Foreign firm to draft merger plan for investment promotion agencies

Highlights: TBS

The interim government intends to engage a reputed international consultancy firm to move forward with its plan to merge four key investment promotion agencies into a single, unified entity.

The firm will prepare a legal framework to facilitate the significant merger of Bangladesh Investment Development Authority (Bida), Bangladesh Economic Zones Authority (Beza), Bangladesh Export Processing Zones Authority (Bepza), and the Hi-Tech Park Authority aimed at serving investors in a more coordinated way.

This decision was finalised at a high-level government committee meeting on 21 May, chaired by Industries Adviser Adilur Rahman Khan.

A legal firm, DFDL, will be engaged to draft a "Super Act". This new legislation will dissolve the existing governing boards of the individual institutions and establish a single, unified governing board for the new entity, the meeting minutes reveal.

Officials from Bida and Beza have confirmed that the consultant appointment process is already underway, with financial and technical assistance from the World Bank. The terms and conditions are being finalised, and they anticipate the appointment will occur soon after the Eid holidays.

Attending the meeting, Bida and Beza Executive Chairman Chowdhury Ashik Mahmud Bin Harun explained the rationale of the strategic consolidation to boost investment promotion efficiency, enhance inter-agency coordination, and cultivate a more investor-friendly environment in Bangladesh.

He cited how current inconsistencies confuse investors as the Bangladesh Small and Cottage Industries Corporation (BSCIC) leases land for 99 years, while Bida and Beza offer 40-year leases. Moreover, each agency operates its own "one-stop service" without proper coordination, and the frequent overlap of governing body members across these agencies, coupled with infrequent meetings, often delays investment decisions, Ashik Mahmud pointed out, proposing creation of executive chairman and executive vice-chairman positions to lead the proposed unified entity.

Chief Adviser's Special Envoy for International Affairs Lutfe Siddiqui, who also attended the meeting, suggested an initial step of merging only the governing boards of Bida and Beza to mitigate immediate issues for investors and current employees.

Finance Secretary Khairuzzaman Mozumder advocated for including BSCIC and Public Procurement Authority (PPA) offices in the merger plan, alongside Bida, Beza, Bepza, and the Hi-Tech Park Authority, given their nature.

He emphasised the impossibility of true coordination with three or four separate investment development agencies, stressing the critical need for careful consideration of employee seniority during the merger.

Bangladesh Bank Governor Ahsan H Mansur highlighted BSCIC's unsuccessful management of the leather industrial area in Savar, suggesting the leather industrial park should be removed from BSCIC's purview.

Supporting this, Senior Secretary of the Ministry of Public Administration Md Mokhlesur Rahman noted that Bangladesh could earn billions annually from leather exports, but the inability to effectively operate the Effluent Treatment Plant (ETP) in the Savar Leather Industrial City forces them to sell leather to Chinese buyers at a third of the price.

However, the committee head, Industries Adviser Adilur Rahman, urged caution, stating, "There should be no haste in merging the country's existing investment development agencies."

Commerce Adviser Sk Bashir Uddin also attended the inaugural meeting of the committee, which may include the attorney general in the near future since the merger involves complex legal issues.

The chosen consultancy firm will be responsible for designing the structure and operational framework of the new, unified entity. This includes providing initial recommendations on staff seniority within the merged organisations. The committee has emphasised its commitment to ensuring uninterrupted investment activities and safeguarding the rights and positions of current officials and employees throughout the merger process, according to meeting minutes.

Despite the government's push, Bepza reportedly has reservations about the merger. An anonymous Bida official highlighted the complexities involved, stating, "Each of these investment agencies was formed under separate laws, and their officials and employees were also appointed according to their respective organisational laws. Therefore, merging these institutions will be extremely challenging."

Underscoring the potential hurdles in integrating these distinct bodies, the official added that an experienced foreign consultant is being hired specifically "to prevent the kind of challenges the government faced when attempting to separate the National Board of Revenue."

Business leaders have largely welcomed the government's initiative. TIM Nurul Kabir, Executive Director of the Foreign Investors' Chamber of Commerce and Industries (FICCI), believes that consolidating these agencies will be highly beneficial for businesses.

He told TBS, "Currently, multiple agencies are separately performing similar tasks for business and investment promotion. As a result, investors in various sectors have to approach different agencies for the same types of services." Kabir added, "If these agencies are merged and developed into a single investment and business-focused organisation, it will provide relief to businesses and investors. It will also make business and investment promotion activities more effective for the government."