FORIEGN INVESTMENT IN BANGLADESH
FOREIGN DIRECT INVESTMENT
Foreign direct investment is the most convenient source of risk capital and the easiest means of transferring technology. Compared to neighbouring countries, foreign direct investment is low in Bangladesh. However, of late, there has been an increase in direct foreign investment. There were 26 foreign firms operating in Bangladesh prior to independence in 1971. 90 new industries were sanctioned between 1971 and 1986. On an average 6 industries were sanctioned per annum during the first 15 years of Bangladesh. The number of sanctioned industries increased to 35 in 1990-91. 24 projects for foreign direct investments were approved in 1991-92 and 28 such projects were sanctioned in 1992-93. Thus during the period 1989-90 to 1992-93, on an average, 28 new foreign investment projects were approved per annum compared to average 6 new sanctions per annum during the period 1971-86. Between 1989 and 1993, 46 new factories were set up in the Chittagong Export Processing Zone by foreign entrepreneurs. 14 of these factories were established by Japanese entrepreneurs. About 75 percent of foreign investment in the EPZ came from Asian countries notably from Japan, South Korea and Hong Kong.
Initially, foreign investment that Bangladesh attracted were import substitution activities operating under high import protection. These included projects for diesel engines, electric motors, sewing machines, pumps, pharmaceuticals, chemicals and plastic products, soap and detergents, paints, radio, TV, drycell batteries, electric transformers etc. In recent years, however, an increasing number of foreign investment projects have been established in Bangladesh in order to export abroad. The export-oriented foreign investment include shoes, electronics, automoblie parts, knitwear, artificial flower, leather gloves, electric goods, tents and sleeping bags, stuffed toys, camera lense, textiles, floppy diskette, garments, garments accessories etc. The initial hesitation of the foreign investors about investment projects in Bangladesh is gradually disappearing. In the first 6 months of FY 1993-94, 25 foreign investment proposals were registered with the BOI. The recent reforms in currency convertibility, the elimination of restrictions of foreign investment and the comparative advantages of Bangladesh are likely to attract more foreign direct investment in Bangladesh in the coming years.
Jute occupies an important place m Bangladesh economy. Jute is a major cash crop for over 3 million small farm households, the largest industry producing about one-third of manufacturing output, and is a large export commodity in Bangladesh. The livelihood of about 25 million people (almost one-quarter of the total population) depends on jute related activities in agriculture, domestic marketing, manufacturing and trade.
production of jute products which a about 80,000 metric tons annually. Bangladesh also produces jute yarn of about 80,000 tons exclusively for exports. About 90 percent of the jute produced in Bangladesh are exported. Bangladesh is the largest supplier of jute in world trade; it accounts for about 80 percent of jute products.
Jute was mainly used for packaging agricultural and industrial commodities as sacks, packs, bags and wrappings etc. Therefore, the traditional jute products were hessian, sacking and carpet backing cloth. The demand of Bangladeshi jute carpet is increasing in the world market for its exquisite design and colour and eco-friendliness.
In recent years the use of synthetic fibre products, because of their preferential price over jute goods, dominated global market. This dominance of synthetic goods have had adverse effects on jute market and resulted in lower price day to day. Researchers and scientists of the Bangladesh Jute Research Institute (BJRI) and Bangladesh Council for Scientific and Industrial Research (BCSIR) undertook various experiments to innovate new products from jute. One of their innovations is geo-jute. Geo-jute used to stop land erosion in roads and embankments and to prevent other soil erosion. Adamjee Jute Mills produce 100 metric tons of geo-jute annually. Meanwhile, the government has directed to use geo-jute in certain specific works.
Paper and pulp are now being produced by low grade jute, cuttings and green jute plant. 5.3 metric tons of green jute is required to produce one metric ton pulp. The government has undertaken a project to produce 25,000 metric tons of pulp by using about 1.35 million tons of green jute.
The Bangladesh Chemical Industries Corporation has undertaken an extensive plan to produce 7,00,000 metric tons of pulp by the year 2000. The BCIC authority is making necessary expansion of Sylhet Pulp and Paper Mills, Karnaphuli Paper Mills, North Bengal Paper Mills and Khulna Newsprint Mills for the purpose. These expansion work are to be conducted by the Khulna Shipyard and Chittagong Dry Dock.
By producing pulp from jute Bangladesh will be benefited in many ways. First of all the jute pulp will be import substitute and exportable. Secondly, traditional use of
wood and bamboo in the pulp will be reduced substantially. Thirdly, the farmers will get cash money by selling green jute to the mills. Pulp is cheaper in price and better in quality. Meanwhile the International Finance Corporation (IFC) and the Commonwealth Development Corporation (CDC) proposed to the Bangladesh Chemical Industries Corporation for setting up of paper mills, security paper mills and board mills based on raw jute. China has also expressed similar eagerness to set ' up jute based joint venture paper and pulp mills in Bangladesh.
