gov.bd epzbangladesh.gov.bd

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