Bangladesh should not discourage foreign direct investment (FDI) that would come from the world's major tax havens, speakers at a seminar recommended Saturday.
It would help increase the FDI inflow into the country, they said, taking part in the discussion.
Leading think tank Policy Research Institute (PRI) organised the seminar titled 'Improving Investment Climate: Key Policy Reforms and Institutional Priorities' at a hotel in capital Dhaka.
Bangladesh should look forward to the world's major tax havens to increase the inflow of foreign direct investment (FDI) in the country, said Syed Nasim Manzur, former president of Metropolitan Chamber of Commerce and Industry (MCCI).
"Colour of the money does not matter as long as that money flows into my country," he said. "From that point of view, the world's major tax havens can be a good source of investment for us."
A tax haven is usually referred to a country or jurisdiction that offers favourable tax or other conditions to its taxpayers than that of the other jurisdictions. Tax havens usually have a low-tax or no-tax regime or have generous tax incentives.
Examples of such tax havens include Andorra, the Bahamas, Belize, Bermuda, the British Virgin Islands, the Cayman Islands, the Channel Islands, the Cook Islands, Hong Kong, The Isle of Man, Mauritius, Lichtenstein, Monaco, Panama, and St. Kitts and Nevis.
Drawing similar instances from the countries in the region, Mr. Manzur mentioned that the fourth largest FDI source for Vietnam last year was British Virgin Island while the biggest source of foreign investment for India in 2016 was Mauritius.
"It is all about changing the mindset," said the business leader, who is also the managing director of Apex Footwear -- the country's leading footwear manufacturer.
His view came against the backdrop of a growing consensus that the share of the FDI as percentage of the country's GDP continued to remain low as compared to other LDCs. In his keynote presentation, PRI executive director Dr. Ahsan H Mansur said the FDI continued to represent a small fraction of the GDP and the private investment with inflows reaching around US$ 2 billion in the last fiscal.
"FDI constitutes only 6 per cent of Bangladesh's GDP while it is 54 per cent for Vietnam, 13 per cent for South Asia and 27 per cent for LDCs," he said.
Mr Mansur also noted that the FDI could play an important role in export diversification and technology transfer. "We must not forget that it was South Korean FDI in RMG that unleashed the domestically-led RMG revolution in Bangladesh."
Echoing with the observation, chairman of Bangladesh Investment Development Authority (BIDA) Kazi M. Aminul Islam said the tax havens could be a potential source of bringing big foreign investment into the country.
"I also agree that the colour of the money does not matter," he said, adding: "We have certain criteria for investment in this country and if they can fulfil those criteria, we would welcome investment from such tax havens."
Mr. Islam was also critical about the age-old regulatory procedures in the country, which he considered as the major impediment to bolster investment.
"We still have acts dating back one hundred years. We still have processes that are redundant and cumbersome. What New Zealand does in three steps, we do it in thirteen steps," he said.
Finance minister AMA Muhith, who attended the programme as chief guest, emphasised on diversification of the country's export basket.
"Export of readymade garments should continue to grow. But at the same time, other items should increase their share in the overall export basket," he said.
Earlier, entrepreneurs present in the seminar noted that the present tax regulations impose 20 per cent tax as well as VAT on technical knowhow, which creates extra burden on bringing new technology in the country.
The finance minister said the issue could be reviewed through discussion with the entrepreneurs before the next budget.
Addressing the seminar, eminent economist Prof Wahiduddin Mahmud said that although a number of big infrastructure projects have been undertaken in the country in recent times, allocation should also be provided for maintenance of those infrastructures.
BUILD chairman Asif Ibrahim recommended establishment of a project monitoring platform at the national level under public private partnership initiative to supervise and monitor the implementation of the big projects.
Noting that most of the government policies were being driven by the needs of RMG, speakers in the seminar also called for making the policies friendly to all other sectors.