Jute reinforced plastic is a new composite material. It is cheaper than fibre. glass. ', Jute reinforced plastic is suitable for use of silver cans, furniture, grain seed silos, water storage tanks and boats. Jute-plastic blended boat has already been ' commissioned in Bangladesh with the assistance of 2 Norwegian naval architects.
The cost of 28 feet long jute plastic boat is taka 2,00,000. Export market of jute plastic boat has tremendous prospects.
Steps have already been taken to use non-even technology to produce design carpets, floor covering and interlinings for garments industry. Bangladeshi scientists have successfully produced Novocell wool from jute. The Novocell wool blanket is now popular among the buyers in the home market.
Polythene made nursery pot has proved to be harmful. At the time of plantation of the sapling polythene nursery bags needed to be removed as it is not bio-degradable. But jute nursery pot is bio-degradable and need not to be removed. Bangladesh is trying to increase the non-traditional use of jute. Development of Diversified Fabric Plant is a pride project of Bangladesh Jute Mills Corporation (BJMC). It was built with the financial assistance of the European Economic Community (EEC) and is located at Rangunia, Chittagong. The plant is engaged for research, development and to innovate non-traditional jute products. Their main products are flexible tea bag, jute in lining, nursery pot, Christmas bag, string bag, bedside mat, prayer mat, soft luggage, bed sheet, bed cover, blanket, briefcase, suitcase, hat, portfolio bag, shopping bag, disposal bag etc. Demand of shopping and garbage disposable bags are increasing in Canada, Brazil, USA and Japan.
Advantages of Jute and Jute Goods :
Advantages of jute over other manmade fibre is still supreme in modern world because of its many inherent yet unique properties. The important ones are
* Under stress jute extends only 0.5 percent to its stable form and so gives wonderful dimensional stability.
* The hairy surface of jute fabric gives it a capacity to grip any surface if it comes in contact with that. They can be stacked high.
* The ignition temperature of jute varies from 130°C-140°C. It thus remains very stable upto near ignition point. Even at boiling temperature, its intact physical properties guard it from undergoing possible distortion.
* Jute being hygroscopic and acriferous permits normal breathing and humidity to the contents and so ensure their storage without deterioration.
* Hooks may be used freely and easily on jute products during handling as its innate properties cover up the pierced holes immediately after. It thus prevents seepage loss of contents during transportation and allows itself to be re-used over and again.
Jute being natural is bio-degradable and for this it does plug the natural pore of the earth soil and surface.
When burned, it emits the same fume as a burning wood.
It has no adverse effect on human body and the mother nature as a whole. Protecting environment is one of its major duties. The world is now becoming conscious of maintaining ecological balance. So use of the natural fibre jute is expected to increase. The climate of Bangladesh has made it the natural home of the world's best quality jute. Jute was once known as the golden fibre of Bangladesh. It still has golden prospects in the years ahead.
Investment and Trade Policies Industrial Policy, 1991 (As Amended) :
The present government has clear and well-defined economic policies, the basic premise of which is to bring about socio-economic emancipation of the masses and self-reliance through involvement of the people in productive activities. The current Industrial Policy has been formulated in conformity with this basic philosophy.
The main aim of the new Industrial Policy is to solve the existing problems of industrial growth. The Industrial Policy has paved the way for rapid expansion of the existing private sector and for its transformation into a more competitive market economy. For this purpose regulatory complications and controls have been reduced to a minimum. The important features of the new Policy are as follows
- No approval or permission or no-objection certificate is required for establishing an industry in the free sectors with own source of financing.
- No approval is also required either for credit or for projects involving foreign loan/credit in which down payment is less than 10 percent and repayment period exceeds 7 years.
- There is no limitation in respect of foreign equity holding (i.e. 100 percent of the equity can be owned by a foreign investor).
- A unit has to register with its sponsoring agencies for the purpose of availing institutional and infrastructure services and for monitoring.
Except the 5 sectors reserved for public undertaking, all other sectors have been kept open for private investment, both local and foreign. These reserve sectors are arms, ammunition and other defence equipment and machinery ; production of nuclear energy ; forest plantation and machanized extraction within the bounds of reserved forests ; security printing (currency notes) and minting ; and air transportation and railways.
All sectors except the reserve sectors are open to investment by private entrepreneurs. Air transportation: to certain specified areas within Bangladesh has also recently been opened to private investment. To protect environment, public health and national interest the government may frame rules from time to time for certain industries, and such industries can be established in the private sector, subject to these rules.
In the new Industrial Policy, the role of the private sector has been recognized as predominant. Except for 5 reserve sectors, private investment has been kept open without any ceiling, and registration is automatic. Private investment, both local and foreign or based on joint venture between local and foreign or with public sector, is allowed.
One of the major goals of the present Industrial Policy is to increase industrial efficiency and productivity by transferring government owned industries to the private sector. With this end in view, the present process of privatization has been strengthened. Recognizing the importance and impact of privatization, the government has constituted a Privatization Board to gradually transfer government owned enterprises to the private sector, and thereby further strengthen and widen its role in the national economy.
ALL YOU NEED TO KNOW ABOUT BANGLADESH:
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