Speech of H.E. Dr. Iftekhar Ahmed Chowdhury, the Hon'ble Adviser for the Ministry of Foreign Affairs, Expatriate Welfare and Overseas Employment and the CHT Affairs

Investment Opportunities for NRBs in Bangladesh

Winter Garden- Hotel Sheraton,
29 December 2007, 14:30 hrs

Distinguished Guests, Ladies and Gentlemen:

I am extremely delighted to be here this afternoon. My heartfelt congratulations go to Scholars Bangladesh for organizing the first ever Conference of non-resident Bangladeshis. This is indeed a very laudable initiative. The Conference has attracted hundreds of non-resident Bangladeshis as well as Europeans and Americans of Bangladeshi origin. We have amongst us professionals, academic, entrepreneurs and activists who have been extremely successful in their host countries. I am confident that they would share their experience and success to support the development of their country of origin.

Most of our NRBs live in capital abundant countries. In their host economies, return to capital is relatively low. This is true even for small-scale private investment in these countries. On the other hand, return to capital is high in a capital-scarce country. We have a persistent savings-investment gap. This explains why we need foreign investment. NRBs can be a catalyst to attract investment from abroad, whether their own savings or large-scale corporate finance. For them, investing in their country of origin will not only give high return, but will also support socio-economic development and poverty reduction.

But why should NRB's investment in Bangladesh. Partly, it is their commitment to the country where they came from. Many NRBs - the especially the ones who are first generation immigrants - earned their education and skills in Bangladesh. Our society incurred a cost to train them as productive citizens. The host countries greatly benefit when trained individuals opt to live and work there. Remittance partly compensate the cost that we incur when our skilled professionals leave the country. But our losses can be further offset if NRBs investment some of their savings back home.

Investment back home also makes sense for NRBs because they can expect a higher rate of return. But why not invest in other developing countries? It is simply because of information asymmetry. NRBs know better about their own country - about its investment climate, about its government procedures and so on, than they can possibly know about any other country. In a sense, investment in Bangladesh is significantly less risky for them.
Ladies and Gentlemen,

If investment in Bangladesh is less risky and offers high return, then why don't we see an investment boom from the NRBs. This is because of the uncertainty and volatility of our economy. In the past, unrests, endemic violence and unpredictable political maneuvers made Bangladesh a risky investment destination, not only for the NRBs but also for investors as a whole. Investors, after all, do not care about nominal returns. They only take into account the expected return on their investment. The expected return largely depends on the probability of a mishap, in the marketplace or in the economy as a whole. Our current caretaker government has taken a number of initiatives to make the investment climate more stable and predictable. We have instituted policy reforms to reduce the cost of doing business in Bangladesh. At the core, our efforts aim to eliminate the vicious effects of corruption on business investment. The current anti-corruption drive is intended to make rent-seeking extremely costly for public servants, bureaucrats and politicians alike.

We have also initiated electoral reforms to reduce the stakes in politics. There has been concerted efforts on our part to ensure that the 'winner-take-all' system does not continue to dictate our political behavior. We are confident that the next general election would produce a government that would be accountable and transparent. By making corruption extremely costly, we also want to ensure that future governments are investment-friendly. If we are to break the poverty-trap, we must reduce the savings-investment gap. We must succeed in attracting NRB investments. And for this to happen, we must create an enabling, investment-friendly environment. Only then, we would be able to achieve double-digit growth rates for a sustained period of time. Only then, we would be able to eradicate poverty.

Ladies and Gentlemen,

Along with investment, technology is the driver for economic growth. Many of our NRBs have access to modern technology and innovations. Often, their strength lies in technological know-how. What is then the most feasible sector for NRB investment? The answer is obvious. Non-resident Bangladeshis can play a pivotal role in the transfer of technology, especially in the IT sector. The vast majority of Bangladeshis have no access to computers. Internet is still out of reach of millions of our citizens. The digital divide is growing. We must reverse the trend. NRBs can make a huge impact in reducing the digital divide. Many of you present here are involved in information and communications technology. Some of you have your own IT firms. I would urge you, and the larger NRB community, to invest in our IT sector. It does not need to be a philanthropic activity. Investment in IT will offer you long-term dividends, especially if it also involves in developing skilled professionals.
Ladies and Gentlemen,

