Factories moving from China: Possibilities for FDI in Bangladesh

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The global Covid-19 pandemic has sparked a trade war between China and america. Multinationals from america, Europe, and Japan have setup industries in China over the past three decades to create low-cost products. As a result, China became the sole reliance on global production. But the United States and its own allies have been spending so much time to reduce China's monopoly power on global production recently. 

Donald Trump's administration imposed an additional twenty five percent tariff charge on importing Chinese products in america market already. Therefore, various countries have taken the goal of reducing their reliance on China for security and strategic reasons.

Many countries are using this Covid-19 crisis to eliminate professional plants from there. New bases are being create in South and South-east Asian countries including Vietnam, Thailand, Malaysia, Indonesia and India. In relocating factories, these multinationals are mainly giving priority to the countries that are simple to invest in.

This could be a particular opportunity for the economy of Bangladesh, which includes been hit by the Covid-19 pandemic. Bangladesh will benefit greatly if it could attract these multinationals for investment. However the question is, will Bangladesh be able to take that opportunity at all?

Foreign direct investment in Bangladesh has been stagnant for some time. Drought of foreign investment could be cut by grabbing this opportunity. Economic activity around the world has stagnated for days gone by seven months as a result of outbreak of the Covid-19 pandemic. 

Like other countries of the world, the same situation is prevailing in Bangladesh. Production has declined in various professional sectors. About one crore persons have lost their jobs. The role of domestic and foreign investment is essential in the economical development of the united states aswell as in increasing the national income.

As foreign investment increases, new industries will emerge. Along with economical development, new jobs will be created. Consequently, the country's economy will recover quickly after overcoming losing caused by Covid-19. Among the strengths of attracting investment is that there surely is relatively cheap labour in Bangladesh.

However, Bangladesh is definitely neglected regarding large foreign investment. There are many of problems, including bureaucratic complexities and infrastructural weaknesses.

Bangladesh ranks 168th out of 190 countries on the globe Bank's Business Facilitation Index. In cases like this, Vietnam is in 60th place, Thailand is in 21st place and Indonesia is in 73rd place. Even Myanmar's position is three steps before Bangladesh's, 175th. In terms of investment, that is a major reason for having less image of the united states abroad.

According to media reports, the Bangladesh government is taking steps to eliminate these barriers to investment. Regarding foreign investment, 11 barriers have been identified by the federal government in bold.

These include insufficient incentives for the coronavirus relocated investments, signing of investment agreements with projects or other agencies without vetting from the National Board of Revenue, corporate tax inequality between domestic and foreign companies, different investment policies, image deficiency in abroad, tax and VAT difficulties linked to investment in PPP, etc.

Bangladesh needs foreign investment to fortify the economy in a post-pandemic situation. Therefore the existing obstacles should be removed immediately.

To attract foreign investment, land could be provided at a nominal price for some period of time in a public monetary zone. New economic zones can even be established if necessary.

Discussions ought to be intensified at the diplomatic level with the concerned countries. The focus ought to be on infrastructure development, land registration facilitation, option of electricity and giving some institutional benefits.

Bangladesh is an emerging country. The rapid growth of the last three decades and the transition from a least-developed country to a middle-income country has given a new dimension to the country’s economy. It is hoped that because of the stable political and economical situation, Bangladesh will soon have the ability to overcome the monetary crisis caused by the Corona epidemic and attract foreign investment. Due to this fact, Bangladesh will be prosperous in industry.
The writer is a student of Department of Law, Rajshahi University
Source: http://www.theindependentbd.com

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