Business | General

Bangladesh eyes UAE investment

Prime Minister urges investors from the UAE to benefit from economic boom

  • By Saifur Rahman, Business Editor
  • Published: 00:00 January 17, 2011
  • Gulf News

  • Image Credit: Alex Westcott/Gulf News
  • The Prime Minister of Bangladesh Shaikh Hasina at Emirates Palace in Abu Dhabi. The Premier seeks closer economic relations with the UAE. Opportunities arising from her economic policies could benefit UAE investors.
Image 1 of 2
12

Dubai: Bangladesh will sign two trade and investment agreements with the UAE within the next two days as part of the South Asian country's plan to bolster bilateral ties with the UAE, Shaikh Hasina, Bangladeshi Prime Minister told Gulf News in an exclusive interview.

Hasina, who is leading a large government delegation to the UAE, including 30 businessmen, is expected to meet General Shaikh Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces on economic cooperation.

In the interview, Shaikh Hasina has urged UAE investors — from public and private sectors — to invest in major infrastructure projects being offered through public and private partnerships and joint ventures.

The economy of Bangladesh, which is named amongst the ‘Next 11' club after the G20 countries, is expected to grow between 6-7 per cent in the next few years. The current government has unveiled a major development programme to unlock the potential for its growth.

Among the upcoming mega projects, construction of a new international airport in Dhaka, a deep-sea port in Chittagong, a metro rail project in Dhaka and several power and water projects could be up for grabs for the UAE investors.

Her government is expected to ink two deals worth $5.5 billion including a 26-km elevated expressway in Dhaka and a 6.15-km long bridge on the river Padma (the Ganges) that will connect the southern Bangladesh with the rest, as part of a major drive to develop infrastructure. A deal to kick-start Dhaka Metro project could take place later this year.

Hasina said, her government will start issuing machine readable passports to non-resident Bangladeshis (NRBs) as well as extend facilities for them to vote in the national elections when time allows. Excerpts:

 

Gulf News: Your government has already undertaken a number of initiatives to reduce poverty and accelerate economic growth. Would you like to share some of these?

My government is working towards implementation of vision for 2021 — a year when Bangladesh will celebrate its silver jubilee. The objective of the Vision 2021 is to transform Bangladesh into a middle-income country.

My government particularly is focused to steer the development paradigm in such a way that the fruits of development helps people across the society. Common people should have access to public services including, health and education and Information and Communication Technology (ICT) should play a major role in development activities and providing public services.

This is what I call Digital Bangladesh. As part of Vision 2021, my government has given priority on some major sectors like, power and communication sector, health, agriculture and education.

 

At what stage is the Digital Bangladesh project? How many government services have been brought under online transactions/services so far?

As part of the Digital Bangladesh project, we have already formulated the ICT Policy. About 1,600 computer labs in various educational institutions, 20 cyber centres in universities, 152 computer e-centres and web portals in 64 districts have been set up.

Information and service centres have been set up in 4,501 unions while plans are in place to bring the whole country under fibre optic cable by 2013. Banking services, rail and air ticketing, bill payments, tenders have been brought under online transactions/services so far.

 

What are the major infrastructure projects that your government has undertaken?

Construction of the Padma (Ganges) bridge is the flagship project of my government and all formalities have been completed and work will begin very soon. The bridge will have railway lines. Once completed, hopefully within the term of present government, it will immensely help development of Bangladesh particularly, the south-west part of the country.

A number of other mega projects are also under active consideration and these include deep sea port, construction of elevated highway in Dhaka, Dhaka-Chittagong highway, a new international airport etc. Dhaka-Chittagong and Chittagong-Hathajari highways are being upgraded into four-lane roads and some other highways would also be brought under the process.

The construction of 26km elevated expressway will begin in Dhaka soon. Study on metro rail in Dhaka in being completed.

 

Bangladesh has been suffering from acute power shortage that is hampering industrial growth. Could you kindly elaborate on the actions that your government has taken so far?

My government inherited the problem of power and the demand of power is increasing every day; roughly 10 per cent a year. We have given top priority to this sector and procedures for implementing power-related projects have also been simplified for its speedy implementation.

Since coming to power, we have already added about 1,000MW of electricity to the national grid and by next year another 2,361MW will be added. New power plants having capacity to generate 12,000MW of electricity will be built in the next five years and 20,000MW by 2021. The government's vision is to provide electricity for all by 2021.

Since big power plants need 3-4 years to go for production, we are implementing short, medium and long-term programmes to resolve the crisis.

