Bangladesh 2.0: Rethinking BIDA and investment strategy

There needs to be integration between BEPZA and other relevant stakeholders to ensure that the overarching investment promotion message is synergised. Photo: TBS

Change is a process, not an event. Our new interim government is facing many pressing challenges. If unmet in due time, those challenges can quickly become an existential threat. 

The government faced the challenge of restoring law and order, rebuilding a broken administration, and addressing an economy strained by the dilapidated banking sector. They navigated these challenges to rectify the deeply rooted systemic issues that led to the student-led uprising and its remarkable success. But such existential challenges are also immediate opportunities for necessary reforms that can build a better future that brings our collective hopes and aspirations to life.

Here we discuss how we can truly honour the heroic courage and the supreme sacrifice that led to this horizon of hope and opportunity, and build a springboard to catalyse foreign and local investment, rethink and redesign Brand Bangladesh, deepen public-private collaboration, and sustainably reform the Bangladesh Investment Development Authority (BIDA).

While support from the IMF and other international organisations is important for now, attracting more foreign private sector investment is crucial for long-term success.

We urgently need to plan and carry out proactive steps to engage with international investors, mitigate uncertainties about the current political and economic situation, and start rebuilding confidence in our future.

The private sector should take more initiative instead of relying on government-led investor roadshows, which have often been ineffective and wasteful.

For instance, DSE brokers should take the lead in promoting portfolio investment. Similarly, our leading corporates and banks should spearhead efforts to attract foreign direct investment. BIDA can support and coordinate these initiatives with the relevant ministries and Bangladesh's international embassies.

Of course there is a strong and popular national consensus about Professor Muhammad Yunus as the pre-eminent Chief Advisor, driven in no small part by his global credibility and differentiated relationships with key international partners such as the US, EU, and Japan.

There is also strong consensus in support of new Bangladesh Bank Governor Dr Ahsan H Mansur as the right person for the job. International and local investors seem keen to see more such technocrats being appointed in key policy positions. 

However, concerns remain about the administrative volatilities in the current government, entrenched agents of the deposed and disgraced government in the current administration, and the risks of disruption and destabilisation from overseas. 

There are also major concerns about the scale of the banking sector crisis, the sheer magnitude of NPL position and financial sector solvency, and the overall stability of the political economy. There are concerns about fiscal slippage, rising inflation, and risks of a weakening Bangladeshi Taka.  

In terms of the economic outlook, investors want to believe that revolutionary change in our embarrassing culture of governance will also help stabilise the budget deficit and worsen foreign exchange reserves by reducing the amount of wastage through corruption, money laundering, and capital flight. 

Less corruption would also potentially see efficiency gains in the longer term in government decision making and activities as well.

For example, BIDA needs much stronger collaboration, driven by collective intelligence, with the private sector.

Leveraging a deep and differentiated global network of Non-Resident Bangladeshis (NRBs), we can set up a dedicated international advisory and advocacy diaspora group that proactively supports investment promotion, policy advice, and political advocacy in their home countries in favour of Bangladesh. 

Then the group can connect to a new series of committees set up by BIDA, with equal representation from all relevant government ministries and leading corporations selected by sector.  

We also need to integrate our SDG, Climate Change, and Social Business goals into a comprehensive BIDA strategy designed to deliver and execute an actionable plan for sustainable growth and national prosperity.

The five mission-critical reforms I would recommend for BIDA to expedite are as follows:

 1) Diving deep into the most effective and successful investment promotion agencies and countries, and integrate that into a new BIDA plan; 

2) A comprehensive study on how all the other Asian markets handle FDI in terms of lock up periods and the ease of exit, so that BB and BIDA remove the major stumbling blocks for outside investors as per globally accepted standards in light of comparable emerging economies; 

3) Working more effectively with Bangladeshi missions to provide specialised training, regular updates, and investment targets for all our commercial counsellors, so the traditional focus on export promotion is vigorously supplemented by investment promotion; 

4) Integrating our overall sector and investment plan from the planning ministry and each relevant ministry across BEZA, BEPZA and PPPA to ensure that the overarching investment promotion message is synergised with the industrial strategy; and

5) Developing bespoke investment messages and sector analysis for specific target audiences such as stock market investors, international corporates, PE funds, and NRBs. 

Our national economic plan and our investment strategy as a subset, should be reset to focus on giving our younger generation better economic opportunities through facilitating SME, Social Business, and Start-up financing across multiple rounds, designed to engineer growth and create more jobs.  

One idea we are working on to catalyse such innovative financing is to design and engineer crowd-funding platforms in key investor markets like the US and UK, in order to attract small scale investments from NRBs and others into tens of thousands of SMEs, Social Businesses, and Start-ups led by innovative, energetic, and resilient youth entrepreneurs. In aggregate this can amount to hundreds of millions of dollars of funding.  

We can also design and engineer a platform for NRBs who sell their properties in Bangladesh or have liquid businesses there to re-invest into SMEs, Social Businesses, and Start-ups.  

At the recent virtual Global South Summit, the Chief Advisor Professor Muhammad Yunus noted the urgent need to redesign the financial system in the Global South to ensure that wealth is shared by all, and asserted that combining entrepreneurship with social business can create miracles.

Brand Bangladesh 2.0 needs to capture the indomitable energy and exceptional bravery of our successful student movement. The power of a youth that toppled a 15 year old autocratic regime may well be the foundation for a new phase of even more rapid, sustainable, and inclusive growth for Bangladesh. Let's work together with our international partners and investors to bring our collective aspiration to life. 

Ifty Islam is the Chairman of Asian Tiger Capital Partners. Email: ifty.islam@at-capital.com

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standar