10/10/2009
Bangladesh Calling
By
Shamsul Huda
BANGLADESH is offering a package of attractive incentives to foreign investors and Saudi entrepreneurs can take advantage of it. Mr. M. Fazlul Karim, Bangladesh Ambassador to the Kingdom, highlighted these incentives in an exclusive interview with the Saudi Commerce & Economic Review.
Returns on investments in Bangladesh are very high which is reflected in the presence of some world famous companies in the country. Apart from the manufacturing sectors like textiles, leather and leather goods, jute and jute products, electrical and electronic products, natural gas based industries, Saudi investors can consider a number of other lucrative areas for investments in power generation, oil refinery, pharmaceuticals and agro-based industries, he observed.
Agro-based Industries
The Bangladeshi diplomat said that his government is offering special incentives for investments in the agro- based industries sector. The sector has the support of a large domestic and international markets. Saudi businessmen can invest in this area with buy back facilities which could be more effective.
There are bright prospects for investments in the manufacture of ceramic products. Bangladeshi ceramic products, specially tableware has a good reputation in the international market, particularly in North America and Europe. Tableware industry is labor-intensive and Bangladesh has achieved technical expertise in this sector. Being a gas-rich and low labor cost economy, Bangladesh can be a strategic partner of Saudi investors in the production and supply of ceramic products.
Power Projects & IT Sector
As the demand for electricity is increasing exponentially with the growing industrialization of the country, there is ample opportunity for foreign investments in power generation projects. Investments are also encouraged in establishing new oil refineries in the country. A good number of US and European companies have already been involved in exploration of natural gas and oil in Bangladesh. Information Technology (IT) has been declared as a thrust sector and tax holiday is available for software and IT services companies. The country has a well-educated, skilled, dedicated and growing IT work force. Saudi investments would be very much welcome in all these sectors, said Mr. Karim.
Tourism Attraction
He pointed out that a land of traditional hospitality, Bangladesh has a host of tourist treasures – beaches, rivers, lakes, forests, hills, wild life, archaeological sites, handicrafts, a rich religious and cultural heritage and much more. World’s longest unbroken sandy sea beach stretching 120 km is in Bangladesh where investments could be hugely profitable. There is also the Kuakata beach where one can enjoy both sunrise and sunset in their majestic splendour. The Sundarbans, the largest mangrove forest in the world and home to the Royal Bengal Tigers, is a world heritage site attracting lots of tourists every year. As Bangladesh has not been exposed much to foreign tourists so far, there are many unexplored and very attractive areas in the country awaiting necessary development through domestic and foreign investments. Saudi entrepreneurs can seize the opportunity and invest in this very lucrative sector.
As a developing country, Bangladesh needs massive infusion of financial resources in building the infrastructure. Construction of bridges on the rivers criss-crossing the country, highways connecting important cities and commuter services in capital Dhaka are some of the major areas where foreign investors may consider putting their money, he noted.
Pharmaceuticals
The ambassador said that Saudi businessmen can also consider investments in the pharmaceuticals sector which is one of the important emerging sectors in Bangladesh with huge potentials for growth. Bangladesh exports pharmaceutical products to a number of Asian, African and European countries. Bangladesh has a good number of qualified skilled pharmacists, biochemists, and micro-biologists for such industries. "Investments in this sector are highly attractive," he added.
Saudi large scale investments in Bangladesh basically started with the establishment of Saudi–Bangladesh Industrial and Agricultural Investment Company (SABINCO) in 1984 with its headquarters in Dhaka. The company was set up with a view to promoting Saudi investments in Bangladesh. It has a paid up capital of $60 million with each government holding shares. It has so far financed 50 projects in 11 sub-sectors including textiles, cement, fisheries and chemicals, disclosed Mr. Karim.