We have taken special initiatives to attract the foreign investors in the electricity production sector. Our incentives for foreign investors are already very lucrative which include among others, tax holidays duty facility, tax exemption and various fiscal and non-fiscal incentives.

The government has already given approval to a number of private sector investors for quick rental and IPP. I would request the prospective investors of the UAE to take the existing advantage for investment in the energy sector.

We are actively considering a nuclear power plant for electricity with Russian assistance, which will gradually generate 2,000MW of electricity.

 

What are the priority sectors for your country for industrial cooperation and joint ventures for UAE investors?

Bangladesh offers excellent incentives for the foreign investors. UAE investors may be encouraged to invest in Bangladesh. Joint ventures in fish and food processing, agro-based products, vegetables; dairy and poultry products, etc is welcome for UAE investors. Bangladesh's Board of Investment (BoI) is ready to make effective liaison with the prime investment promotion agency (IPA) in UAE so that exchange of investment related information may be shared.

The UAE may provide economic and technical assistance in establishing ICT Parks. They may explore opportunities for investment at the ICT Park in Kaliakoir. Investors could be interested in setting up hotels and resorts.

 

Your government has finalised a public-private partnership (PPP) model for projects. Could you tell us at what stage it is?

The Public-Private Partnership (PPP), a landmark initiative of the present government, is meant to implement large-scale investment projects where private sectors are mostly unwilling to invest alone. Bangladesh has experience on PPP, in social services with Non-Government Organisation activities.

The priority PPP sectors are health, education, infrastructure development, tourism and ICT. We are actively considering to create the first fund for the energy sector to encourage PPP projects with an option to raise money from the capital market. It will be a general pool of fund operated under a company and it will be used in PPP projects on equity or debt basis.

The projects can also have the option to raise funds from the stock market to gather necessary funding. Investors from the UAE and NRBs too can invest in these PPP projects. We strongly feel this will help meeting the investment gap in some major development sectors including, infrastructure.

Agreements have been signed to construct four power plants on rental basis with a capacity of 300MW and two 200MW peaking power plants under the PPP.

Five land ports out of the 13 commissioned under the PPP have begun their operations. A list of 23 projects under PPP has been presented in Annual Development Plan (ADP) of FY 2009-10. We have created a fund called Bangladesh Infrastructure Finance Fund (BIFF) to strengthen PPP activities and to encourage the potential investors with 16 billion taka (Dh800 million) already been placed in this fund.

 

How is the investment climate in Bangladesh and comparative advantage of investing in Bangladesh?

The geographic location of Bangladesh bridging the South Asia and South East Asia, large domestic market with growing middle class, competitive labour market, flexible labour laws, bilateral and multilateral guarantee and stable inflow of remittances with comfortable balance of payment situation and a host of incentives are major reasons for foreign investors to invest in Bangladesh.

Preferential market access as LDC is an added advantage for investors in the export sectors. Bangladesh enjoys tariff-free access to the EU, Canada, Australia and Japan. AS of January 1, 2011 the new EU policy dealing with the Generalised System of Preferences (GSP), and in particular the Rules of Origin, will be implemented, which will provide an extra advantage to Bangladesh's exports.

 

What are your plans to mitigate the energy crisis by green energy through joint ventures?

Bangladesh's existing gas infrastructure is yet of limited capacity and needs to be expanded as per requirement. Additional investment is therefore required to enable the country to utilise its remaining gas reserves and to increase exploration activities for new gas [and oil] reserves.

UAE investors may invest in gas-based industries in Bangladesh and also in the power sector, specially in the coal-fired power generation project etc.

We also encourage the setting up of solar panel manufacturing industries.

 

What are your country's plans for clean and green energy?

In 2009, Bangladesh received the Zayed Future Energy Prize for promoting clean energy. The government is giving emphasis on the renewable source of energy to meet up the growing demand of electricity as well as a measure to mitigate the adverse impacts of climate change.

We have adopted a separate policy for renewable energy in 2009 in line with national energy policy. The government is reviewing this policy to include effective market incentives to expedite the development process of renewable sources.

We target to generate at least 10 per cent of total power generation from renewable sources by 2020 which is estimated around 2,000MW. We have also established a competent national energy authority for renewable energy authority development, which is titled Sustainable Energy Development Authority (SEDA).

As per the current sources of renewable energy, the government utility has adopted 100-200MW capacity wind power projects in coastal area. Solar home system (SHS) promotion in the country has already reached an international benchmark; around 400,000 SHS have been installed by this time.

