Tax rates should be lowered to attract foreign investment

Despite Bangladesh's attractive market, actual investment in real hard currency has remained minimal and in recent times, nearly stagnant. This is despite some visible efforts by BIDA, NBR and Bangladesh Bank.

There are three fundamental reasons that can be attributed to this situation.

Firstly, our credibility as a trustworthy investment destination is in question, given we have failed to honour sovereign commitments multiple times, whether related to payments, energy support or arbitration outcomes. There are numerous instances where intellectual property rights have been disregarded. Moreover, while NBR promises lower tax rates, the effective tax rates remain among the highest.

Secondly, there is a lack of policy consistency. For example, commitments made under BEZA, EPZ, or Hi-Tech Park initiatives are often not fulfilled, and policies are frequently altered midstream. Moreover, tax rates and import valuations are sometimes increased arbitrarily.

Thirdly, there are capability issues with officers as they do not have the capacity or intent to understand business issues and use bureaucracy as a deterrent for investment. In some cases the whims get in the way of facilitating real  investments.

Investors look forward to a stable government, through which long-term and predictable policies can be ensured. It does not matter much who is in power; what matters is that the government builds trust among investors. 

Investors also expect a fully digital and data-driven ecosystem, enabling them to complete the investment process once and for all through a streamlined, online platform.

Once these are done, five big bold moves are needed for facilitating trade and investments.

Firstly, there is a pressing need for an integrated Investment Promotion Agency (IPA). Currently, investors face considerable challenges when navigating Bangladesh's investment landscape. The existence of multiple standalone agencies such as BIDA, BEZA, BEPZA, and the Hi-Tech Park Authority makes the approval process confusing, fragmented and unnecessarily complex.

Foreign investors often struggle to determine which agency to approach, causing delays, higher costs and uncertainty. A consolidated investment-promotion authority that acts as a one-stop service centre would be a fantastic solution. Instead of investors running between multiple agencies and departments, this unified platform would oversee the entire process-from securing land and utilities to obtaining permits and regulatory clearances. A streamlined system like this would not only enhance efficiency but also make Bangladesh a more attractive investment destination. If regional competitors simplify their investment frameworks while Bangladesh remains bogged down by bureaucracy, the country risks losing out on critical opportunities.

We need to separate the policy-making and administrative functions of the NBR. A recent positive step is the government's decision — now officially announced — to make this separation, something the Foreign Investors' Chamber of Commerce & Industry (FICCI) has supported for a long time. This change is expected to improve how tax policies are made and make revenue collection more efficient. However, it is important that this reform is carried out properly, so the original goals are met and accountability is not lost during the transition to two separate units.

We must protect intellectual property rights. Although Bangladesh already has laws for things like IT, trademarks, and other intellectual property, the main problem is weak enforcement. Without strong protection, the country could miss out on the economic benefits that come from innovation and new ideas. Businesses will be unwilling to share their technology or offer manufacturing services if they do not trust us to protect their intellectual property. We need to take quick steps to fix these problems and make sure our enforcement matches international standards.

Bangladesh needs to shift toward more responsible business practices. As the country prepares to graduate from Least Developed Country (LDC) status, it will be very important to protect workers' rights and follow strong regulations. With changes happening in global trade, businesses must adopt sustainable practices that follow Environmental, Social, and Governance (ESG) standards. 

FICCI has often stressed the need for policies that support fair wages, protect workers, and promote ethical business behaviour. To make a smooth transition after LDC graduation, the government must focus on policies that put worker welfare first. Without these protections, Bangladesh may face serious challenges in dealing with future economic changes.

Mohammad Zaved Akhtar, chairman and managing director of Unilever Bangladesh and president of FICCI