Bangladesh programs redesigned incentive package for post-pandemic FDI flow

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Bangladesh plans to redesign its incentive offer to draw foreign immediate investments (FDI) to negate the impact of Covid-19 pandemic in the countrywide economy, keeping a supplementary eye out on potential sources in the South-East, officials reported.

"Analysis of the problem is underway but we have set out a number of proposed methods to redesign the incentive package deal for post-Covid FDI circulation," Bangladesh Economic Zones Authority (BEZA) Executive Chairman Paban Chowdhury told BSS today.

He said a good redesigned incentive bundle appeared crucial for Bangladesh as being other FDI seekers found in the neighbourhood want India, Vietnam, Thailand and Cambodia were offering "more than what we are doing" plus some of them right now ensured their usage of bigger market segments under different foreign trade agreements (FTA).

"We have manufactured a series of recommendations to incorporate new offers inside our existing incentive plans to draw FDI during and after the pandemic," Chowdhury stated.

Officials familiar with the policy planning said the proposed methods included tax waiver for probable foreign buyers alongside new offers found in incentive package for drawing new foreign buyers to negate influence of Covid-19 onslaughts on national economy.

They said several financial analysts and watchdogs suggested that the countries which appeared less-affected by the pandemic, like Japan and Singapore, could possibly be better sources of possible FDIs for Bangladesh. The officials said they kept available their eyes to the global monetary scenario particularly to explore opportunities of possible organization relocations in the arriving days particularly against the setting of america (USA) virtual trade battle with China.

The BEZA chief said his office already prepared a written report proposing new FDI-drawing proposals analysing movements by other regional FDI receiving competition by late April while it now awaited a decision by the Prime Minister's Office (PMO).

Chowdhury said the survey proposed corporate tax waiver and duty-free center on importing all machineries for shareholders who would like to relocate their investment in Bangladesh from other countries under G2G (authorities to government) basis.

He said currently BEZA was dealing with some Japanese buyers who were likely to relocate their expenditure from China due to coronavirus pandemic.

The report also suggested cent percent waiver on corporate tax for a decade for all foreign investors and export-oriented manufacturers as well as VAT waiver on land leasing and bonded warehouse facility for all regional and foreign investors.

Besides, it proposed that corporations which would invest US$100 million or perhaps create 300 employments would receive seven years tax take advantage of the Bangladesh government.

BEZA officials said in addition they recommended lowering corporate tax to 25 from the existing 35 percent for community investors since the current price of tax in India is 22 percent and 20 percent in Vietnam and Thailand.

In addition, it suggested deducting VAT to 12 from 15 percent stating that the fee was 7 percent found in Vietnam and ten percent found in Thailand and Cambodia.

The BEZA chief, however, said in comparison to its regional competitors, Bangladesh was within an an advantageous position in offering online service through the main one Stop Service (OSS) Centre.

"This is milestone place by the existing government found in attracting FDI," Chowdhury said adding that the OSS provides 17 different services through on-line whereas India offers 5 to 6 and Vietnam 9 services on the net.

He said BEZA ideas to provide completely services through online, in order that an investor will get all go-ahead services remotely even not going to any offices found in Bangladesh.

Meanwhile, Bangladesh Investment Advancement Authority (BIDA) officials said these were working on revising different brochures and handbooks along opportunities in investing Bangladesh within its endeavor to hunt new FDI origin countries.

"We will send the revised handbooks to all or any intending foreign investment supply countries targeting the post-corona era," a senior BIDA official explained.

BIDA's past executive chairman Kazi Aminul Islam, however, said Bangladesh even so had a lot of scopes to help ease "conducting business" as according to a 2020 global rating it secured 168th position out of 190 economies - the cheapest found in South Asia excepting Afghanistan.

"We must understand that if Bangladesh does not increase its 'doing Business' rating, our initiatives to attract FDI at this critical juncture may appear futile," he said. Islam particularly suggested reduction of bureaucratic hassles capital and profit repatriation by foreign buyers to "assure them about smooth access and exit of their funds".

Yet, during 2018-2019 fiscal, FDI found in Bangladesh improved by 51 percent to US$3.9 billion - an archive high while FDI show of gross domestic merchandise (GDP) also elevated from 0.92 to 1 1.28 percent over the same period.

Through the first seven several months of 2019-20 - from July 2019 to January 2020 - the web FDI inflow was $1.69 billion, which is 4 percent greater than that of the same period in the previous fiscal.

According to the Bangladesh Bank, China was the largest investor during 2018-19 fiscal with a net FDI inflow of $1.16 billion, followed by holland with $802.8 million with energy sector drawing the best volume of gross FDI worth $1.27 billion.
Source: https://www.thedailystar.net

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