Bangladesh observer

Dhaka

April 20, 2005

Among 21 major states in Asia
Bangladesh cheapest destination for investment: Japanese survey

Staff Correspondent

Leaving aside the political confrontations in the country, a Japanese survey has found Bangladesh as the cheapest destination for investment among 21 major cities and countries in Asia.

The 15th "Survey of Investment-Related Cost Comparison in Major Cities and Regions in Asia" also found that by and large the investment cost in Bangladesh cheaper than that of last year (2004).

The cities and countries the survey was conducted were Seoul, Hong Kong, Taipei, Singapore, Bangkok, Kuala Lumpur, Jakarta, Balam (Indonesia), Manila, Cebu (Philippines), Hanoi (Vietnam), Ho Chi Minh City (Vietnam), Yangon, New Delhi, Mumbai, Bangalore, Karachi, Colombo, Dhaka, and Okinawa and Yokohama of Japan.

Carried out by Japan External Trade Organisation (JETRO), the survey, completed in March this year, revealed the comparisons based on 34 cost-components.

The components included wage for workers, salary for engineers and staff, cost for land, office rent, land and mobile phone charges, charge for internet, electricity, gas and water fees, container freights, cost of automobiles, cost of petrol, corporate tax, personal income tax, and VAT.

Compared to last year, the relative position of Bangladesh against the components like rental fee in the industrial estates, charge for overseas telephone call, cost for water for general use and cost of petrol has been improved, the JETRO report observed.

In comparison with other countries, Bangladesh is less competitive in the areas like monthly basic payment for Broadband (512 kbps) internet service, new connection fee for fixed telephone line, new connection fee for ISD mobile phone, container transportation cost, cost of passenger cars, and rate of corporate tax, it said.

Apart from the investment cost, the report pointed out two newly developed aspects in the procedural matters, which could contribute to improvement in the investment climate. Those are "Work Permit for Foreigners" and "Visa on Arrival".

The JETRO report, however, came up with the fact that the cost of container transportation from Chittagong Port is higher than that from Mumbai Port.

The reason for this high cost was attributed to the fact that large container ships cannot come to Chittagong Port due to its shallow draught and, therefore, transshipment of containers becomes necessary either at Singapore Port or at Colombo Port. "To resolve this problem, the construction of a deep sea port in Bangladesh should be considered seriously," it suggested.

Raising some other bottlenecks in foreign investments, it said, "Due to the increase in import duty for passenger cars, Bangladesh has become one of the most expensive countries in Asia."

The corporate tax in Bangladesh, being 37.5 percent for general enterprises, is one of the highest in Asia. Quoting newspaper reports on the government's decision to abolish the Tax Holiday system, the Japanese report observed that the government should rather concentrate on how to control tax evasion.

It suggested the government to introduce much more attractive incentives comparing to those given by China Vietnam and other ASEAN countries.

In this regard, the JETRO report drew attention of the government on three aspects - improvement of infrastructure facilities; ensuring speed, sincerity and transparency in issuing various permissions by the government departments; and the last one is continuation in government policies.

"If the government addresses the three aspects gradually, the flow of foreign investment to Bangladesh should increase automatically," the JETRO report added.