Move on to ease EU trade, investment concerns

Dhaka,  Wed,  20 September 2017
Published : 21 Apr 2017, 23:57:19

Move on to ease EU trade, investment concerns

Syful Islam

The government is likely to make some amendments to the policy guidelines concerned with a view to addressing the concerns of the European Union (EU) over various obstacles that hinder its trade and investment in Bangladesh, officials said.

The ministry of commerce (MoC) has formed five working groups to examine the issues and make suggestions how the changes could be made upholding interests of both the sides, they added.

The working groups held a meeting last week to expedite the process for taking policy actions to remove the barriers.   

In May last year, officials of the MoC and the EU Business Council (EUBC) for the first time met for EU-Bangladesh Business Climate Dialogue in Dhaka.

In the meeting, the EUBC voiced concern over five areas where they had earlier sought government intervention to facilitate their trade and investment in the country.

The areas are import duty/custom/trade facilitation, licenses and investment in services sector, financial flows, tax regime, and pharmaceutical industry.

Officials said the EU found that various issues in Bangladesh's tax regime hinder its interest.

For example, they said, when a sample of goods comes to Bangladesh, the customs department charges duty on it. Besides, it takes three days to three weeks to get the packet delivered from the airport cargo area after completing necessary procedures.

When the same sample is sent to Vietnam, it is delivered within a day after it reaches the airport. In that case, the Vietnamese customs department does not charge any import duties.

They said there are many instances where samples were shipped to Bangladesh and Vietnam at the same time. The Vietnamese manufacturers received it on the following day. But the Bangladeshi manufacturer could only get the sample delivered from the airport after the Vietnamese manufacturer shipped goods after production.

Regarding the issue of financial flow, the EU is concerned over difficulties in transferring royalties and fees against overseas services. They requested for incorporation of a clear process in Bangladesh's Import Policy Order for import of services from abroad.   

They allege that though the paragraph 25 of chapter 10 of Bangladesh Foreign Exchange Transaction Guidelines allows no prior approval from Bangladesh Bank (BB) and Bangladesh Investment Development Authority (BIDA) for remitting royalties, technical know-how, or technical assistance fees, the authorised dealer banks ask for approval from BIDA for transfer of any amount in foreign currency.  

The EU suggested adjustment of rules that hamper financial flows, raise the limit of amount which can be transferred as royalties, and allow multilateral banks in this task.

It also requested for addressing shortcomings in the government's inter-ministerial coordination and implementing legal guidelines to make financial flows easier, faster and more transparent.

Presently, a foreign national working in Bangladesh can remit 75 per cent of the amount he or she gets as remuneration. The EU wants that the amount be increased further.

Officials said under the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), least developed countries including Bangladesh will enjoy medicine patent waiver until 2024.

Bangladesh at present does not allow foreign investment in pharmaceutical sector. Investors from the EU want to invest in this sector to take advantage of the patent waiver.

A senior MoC official said the second round of EU-Bangladesh business climate dialogue held last December had focused on progress of policy actions needed to facilitate EU investment in Bangladesh.

He said the third round of the dialogue is scheduled for next month. Before that, the working groups need to make progress in removing obstacles at least to some extent.
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