Abrupt policy changes discourage foreign investors, FICCI warns

Frequent changes in fiscal policy send wrong signals to investors and would make it difficult to attract and retain foreign investments in Bangladesh, the Foreign Investors Chamber of Commerce and Industry (FICCI) warned today.

"There were very few facilities here [in Bangladesh], but now those too have been withdrawn," said Rupali Chowdhury, former president of FICCI, expressing concerns over the sudden withdrawal of several benefits for investors in private economic zones in the proposed budget for FY25.

During a press conference held at a hotel in the capital, she said, "Bangladesh is not the only destination for investment. They [foreign investors] consider the benefits available in other countries as well."

This will raise questions in investors' minds regarding the country's credibility. They may not invest again, and those in the pipeline will also rethink

Zaved Akhter, President, FICCI

Rupali Chowdhury, also managing director of Berger Paints Bangladesh, a multinational company, also highlighted the incentives offered by the neighbouring countries to attract foreign direct investment (FDI).

In the proposed budget, a tax holiday benefit for the income of the private economic zone's investors has been withdrawn. Also, their duty-free benefit of capital machinery imports was also withdrawn.

When investors started investing in the private economic zones, there was no VAT on land acquisition expenses, but some years later, the National Board of Revenue (NBR) also imposed VAT on the land.

Shehzad Munim, an advisor of FICCI and managing director of British American Tobacco Bangladesh, said, "We have invested here on the basis of promised benefits to investors. If there is a sudden policy change, it will be difficult to attract these investors again."

Referring to the proposed tax rate increase for individuals in the budget and its retrospective effect, he told The Business Standard after the press briefing, "Due to this change, about 200 employees of our company will not get any salary for the current June, as we have to deduct an additional 5% tax for the previous month of this whole year."

"Is it logical in any sense?" he questioned.

FICCI President Zaved Akhter stressed the potential negative impact of withdrawing promised benefits to investors in privately established economic zones.

"This will raise questions in investors' minds regarding the country's credibility. They may not invest again, and those in the pipeline will also rethink," he warned.

Snehasish Barua, managing partner of Snehasish Mahmud and Company, presented the key changes in the proposed budget, especially in the finance bill.

The press conference, titled "Press Meet on National Budget 2024-25," was attended by senior leaders of FICCI and top officials from various foreign investment organisations.

While the FICCI appreciated some positive initiatives proposed in the budget, the primary focus was on the risks posed by policy instability.