Why the government should allow the local companies - virtually filthy rich individuals - to invest made-in-Bangladesh money abroad, is not quite a convincing proposition. Even businesswise, corporatisation in this country is yet to take any proper shape.
A blanket legal coverage for outward investment will require changing the current currency regime - making Bangladesh Bank’s (BB’s) capital account convertible. This is a move which conservative players think may erode the nation’s foreign exchange reserve in case the outflow of dollars surges suddenly.
The government has certainly felt it relevant to remove restrictions on Bangladeshi companies in setting up or relocating industrial units elsewhere. Accordingly, a committee headed by Bangladesh Investment Development Authority (BIDA) member Ajit Kumar Pal has been assigned to recommend a decision.
And it is not also logically tenable why BIDA, as an investment promotion agency, should be promoting Bangladeshis’ overseas investment.
Will the country and its people be benefitted if Bangladeshi companies and individuals invest in, say, Vietnam, Tanzania, Uzbekistan or Columbia withdrawing money, that is hard-earned foreign currency, from the motherland?
After becoming US president in 2008, Barack Obama pushed for bringing back the jobs the Americans had lost due to investment by their companies in different countries especially China. When he asked Apple’s Steve Jobs if it was possible to do so, the answer was an emphatic ‘NO’. It remains to be seen how Donald Trump ensures US multinational companies give priority to patriotism over profit.
We often refer to neighbouring India for many things, except for electoral democracy and competition for creative works there. Till date, India has not established a completely free foreign exchange regime despite billions of dollars of earning in export proceeds and remittances and rise of big MNCs capable of competing at the global level. India gives opportunity of outward investment only selectively.
Bangladesh Bank still follows the same policy, approving or rejecting proposals for investing abroad on a case-to-case basis, a practice which is dominated by political patronage. Flight of capital and stagnation in domestic investment are blamed for infrastructure, energy and governance deficiencies as well as for lack of investors’ confidence due to persistent political crisis.
We’ve heard, as BIDA chairman Kazi M Aminul Islam claimed, Bangladesh has been blessed with some world class entrepreneurs. He termed it a potential that, he argued, could be utilised following a decision by the government.
But, a BB official, at a Prothom Alo roundtable recently, raised a few questions about justification of such a move: Whether such investment would create employment for Bangladeshis or deprive them of job opportunities, whether the companies that already invested abroad repatriated any money and if the companies that are more interested in going global have good business records at home.
The central bank, according to that official, has not found anything encouraging on any of these points.
It’s now up to the BIDA-led committee to discover merits of allowing wholesale outward investments by Bangladeshi nationals. If the government does really want to make the gambit, it will need to support honest and genuine entrepreneurs in making investment decisions at home and in opening windows in suitable countries for national gains.
However, the timing of this initiative seems to be interesting.
It has been initiated at a time when Bangladesh’s exports have almost stagnated and remittance earning has declined, creating shortfall in foreign exchange earnings. There is no sign that the trend would be reversed soon and the foreign currency market would not be volatile if huge amount of dollars is sent abroad.
The initiative is taken in the context that Bangladesh could not stop the incremental growth in the flight of capital over the years. The year 2013, the last year of the previous Awami League regime, saw siphoning off $9.66 billion, according to the global financial integrity report on ‘Illegal financial flows from developing countries: 2004-13’.
The country’s loss for capital flight the very next year was $9.11 billion and between 2004 and 2014 was $75.85 billion, reports the Washington-based research and advisory organisation.
Dhaka could not yet press the Swiss banks to disclose information about the deposits of illicit money by Bangladeshis. When white-color jobholder expatriate Bangladeshis struggle for making a decent living, some fortune makers banking on invisible income in this growing nation have comfortably bought houses in a number of cities around the world.
This move, which shall by default allow Bangladeshis to take their money abroad through legal channels, is being ‘examined’ one and a half years before the next general elections.
Executive director of Policy Research Institute Ahsan H Mansur argues even if outward investment is not allowed, money is traveling out of the country. “So, it’s better to give permission,” he feels. Former BB governor Salehuddin Ahmed, addressing a Prothom Alo roundtable, called such comments thoughtless and irresponsible.
On 29 May, the Awami League’s general secretary Obaidul Quader, who is also a cabinet member, told his party leaders and workers that without AL in power, they would have to flee with their money. “You’ll have to hide with the money you have made now.”
I wonder how the ruling party men and other beneficiaries of the regime would react to their leader’s warning, if outward investment is made legal in an atmosphere of electoral uncertainty. His government is considering a free exchange rate regime without securing useful records about siphoning off of money and addressing properly the issues of domestic investment atmosphere.
Khawaza Main Uddin is Head of Prothom Alo English (Content). He can be contacted at firstname.lastname@example.org.