There is enough solar energy available around the year. We have plans for utilising Solar Power in irrigation to increase food production. We need around 800MW electricity for irrigation purpose alone.

 

What are your expectations from the World Future Energy Summit?

Though our greenhouse gas emission is negligible, we are one of the worst victims of climate change. Global warming and climate change has led to increasing frequency and ferocity of floods, cyclones, droughts, and other natural disasters causing loss of lives, destabilising food security, displacing people, among others. Our aim for a green economy has resulted in the establishment of nearly a million homes powered by solar power. Wind energy is being considered for our 140 islands and other areas with strong wind regimes, and outside our power grid.

We are also seeking to use biomass and biogas sources, exploring tapping of geo-thermal power, and employing clean coal energy when exploiting our coal reserves. Our objective is to create a balanced energy mix of hydrocarbons, hydropower, renewable energy and nuclear power.

Establishing historic ties

Gulf News: Could you tell us about Bangladesh's historic relations with the UAE and your thoughts on improving it further?

The two countries appeared on the world map almost simultaneously in December 1971. Thus Independence and all the noble feelings associated with it bind the people of the UAE and Bangladesh with a common bond. The relationship was given the formal status when Bangladesh opened a diplomatic mission in Abu Dhabi on March 23, 1974 and the UAE reciprocated by sending its representative to Dhaka. Thus began a relationship, which flourished quickly yet quietly based on the shared perceptions of compassion and cooperation.

The bilateral relations between the UAE and Bangladesh have stood the test of time and will not only remain so in the coming days but will also be strengthened further in the days ahead. The historic summit between Bangabandhu Shaikh Mujibur Rahman and Shaikh Zayed — the founding fathers of the two great nations — UAE and Bangladesh — in 1974 gave our relations a solid foundation which was cemented by a subsequent 10-day state visit by Shaikh Zayed to Bangladesh in 1984. Over the years, bilateral relations have grown in depth and dimensions. This is evident from the widening bilateral cooperation between the two countries in areas such as economic, trade, investment, employment of Bangladeshi manpower, education, tourism, culture, people-to-people level contacts etc. Our relations with the UAE are getting stronger every year and we work together in the UN, Organisation of Islamic Conference (OIC) and other international forums. Bangladesh and the UAE hold similar views on major regional and international issues. Both countries are committed to maintain international and regional peace, security and development.

How is Bangladesh's economic relation with the UAE?

It is is excellent. There is a Joint Economic Commission (Joint Committee) between Bangladesh and the UAE; that provide a broad framework for economic cooperation. The 3rd session of the Commission was held on November 21-22, 2009 at Abu Dhabi. The meeting discussed the whole gamut of bilateral relations and agreed to pursue cooperation in a number of fields.

How would the two agreements — Double Tax Avoidance and Investment Protection Agreement — with the UAE improve bilateral relations?

Bangladesh's relations with the UAE has matured over the years, and business and investment now play a major role. Avoidance of Double Taxation is a very important agreement for attracting investment.

My government has agreed to sign this particularly to provide tax incentives to prospective investors from the UAE. While the government would lose some taxes at present, I believe it will help investment flow from the UAE to Bangladesh. Signing of the Promotion and Protection of Investment will also encourage UAE investors to invest in other sectors. We are also hopeful that public investment companies from the UAE will invest in large projects in Bangladesh.

 

What is the present status of air services between the countries?

Bangladesh is now looking to the UAE as a full-fledged trading partner. All airlines from the UAE fly to Bangladesh and three Bangladeshi carriers [Biman, Bangladesh Airlines, GMG Airlines & United Airways] operate regular flights. Meanwhile, Etihad Airways and Biman Bangladesh Airlines may enter into some strategic partnership soon.

How is the trade flow between Bangladesh and the UAE?

In the FY 2009-10, trade volume of UAE-Bangladesh reached at $511.30 million, which is 18.57 per cent less than the previous year [FY 2008-09: $606.13.million]. Export from Bangladesh to UAE for the FY 2009-10 was $65.82 million which is 14.87 per cent higher than the previous year [$56.03 million]. Bangladesh imported from UAE to $550.10 million in the FY 2009-10 which is 18.5 per cent less than the previous year.

What are your government's plans to expedite exports to the UAE, GCC and the Middle East?

