RIYADH, 26 March 2004 — “The existing bonds of friendship between the Kingdom of Saudi Arabia and Bangladesh are characterized by cordiality, mutual understanding and ever-deepening brotherly ties based on a common religious faith, shared history and culture,” says Bangladesh Ambassador in the Kingdom, Sharjil K. Hassan.
He was speaking to Arab News on the eve of the 33rd Independence and National Day of Bangladesh. Saudi-Bangla relations took a positive turn since the change of government in Bangladesh in August 1975.
Saudi Arabia announced its formal recognition of Bangladesh on Aug. 28, 1975. The following year, Bangladesh opened its mission in the Kingdom, reciprocated with a Saudi mission in Dhaka in October 1977.
The maiden official contact between the heads of state took place in July 1977 when the former Bangladesh president Ziaur Rahman paid an official visit to the Kingdom. President Zia attended the Third Islamic summit Conference in Makkah and Taif in February 1981 and also visited Jeddah as a member of the OIC Good Offices Committee on Reconciliation of Iran and Iraq.
Hassan said the establishment of a democratic government under the leadership of Prime Minister Begum Khaleda Zia in 1991 drew the attention of Saudi leaders. “Her government continued the late President Zia’s policy of forging a special relationship with the Islamic Ummah, and particularly with Saudi Arabia,” the ambassador said.
After a landslide victory in October 2001, Khaleda Zia paid an official visit to the Kingdom and met the Custodian of the Two Holy Mosques King Fahd. “The visit was a milestone because the two leaders agreed to expand bilateral cooperation in several areas,” the ambassador said.
Top Saudi officials such as Prince Sultan, second deputy premier and minister of defense and aviation, Foreign Minister Saud Al-Faisal and Prince Talal have visited Bangladesh to strengthen the cordial relations between the countries.
The Saudi-Bangla Joint Commission (SBJC) meets regularly to enhance trade relations between. The last meeting of the commission held in Dhaka in April 2002 and the next meeting will be held this year in Riyadh.
Bangladesh exports to the Kingdom are valued at SR46 million, while its imports from Saudi Arabia are estimated at SR35 million a year. Goods exported to the Kingdom include vegetables, frozen fish and shrimps, woven garments, leather goods, china and melamine tableware and handicrafts. Since 1975, the Kingdom has been extending economic, financial and technical assistance to Bangladesh. So far, it has donated some $1 billion. Lately, the Kingdom donated SR16 million for the exoansion of the Baitul Mokarram, Bangladesh’s national mosque.
The Saudi- Bangladesh Industrial Company (SABINCO), a joint venture funded by the Saudi Fund For Development with an initial capital of $60 million, has been functioning in Dhaka for 15 years. It provides employment for a large number of young Bangladeshis in industrial projects.
G-Telco, a Bangladeshi company, has been in the Kingdom’s telecommunications sector for several years, building telecom towers, HF and VHF antenna towers and HV transmission towers.
Of the two million Bangladeshi expatriates in the GCC region, 1.2 million are in the Kingdom. Their annual remittances have exceeded $1.25 billion a year.
Officials of the Ministry of Health visit Dhaka from time to time to recruit medical and paramedical staff. In December last year, a delegation from the Health Department in Makkah went to Dhaka to select 109 general practitioners (GP) for hospitals in the Makkah region. “The workers form 46 percent of the overseas workers population. The Ministry of Expatriate Welfare looks after their interests through its missions abroad,” Hassan said.
There are five Bangladeshi community schools in the Kingdom, including two international schools in Riyadh, two in Jeddah and one in Dammam, with some 5,000 students. They follow the British system of education leading to the GCE and IGCSE examinations.
The Bangladesh Doctors Group in Riyadh, with a membership of more than 150, organizes seminars on latest advances in the field of medical education. According to Dr. Mansour Naser Al-Howasi, deputy minister of health for executive affairs who inaugurated the eighth Scientific Symposium of the Bangladesh Doctors, 400 more Bangladeshi doctors have been selected for hospitals in the Kingdom. The minister of health, Dr. Hamad Al-Manie, is scheduled to visit Dhaka shortly.
Export-Oriented Businesses Offer Opportunities to Global Investors
With its strategic location beside the Bay of Bengal, Bangladesh is now attracting the attention of global investors. It has become the hub of export-oriented businesses.
International entrepreneurs evince keen interest in Bangladesh because of its proximity to the fast growing South Asian markets and its convenient access to the Middle East market.
Changing economic and political conditions in the Asian region are now prompting many international investors to reassess their investment strategies and plan for relocating their investments. Those changes are providing opportunities for Bangladesh to attract higher levels of FDI and take up production and marketing operations that are being shifted from other countries.
