Metropolitan Chamber of Commerce and Industry (MCCI) has observed that green-field investment for a country like Bangladesh would be a major boon.
The MCCI in its latest editorial mentioned that greenfield investments refer to those foreign direct investments where a parent company creates a subsidiary in a different country, completely building its operations from scratch.
"The country where green-field investment takes place benefits from the transfer of knowledge, technology, and expertise from the investing country. Greenfield investments are often seen as a source of economic stimulation," the chamber opined.
As per the editorial, green-field investments have the advantage of potentially offering tax breaks or lower tax rates to business. To owners, they also offer financial incentives, greater control over project specifications, and complete control of the venture.
However, challenges like greater capital outlay, planning complexity, and the project being a long-term commitment remain. For the hosting country, even if the tax-revenue is not up to the mark, the economic benefits over the long run could more than offset the loss in revenue.
Historically, Bangladesh has always faced significant difficulties in bringing green-field investments into the country. Since its birth, the country has faced challenges like lack of funds and infrastructure, not to mention the difficulty of ensuring the right enabling environment that propels business growth.
Bangladesh government has been working relentlessly to change the business landscape of the country for the last few years. If things go as planned, then Bangladesh could certainly see a surge in green-field investments in the future.
In 2021, countries like Costa Rica and UAE topped the Greenfield FDI Performance Index. Bangladesh can certainly target learning from their green-field investment strategies.
To become a force to be reckoned with, Bangladesh must improve its ease of doing business and lower the cost of doing business. Access to capital should be made for all. The time required for starting a subsidiary in a foreign country must be lowered to an absolute minimum. Just for a few factors, Bangladesh is missing out on huge investments from first world countries.
It, however, does have a resource that only a few countries can boast of a large and young workforce. Foreign companies would love to train and employ them because of more economic viability. The legal landscape needs to be improved and extremely business-friendly.
Finally, necessary reforms should be made in terms of laws and regulations to make them more up-to-date. Competing in this modern world means Bangladesh has to evolve into a business and investment friendly country.
The latest initiatives in making Bangladesh a business and investment friendly country such as the establishment of the hundred economic zones, or the construction of the Padma Bridge -- all are wonderful works that are aligned with this target.
"Achieving this target will not be easy, but then again, it has not been easy for any of the countries.
If we look at the UAE now, they have the best brands operating in the domestic market. It did not happen overnight."
They laid the groundwork for years before getting instant results, and look where they are today. What Bangladesh now needs is some careful planning.
