What makes a country attractive to foreign investors? The list is likely to be exhaustive but local companies investing in Bangladesh would say it is friendly bureaucrats. When Bangladesh hits Sri Lankans headlines, it is commonly for weather disasters. Yet the nation of 160 million people, with an expanding middle class and strong growth, is growing as an attractive complementary destination for Sri Lankan businesses, not least because it has bearable red tape.
Top Bangladeshi officials were in town this week to build the case for increasing investment to their nation. At an event on Thursday, two local companies, namely Laugfs Holdings and LTL Group, presented their experiences of investing in Bangladesh that were overwhelmingly positive. The latter has been received so enthusiastically by Bangladesh that they have invested about $ 200 million and have applied to list on the Dhaka Stock Exchange, becoming the first local company to do so. Laugfs has also been no slouch, capturing 9% of the Bangladeshi market and reaching 33 million households in just a few years.
One of the most striking statements made by both companies was how welcoming bureaucrats in Bangladesh were compared to their local counterparts. Sri Lanka has good bureaucrats but they were described as cold and generally less approachable. The Bangladeshi officials were seen as more receptive, often open to meeting corporate representatives without appointments and forging relationships with them that would smoothen project implementation and cooperation across multiple projects spread over several years.
Bangladesh, as a fellow developing country, has many of the same pitfalls as Sri Lanka. LTL Group, which has rolled out two power plants in Bangladesh, found they needed 40 approvals from different Government entities, an experience that local businesses would relate to. However, the difference was that these approvals were swiftly acquired and did not require extended waiting periods as investors often complain in Sri Lanka. This is clearly an area where Sri Lanka could also look to improve on. Approvals are necessary because they ensure investment that is positive for the wellbeing of the country is allowed. Environmental, labour, raw material and many other concerns need to be considered by the host country, but this process can be done without discouraging the investor.
The Bangladesh Investment Development Authority (BIDA) was praised by Sri Lankan companies for being a genuine one-stop shop. Not only did BIDA assist to obtain approvals, they were also supportive in securing funding for investors. Bangladesh also has a changing regulatory and policy environment that could increase risks for investors, but officials were upbeat that the challenge could be handled and was not a deterrent to investment. Political uncertainty was also hedged by bureaucrats and when policy changes took place, they took the initiative to update investors of possible changes.
Apparel, IT, pharmaceuticals, insurance, tourism and many other sectors offer natural synergies for Sri Lankan investors, insisted officials who described Bangladesh’s young population as a natural complementary counterpart to Sri Lanka’s high-wage-preferring, aging population. Obviously, Bangladesh’s economy comes with its own set of challenges, but the way its bureaucrats are dealing successfully with the situation is a compelling example that Sri Lanka’s Board of Investment (BOI) and other bodies could learn from to attract and retain investment even in a gridlocked policy environment.