Rising wage rate and production cost in many Asian countries, such as the Philippines and Vietnam are making them less attractive as sites for labor-intensive low-cost manufacturing. The labor cost in Indonesia, Malaysia and Thailand is also on the higher side of the spectrum.
In this backdrop, Bangladesh Export Processing Zones Authority (BEPZA) have the potential to become lucrative sites transfer of investment resources.
Investors from Japan, South Korea, US, UK, China, Hong Kong, Singapore, Malaysia, Taiwan, Thailand, Spain, Panama, Germany, France, Belgium, Netherlands, UAE, Canada, Italy, India, Pakistan and Bangladesh have already invested in the EPZs of Bangladesh.
Most investment is coming in the natural gas, electricity, and physical infrastructure areas.
Exports of natural gas provide a major additional revenue source for Bangladesh.
Bangladesh Export Processing Zones Authority (BEPZA) was set up by an Act of Parliament in 1980 to attract foreign capital and technical know-how and thereby boost exports through establishment of export oriented industries in special zones with special facilities.
Earlier in 1980, the Foreign Private Investment (Promotion and Protection) Act was passed by Parliament for promotion and protection of foreign investments.
As per these Acts, BEPZA, an autonomous statutory body, came into being in 1983. It was entrusted with the responsibilities of setting up and operating EPZs in the country. The objective of setting up EPZs was to provide investors with a congenial investment climate free from excessive procedural complications.
Accordingly, the Chittagong EPZ, the first EPZ in Bangladesh, was established at Patenga in the port city of Chittagong; it became fully operational in 1984. It was followed by the launching of the Dhaka EPZ in 1993. Since then, four more EPZs have been set up at Mongla, Comilla, Ishwardi and Nilphamari.
The principles and procedures governing setting up of industries in EPZs was approved by the Executive Committee of National Economic Council (ECNEC) in its meeting held on 19 March 198 1. It prescribed setting up of three types of industries in the EPZS.
These are: (a) I00 percent foreign owned, including investment by Bangladeshi nationals ordinarily resident abroad (Type-A);
(b) Joint venture projects between foreign and Bangladeshi entrepreneurs resident in Bangladesh (Type-B);
(c) 100 percent ownership by Bangladeshi entrepreneurs resident in Bangladesh (Type-C). Foreign investors are required to invest in convertible foreign currencies. There are options to establish public/private limited
companies or sole proprietorship/partnership concerns.
All foreign investments in Bangladesh are secured by the Foreign Private Investment (Promotion and Protection) Act, 1980. The insurance and finance programs of Overseas Private Investment Corporation (OPIC), USA, are applicable here. Security and safeguards are available under Multilateral Investment Guarantee Agency (MIGA), of which Bangladesh is a member.
Arbitration facility of the International Center for the Settlement of Investment Disputes (ICSID) is also available.
The BEPZA, which has been placed directly under the Prime Minister’s Office, offers one-window, same-day services with simplified procedures to the prospective investors.
These include issuance of required import/export permits and provision of required infrastructure/support service facilities in the EPZS. Potential investors are required to deal with only BEPZA for investment and all other operational purposes.
The fiscal incentives offered by the EPZs of Bangladesh include: duty-free import and export; relief from double taxation; exempt from dividend tax; GSP facility; duty-free import of three vehicles; expatriates exempted from paying income tax for three years; accelerated depreciation on machinery or plant; remittance of royalty, technical and consultancy fees.
The non-fiscal incentives include: 100 percent foreign ownership allowed; no ceiling on foreign investment; full repatriation of capital and dividend.
Another reason for Bangladesh’s attraction to foreign investors has been the availability of most inexpensive and productive labor force. This has made the EPZs of Bangladesh the optimum profit earning bases in the world.
Prospects are further boosted by the fact that the present government of Bangladesh is pursuing a most liberal policy with regard to foreign investment. The role of the government is now promotional rather than regulatory.
Bangladeshi EPZs are excellent places for setting up labor-intensive high-tech industries and relocation of sunset industries from abroad. As a consequence of low wage-bills and import cost, the cost of production can be kept very low.
Bangladesh’s geographic location is also an advantage for foreign investment. Through reforms and liberalization, the present government in Bangladesh has been tackling the macro-economic and structural problems of the country quite well.
Various measures have also been initiated to attract foreign investment, which include provision for setting up private export processing zones in Bangladesh. A number of countries have already shown interest to set up private EPZs in Bangladesh. One South Korean investor is already setting up a private EPZ on the bank of the river Kamaphuli in Chittagong. This EPZ will cover an area of 2600 acres and is likely to be operational within the next two years.
The government is sanctioning additional private EPZs and industrial estates for large-scale industrialization in the country.