We give more emphasis on trade than aid. Bangladesh is no more an aid dependent country. A 30-member strong business delegation from Bangladesh is visiting Abu Dhabi with me and a MOU between the two apex chambers will be signed during my visit. Despite a downturn of economy of most developed countries, Bangladesh exported from July to November 2010 a total value of $8.27 billion, which is a growth of 36 per cent compared to the same period one year earlier. The main export earners are knitwear and woven exports, together accounting for 77 per cent of the exports.

Our government is giving much emphasis on the private sector development activities. Their visit with me and interaction with Emirati businessmen will help boost business relations including trade. Signing of a MoU along with the signing of the two agreements between the two governments will provide enabling framework for various cooperation between the business communities of Bangladesh and the UAE.

How much investment has Bangladesh attracted from the UAE? What is your view on investment between UAE and Bangladesh?

The total investment from UAE to Bangladesh stood up to $2.47 billion. The investors have given all out support to contact with Board of Investment, Bangladesh. Through your media, I want to invite UAE investors to invest in Bangladesh.

The present government is trying to finding out ways and means to boost up the trade relations between the two countries and discuss to reduce the barrier of trade exists. It is hoped that the following agreements signed soon:

1. Convention between the governments of UAE and Bangladesh for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income.

2. Agreement between the governments of Bangladesh and UAE for the Promotion and Protection of Investments.

3. Memorandum of Understanding between The Federation of UAE Chambers of Commerce & Industry and the Federation of Bangladesh Chambers of Commerce & Industry.

I would like to request UAE companies to increase imports. Private sector businessmen have to exchange delegations and explore new avenues to increase business. A joint chamber of commerce may be established for promotion of trade and investment. UAE real estate companies may invest in Bangladesh real estate business.

Plans for NRBs

Gulf News: What are your government's initiatives for non-resident Bangladeshis (NRBs), such as allowing them to vote in elections?

My government acknowledges the contribution of the NRBs and we are mindful of their various needs from the government. Remittance sent by them immensely helps stabilise the exchange rate of our currency.

Our Embassy in Abu Dhabi and Consulate General in Dubai will start proving Machine Readable Passports (MRPs) very soon after completion of certain logistical arrangements and necessary official formalities with the concerned UAE authorities.

Enlisting them in the voter's list and providing them ID cards from the missions are also being actively considered.

We have established an Expatriates Welfare Bank primarily to help them meet their emigration cost.

NRBs are also provided facilities like, tax waiver on remittances and accorded Commercially Important Person (CIP) status based on the amount of remittance sent, investment in the stock market etc.

What are your government's strategies for human resource development and overseas employment?

About 700,000 Bangladesh expatriates are working and living in the UAE and they are contributing to the economic development of the UAE and Bangladesh. They send more than one billion dollar as remittance to our economy and overall economic development.

Bangladeshi professionals are hard working, sincere, disciplined, productive and law abiding.

We have large population and this can only be resources if we can provide them proper training and skill.

That's why my government has taken measures like setting-up of more Technical Universities, Institutes, and vocational training centres in an effort to prepare a large pool of skilled and semi-skilled manpower.

Quite a number of Bangladeshis are doing various businesses in the UAE including, motor workshops, small to medium scale shops, maintenance companies and other service sectors. Our businessmen in this country are investing in Bangladesh and playing a key role in trade. I am proud of them.

My message to them would be: obey rules, regulations and customs of this country and engage in various positive activities in coordination with the host's society so a positive image of our community and Bangladesh is established in the UAE.

Comments (4)

  1. Added 15:05 January 17, 2011

    Good Luck Bangladesh , She has got the vision, Bangladesh will be fine Inshaallah

    amir, UAe, Afghanistan

  2. Added 14:45 January 17, 2011

    A Cultural Club with a VENUE is a must need for our community in DUBAI. Can we have one please Honoureable PM?

    Ahmad , Dubai , United Arab Emirates

  3. Added 10:45 January 17, 2011

    it's a nice step to boost investment environment in bangladesh. our country is so much blessed with natural gifts which in turns make us prosperous country. but for years we are having political conflict which does not help us to grow. Hope this goverment will show right leadeship skill to show us light making one of the proud nation of the world.

    nure alam siddiqui, dubai, United Arab Emirates

  4. Added 10:19 January 17, 2011

    what hasina interviewed are only plans not a reality. always we have seen such a big plans since the creation of bangladesh. best of luck bangladesh

    mohammad, dubai, United Arab Emirates

Gulf News
Retail Gold Rate
Business Editor's choice