Govt body may suggest limited Bangladeshi investment abroad

Dhaka,  Fri,  18 August 2017
Published : 03 Aug 2017, 23:13:42 | Updated : 04 Aug 2017, 17:28:15
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Govt body may suggest limited Bangladeshi investment abroad

Syful Islam
A committee formed to assess the merit of allowing overseas investment by resident Bangladeshis may submit shortly its report recommending an avenue for the businesses to seize opportunities abroad.

Sources said the body, formed by the Prime Minister's Office (PMO) in mid-March, would suggest granting the scope on a limited scale, keeping in mind its impact on foreign-currency reserves.

"Suggestions came to open the avenue at least to some extent. Precaution, prevention, and proper monitoring have to be taken into consideration," committee head Ajit Kumar Paul, an executive member of the Bangladesh Investment Development Authority (BIDA), told the FE.

A cabinet committee, headed by Finance Minister AMA Muhith, had decided in principle in mid-May to allow Bangladeshi investments abroad amid strong pleas made by several companies.  Before that a policy on facilitating overseas investment has to be framed.

"We will suggest pursuing conservative approach in this regard. The scope may be offered on case-to-case basis," said Mr Paul, who heads the six-member inter-ministerial committee.

"Various suggestions have come from the meetings. We are compiling those and submit the report by mid-August," he noted.

Presently, making equity investment abroad for resident Bangladeshis is not open under the Foreign Exchange Regulation Act. But under sub-section 6 of section-4 of the Act, the central bank in consultation with the government can identify areas of equity investment abroad.

In recent months, Bangladesh Bank has received a good number of applications seeking permission to make overseas equity investment. Local conglomerates Akij Jute Mills Ltd, Ha-Meem Group, and Nitol-Niloy Group sought permission to send abroad US$37 million to invest in Malaysia, Haiti and Gambia respectively. However, the central bank has suggested that the government weighs a number of factors, including the ratio of private-sector investment in the country and foreign-exchange-reserve situation, before allowing Bangladeshi investors to make offshore investment.

The committee, led by MR Paul, is tasked to take into consideration the level of economic development of the country and the strategies, foreign-exchange rules, and the need for investment within the country.

Former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Abdul Matlub Ahmad earlier had told the FE there is an urgent need for framing a policy on the country's investment abroad.

The businessman, however, suggested that the government should not allow equity investment abroad on a wholesale basis. He also urged ensuring proper monitoring of those investments and repatriation of profits.

Former central bank governor Dr Salehuddin Ahmed, talking to the FE earlier, said the government should examine the pros and cons before allowing equity investment abroad.

"Since our monitoring and supervision systems are not efficient enough to allow wholesale-scale overseas investment, there is a need to look into the compliance issues before doing so," he said.

Responding to a query he said the government needs to make capital account convertible before allowing investment abroad.

Executive director of the Policy Research Institute of Bangladesh Dr Ahsan H Mansur also advocated for allowing equity investment abroad on a limited scale.

But he suggested tagging conditions like employment generation for Bangladeshi nationals with the offshore investments. The reporting mechanism of equity investments should be very well to keep track of the capital going abroad, he told the FE earlier.

    syful-islam@outlook.com
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