INVESTMENT POTENTIAL AND OPPORTUNITIES IN

Influence of International Politics & Political Corporate Investment for Bangladesh

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Influence of International Politics & Political Corporate Investment for Bangladesh

Introduction

Bangladesh is one of the forty-nine low-income countries of the world, one of the twenty-nine least-developed countries of the world, and one of the forty-five countries considered by the U.N. as most seriously affected (MSA) by recent adverse economic conditions.3 Furthermore, it has become one of the most aid-dependent nations in the world. From the late 1970s onwards it has consistently been one of the world's top three recipients of international development aid. Foreign investment (FI) is the alternative to external borrowing. FI in Bangladesh mainly occurs in the form of (i) cash brought in, (ii) capital equipment brought in, and (iii) reinvested earnings' in order to contribute, according to the Foreign Private Investment (Promotion and Protection) Act, 1980 of Bangladesh, to (i) the development of capital, technical and managerial resources of Bangladesh; or (ii) the discovery, mobilisation or better utilisation of the natural resources; or (iii) the strengthening of the balance of payments of Bangladesh; or (iv) increasing employment opportunities in Bangladesh; or (v) the economic development of the country in any other manner.



Background Discussion

Before independence in 1971 foreign investment policy was completely liberal. The first policy statement of relevance to the role of FI was enunciated in the Pakistan Government's announcement of its first industrial policy in 1948 and again clearly in 1954. All sectors, especially importsubstituting consumer goods industries, were open to FIs. After securing independence from Pakistan, the Government of Bangladesh took over management of many industries under Presidential Order of 1972 following the policy of nationalisation of industrial units including banks and insurance.

FI was permitted only in collaboration with state-owned enterprises (SOEs) to form joint ventures and only with a minority equity participation of 49% or less. Later, by realising the negative effect of undermining the private sector, the Government announced a new Industrial Investment Policy in July 1974 giving permission to FI for ventures in collaboration with the private sector, preferably where technical expertise was not available locally, where the technology was particularly complex or the skills particularly important to Bangladesh.

With the passage of time FI policy turned back towards liberalisation. Bangladesh made a number of significant changes in its overall policy framework for attracting FI. The Foreign Private Investment (Promotion & Protection) Act 1980 is really a break-through which ensures equality in all respects for foreign and local investment, protection of foreign investment from nationalisation, and facility for transfer of invested capital and profits. In 1989 the Government announced an extremely liberal investment regime with extensive tax breaks, import concessions and profit repatriation. The Government launched a policy in 1991 to further liberalise its already liberalised foreign investment policy in order to "encourage foreign investment in appropriate sectors and particularly in high technology, export-oriented and labour intensive industries ". (Wissen 2007 Pp. 27-32)

This liberalisation policy in Bangladesh has been undertaken gradually in reaction to forces operating in ...