Incentives 'tailored' for garment trade
Hong Kong garment manufacturers are at the forefront of a rush to capitalise on Bangladesh's new 'open-door' policy and the SAR now ranks alongside Japan and Britain as one of the top three investors in the emerging market.
Dozens of local firms are already capitalising on the cheapest labour costs in the region.
Others were now following the trail to Dhaka, the capital, on a weekly basis to explore investment options, Bangladesh Consul-General Badiuzzaman Khan said.
Prime Minister Sheikh Hasina's range of incentives were second-to-none, he said.
A new Board of Investment bureau operating around the clock at the airport is providing the red carpet to foreign businessmen, guaranteeing to process and organise every aspect of establishing a new venture within 30 days. 'Before the paperwork used to take months,' Mr Khan said.
'The entire process has now been completely streamlined. One office takes care of everything from allocating land and registering a business to organising electricity and gas supply, labour and telephone connections - everything you need.' Most of the Hong Kong manufacturers are setting up shop in Bangladesh's new Export Processing Zones (EPZs).
In these industrial parks, start-up costs are reduced to a minimum and duty-free status is granted to companies which export products.
Exports from the first two EPZs in Savar and Chittagong are growing by nearly 50 per cent annually. Now, a third EPZ is proposed for Khulna, while Korean and Japanese concerns are keen to develop their own.
The government also plans to nearly double the number of industrial estates in the country to 77.
'The idea is that anyone coming to Bangladesh to invest will be helped in all ways so they do not return home frustrated,' Mr Khan said.
An independent analysis of the market by the Hong Kong Trade Development Council proved that Bangladesh's investor-friendly policies are showing positive results.
'The foreign investment climate is improving as the political situation in Bangladesh becomes more stable,' according to the recent report. 'The government is eager to rebuild the economy by attracting foreign capital, eliminating corruption and privatisation.' Bangladesh also needs employment. The world's most crowded nation with a population density of 755 to every square kilometre is one of the most under-worked. A worrying 18.5 per cent of the population of 123 million is unemployed and 45 per cent live below the poverty line.
But the economy is finally showing signs of a long-awaited take-off. Last year, GDP grew at an impressive 5.7 per cent. Expansion in the manufacturing sector has so far proved the main engine of growth and looks set to remain in the driving seat.
Latest incentives to attract even more garment manufacturers include a new tariff exemption on raw cotton imports. It means factory owners can now save 2.5 per cent duty previously due on their principal raw material - so they can afford to increase investment.
Another big reduction in taxes on textile machinery imports - down from 7.5 per cent to 2.5 per cent - has further encouraged the surge in investor enthusiasm.
To fuel growth further, the government is now opening power, ports, mining, electronics, food and leather processing to foreign investment.
As a result of the investment boom, the government is projecting an average growth rate of six to seven per cent from 1998 to 2002 - although economic projections in Bangladesh are always subject to natural catastrophes and the weather.
With agriculture accounting for a third of GDP, as well as three-quarters of the entire national labour force, one devastating flood or drought can throw all forecasts haywire.
For the last two years, however, the fickle climate has been kind, contributing to the rebound in Bangladesh's fortunes.
However, the biggest potential boost of all may ultimately come from the recent discovery of vast reserves of natural gas - being heralded in some circles as the foundation of a new 'economic miracle'.
Energy companies are currently vying for licences to develop the reserves, believed to be bigger than Qatar's offshore fields.
Farooq Sobhan, new chairman of the Board of Investment, said exploitation of the gas would pave the way for a sharp increase in total foreign investment - which could rise from an estimated US$1 billion this year to around $1.5 billion in 1999.
The country is also working hard to improve its infrastructure with power development a priority and several highway and transport projects on the drawing board, including a new highway from Dhaka to the main port city of Chittagong and new container terminals.
The emerging concept of a South Asian Growth Quadrangle, through which ports of Bangladesh would become the gateway to landlocked Bhutan, Nepal, and the northeastern states of India, should also open up abundant opportunities for investment and growth.
Bangladesh is still waiting for its elusive economic miracle. But at least prospects of one happening are today more realistic than ever.