Another potential sector for investment is pharmaceuticals. There is huge potential for investment in this sector to produce affordable essential drugs, vitamins and vaccines. You should take advantage of the patent exemptions granted to the least developed countries. WTO rules also grant us compulsory licensing facilities for many life-saving drugs. Because of these provisions, Bangladesh can be an extremely cost-effective producer and exporter of pharmaceuticals. We must make the best use of this opportunity. Besides investment in the pharmaceutical sector will render a positive externality. As we know, this sector is relatively skill intensive. It is also labor intensive. Investment in the pharmaceutical sector will increase demand for skills, which, in turn, will increase demand for education. I will urge the NRB community to investment in our pharmaceutical sector and transform Bangladesh into a high-skill and high-value added economy.

NRBs should also take advantage of our demographic trend. We have a very large young population. As many as 80 million of our people are under the age of 18. If we can offer affordable, vocational training to these young population, we will become a power house in the global services sector. Our services export has the potential to grow exponentially. NRBs should consider investments to train our young population not only in IT, but also in hotel services, tourism, nursing, plumbing, welding and so on. The demand for these services is growing fast in the advanced economies. Bangladesh can afford to have hundreds of vocational training schools to train its human resources. Only constraint is the lack of resources - financial and technical. NRBs can certainly play an important role in meeting the growing demand for skills-training.

Ladies and Gentlemen,

Our political or social identity may change as we adopt a new country of residence. But at heart, we remain a Bangladeshi no matter how far we are away from home. In this day and age, physical distance no longer stands to weaken your ties with your home country. Modern communication - not just air travel but also phone, faxes and emails - ensures that we are never too far from our origin. Your decisions to investment in Bangladesh can only contribute to strengthen that bond. This will also help you to find your roots. The concept of 'circular migration' is an increasingly popular phenomenon in many origin countries, including in India and China. Many of their expatriate nationals returned and invested and then went back. It is like a circular motion. But it benefits both source and destination countries. Circular migration also facilitates flow of investment and technology transfers. I hope the NRBs will also engage in circular migration to support our development quest.

Ladies and Gentlemen,

As we have whole-heartedly welcomed the first NRB Conference, we would continue to support initiatives to engage the non-resident Bangladeshis in our development efforts. This conference is indeed a bold step in the right direction. But it should not be a one-time event. It should be a process. We must sustain the momentum and goodwill generated at this first ever conference of the non-resident Bangladeshis. I hope all of you would commit yourselves to remain engaged and contribute in whatever capacity you can. In future, we would expect to see an broader participation from all NRBs. Let's all work together to build a better Bangladesh.

Thank you.

Some Investment Related Information (Obtained from the Board of Investment)

In spite of some natural and man-made adversities, Bangladesh envisions to emerge as a high-growth economy in the near future. Such hope is well reflected in the designation of Bangladesh as a "next-eleven" or "frontier-five" country by the global investors.

· The economy of Bangladesh is driven by the private sector, accounting for 75% of the total investment.

· Manufacturing has overtaken the agricultural sector and is growing at double-digit rate.

· To attain the target growth rates of 7%, Bangladesh requires huge investments in basic infrastructure, human resources development, key competitive sectors and in related linkage industries.

Non-Resident Bangladeshis (NRBs): Bangladesh recognizes their potential positive knowledge and resource transfer effects on the economy.

· The remittance contribution by the NRBs is equivalent to nearly 50% of our total export earning.

· The largest joint venture telecom operation in Bangladesh was a brainchild of an outstanding NRB scholar.

· NRBs have started developing global linkages for Bangladeshi enterprises to attain competitiveness and market access.

Potential investment sectors: Apart from the traditional investment sectors like textile, clothing, leather and leather goods, etc. NRBs can consider innovative and Technology-driven sectors for investment. These include:

· Capital intensive investments: It includes infrastructure like power, energy, toll road, industrial zone development, steel plants, equipment manufacturing, large manufacturing set ups etc.

· Technology-driven investments: It includes Information & communication technology (ICT), software development, telecommunications, pharmaceuticals, electronics and electrical appliances etc.

· Knowledge-based investments: It includes professional education, industrial research, skill development etc.

Investments in the securities and takeovers: It includes participation in the capital markets, privatization programs etc