$3B Oil Refinery
He said that now some private sector Saudi companies have come forward to investing in Bangladesh in a significant way. Recently, two companies of Saudi Arabia and Bangladesh, namely, High-Tech International Group (HTIG) and Cosmopolitan Oil Refinery Management Limited (CPORML) have signed a deal to invest $3 billion to set up an oil refinery in the private sector in Bangladesh with a capacity to produce 300,000 barrels of oil a day. The plant will import more than 5 million tons of crude oil from Saudi Arabia and the final product will be exported to the neighboring countries.
A number of Saudi entrepreneurs have already evinced keen interest to invest in energy and agro-based industries sectors in Bangladesh.
In order to promote and protect investments in both Bangladesh and Saudi Arabia, the two governments have agreed to sign following two agreements: (i) Agreement on Avoidance of Double Taxation, and (ii) Reciprocal Promotion and Protection of Investments. These agreements have already been finalized and await formal approval. "Signing of these agreements, I am confident, would provide necessary impetus to promote Saudi investments in Bangladesh," noted the diplomat.
He pointed out that at a time of global economic downturn, Bangladesh is relatively unscathed by the crisis. No foreign company has incurred any loss from their businesses in Bangladesh during these tumultuous times. Foreign investments in Bangladesh are protected through various regulations. The Board of Investment (www.boi.gov.bd) has introduced one-stop-shop to provide services for foreign investors.
Lucrative Incentives
Mr. Karim observed that foreign investors are now offered a number of lucrative incentives and facilities in Bangladesh. These include: (i) tax holiday for five to seven years, (ii) no import duty on the import of raw materials for export oriented industries, (iii) full repatriation of invested capital, profits and dividends, (iv) concessionary duty on imported machinery, (vi) 100% foreign equity allowed, (vii) unrestricted exit policy. (viii) most Bangladeshi products enjoy duty and quota free access to EU, US, Japan and other developed countries' markets.
A number of Export Processing Zones (EPZs) have been established in various parts of Bangladesh offering ready plots with all infrastructural facilities to foreign investors. "Foreign investors can also establish their own Export Processing Zones in the country", he said.
Prospects for JVs in KSA
The diplomat noted that since the Saudi economy is now open to foreign investments, Bangladeshi businessmen can avail of this opportunity and invest in various sectors. Some of them have already invested in the service sector, real estate, fish processing, etc. They can also establish joint ventures in pharmaceuticals, construction, agro-based industries and IT sectors.
World-Class Products
Mr. Karim pointed out that Bangladesh now manufactures products of international standard which are being exported to markets in Europe, North America, Asia and Africa. These include, ready-made garments, leather and leather goods, ceramic products, pharmaceutical products, jute and jute goods, fish, agriculture products, jewelry, handicrafts and electronics and other consumer items. Bangladeshi products have earned international recognition because of their uncompromising quality. Bangladesh ceramic products have been highly appreciated in Europe and North America. Pharmaceutical products of Bangladesh are now exported to more than 70 countries.
Saudi businessmen can import these products at a competitive price, he said. He added: "One reason why our exports to KSA have not picked up fast may be that many Saudis are not aware of the quality and competitive price of our products. We are advising our exporters to participate in more trade fairs in the Kingdom, organize catalogue shows and establish showrooms in various cities of the country to familiarize our quality products among Saudis".
Although the current trade exchanges between Bangladesh and Saudi Arabia have not reached the satisfactory level, there is huge potential for further expansion of trade relations between the two countries. So far bilateral trade has not been that significant as the statistics would show. Last year, Bangladeshi imports from Saudi Arabia reached $350 million while its exports to the Kingdom were around $87 million.
Saudi-Bangladesh Trade 1998-2008
(SR million)
Year
Saudi Imports from Bangladesh
Saudi Exports to Bangladesh
1998
41
251
1999
43
461
2000
66
737
2001
76
849
2002
70
580
2003
69
672
2004
72
684
2005
102
1,347
2006
122
1,352
2007
143
1,340
2008
326*
1,312*
