Foreign investors to get wider benefits in new industrial policy

The facilities extended to foreign investors are set to be increased in the new industrial policy in yet another bid to bump up the disappointing inflow of investment from abroad.

For instance, foreign investors who take up green, high-tech or transformative projects will get a special financial incentive package.

There will be an integrated one-stop service, country-specific economic zones or industrial parks for foreign investors, as per the draft of the Industrial Policy 2016.

The draft was approved on February 24 by the cabinet committee on economic affairs and is now awaiting the nod from the prime minister.

Despite a series of efforts, the inflow of foreign direct investment remained at 1 percent of the country’s gross domestic product.

In contrast, the FDI flows to Vietnam, China, and India were 6 percent, 5 percent and 3.5 percent of their GDPs respectively.

The government has already taken an initiative to set up separate economic zones for different countries.

The government has announced that about 100 economic zones will be set up throughout the country. The initiative is now being integrated into the formal policy.

Other than the separate economic zones, the foreign investors will also enjoy tax holidays.

Any foreign investor who invests $10 lakh or transfers $20 lakh to a recognised financial institution can apply for Bangladeshi citizenship, according to the new policy.

Prospective foreign investors will be given five-year multiple visa.

Two new sectors — high-priority industry and creative industry — will be included in the proposed industrial policy, for which the government will provide financial and policy support.

While there is a list of priority industries in the existing policy, the new policy cranked up the urgency, drafting in a list of high-priority industries.

The industrial policy, in its definition, said the high priority industries are those sectors that create large-scale employment through quick expansion and earn substantial amounts of export revenue.

Subsequently, the industries will get priority in receiving government incentives for rapid development.

Six industries have been included in the high-priority category: agriculture and food processing, garment, ICT and software, pharmaceuticals, leather and leather products, and jute and jute goods.

Creative industries have been defined as the sectors producing aesthetic and creative products by using artistic and innovative thinking and techniques or modern technology.

These include architecture, art and antique, design, fashion design, film and video, interactive laser software, software, and computer and media programmes.

A plan is underway to map out the creative industries in the country, according to the policy. The government will then provide policy and institutional support for the expansion of these industries.

In the industrial policy of 2010, specific tax benefits for under-developed and priority sectors were mentioned but the proposed policy said the tax facility will be given as per the existing customs, VAT and income tax laws.

The priority sectors and sub-sectors will get timely and separate investment incentives, according to the new policy.

The Bangladesh Bank, the National Board of Revenue, the Board of Investment and other related agencies will take the necessary steps.

Specific investment incentives, including subsidies, tax and duty rebate, have been proposed for the areas falling behind economically and in industrialisation.

The proposed policy has redefined the sizes of industrial units.

For example, a company with asset value of over Tk 50 crore and 300 employees will be deemed a large industrial unit.

At present, a company with assets of over Tk 30 crore and employees of 250 now qualify as a large industrial unit. However, if a garment unit has staff count of more than 1,000, it will fall in the big industry category.

The BB has recommended the inclusion of annual turnover in the definition, which will bring down the facilities enjoyed by the companies. A company with annual turnover of over Tk 300 crore should be counted as a big industrial unit, according to the BB proposal.

For a mid-sized company, it will be between Tk 100 crore and Tk 300 crore. A small unit will have Tk 20 crore in annual turnover and micro- and cottage-industrial units below Tk 5 crore.

In an effort to reform the state-run companies, the new policy made several proposals: increasing private involvement in the loss-making state enterprises is one of them.