Chinese companies eye Bangladesh to avoid looming US tariffs under Trump

Highlights 

• Foreign investors say the recent political upheaval caused business climate deterioration
• For more foreign investment, Bangladesh needs to streamline export-import procedures
• Bida should play a more active role in addressing investor concerns and resolving issues
• A robust law and order system is needed to create a stable business environment

Bangladesh is likely to see a boost in foreign investment as Chinese businesses plan to relocate here to avoid high export tariffs from the US after the Trump administration takes office in January next year. 

"I think the Trump administration is going to raise substantial tariffs on Chinese goods," said Calvin Nyan, newly re-elected president of the Overseas Chinese Association in Bangladesh (OCAB), in an interview with TBS.

"Manufacturers must relocate production to avoid the looming high tariffs on Chinese exports to the US before they are imposed. So, we will see a lot more investment coming in [to Bangladesh]," he told TBS on the sidelines of the inauguration ceremony of the fourth session of the association's board of directors at a hotel in Dhaka on Saturday.

Nyan also pointed to some of the challenges foreign investors are encountering in Bangladesh, noting that one of the biggest issues is the complex export-import process.

"We need simple import and export procedures. If they [government] can streamline these processes, it would greatly benefit businesses," said Nyan, who is also managing director of Golden Crown Enterprises International, an export-oriented textile and apparel company.

He gave an example, explaining that even minor mistakes, such as typographical errors in a document, can halt both exports and imports, causing significant problems for manufacturers and exporters.

"So, we need to think about simplifying procedures and policies to support businesses," he added.

He said that the Bangladesh Investment Development Authority (Bida) could play a more prominent role in addressing investor concerns.

"Bida should have a stronger voice in certain issues to help investors resolve challenges. It would be very beneficial if Bida took a more active role," he said.

Expressing concern over the law-and-order situation in Bangladesh following the government change in August, Calvin Nyan said, "There is widespread unrest across Bangladesh, and we hope it will be resolved soon."

He said, "The most important thing is that workers need to understand that when the factory shuts down, they lose their jobs as well. Owners, investors, the government and workers must work together to restore law and order and bring common sense back to the country."

On the change in political regime, he said, "It was a big surprise for us. We did not expect a regime change, especially after the election in January. The election took place, she [Sheikh Hasina] won, and then suddenly the regime changed."

"For us, as Chinese investors, it does not matter who is in power. What matters more is law and order in society. People need to do the right thing and we will support any government promoting that. We are here not for any particular political party, but to find a win-win situation," said the entrepreneur.

"We create jobs, invest and pay our taxes. We want to grow, but having law and order is crucial," he added.

Golden Crown Enterprises International manufactures woven fabrics, jackets, pants and headwear, exporting worldwide, including to the US, Europe, Japan and Korea. The company's annual export value is $180 million; and it employs a total of 10,000 workers.

Regarding future investment plans, Calvin Nyan said they have paused their expansion due to the current political situation and economic slowdown but intend to resume expansion next year when stability returns.

"I think other investors will hesitate to invest right now because they are also concerned," he added.

"However, in the long run, I believe investors will return because the opportunities here are too attractive. The land, the people and the resources are all excellent. Sometimes, I would even say that when no one else is coming, that's the best time to enter the market," Nyan said.

Describing developments in Bangladesh, he said Golden Crown established its business here 30 years ago during a challenging time when the country lacked a backward linkage industry.

"Thirty years ago, there were basically no industries around, but now there are many supporting industries. Back then, it was very tough to set up the industry, but today, a lot has changed. For example, when we needed buttons for garments, we had to import them. Now, we can buy them locally," he said.

Calvin Nyan also noted a key difference between Bangladesh and other Southeast Asian countries: Bangladesh has many local entrepreneurs who are very successful and skilled businessmen. "Because of that, we believe this industry [apparel] can sustain long-term growth," he added.