A number of foreign companies are operating in Bangladesh. Besides these, there is a long list of franchise foreign companies operating by the Bangladeshi entrepreneurs with their brand names against paying royalty to the original foreign brand. But how many Bangladeshi companies are working abroad? Only a few are working abroad with Bangladeshi brand name. We have a good number of companies exporting their products to foreign market and the buyers sell these at their outlets. We would like to develop Bangladeshi originated companies to operate globally at least in more than one foreign country.
Do we have any national initiative to internationalise local companies or facilitate to go internal? Till now there is a vacuum or lack of government attention towards this issue. A recent research identified a long list of barriers / challenges of Bangladeshi companies to go international. These barriers include the following:
1. Restrictions on investing abroad: There is a restriction on businesses to invest abroad. This restriction is becoming lose but till ow it is a very complex procedure to send money from Bangladesh into international investment.
2. Lack of information: Bangladeshi companies are till now having little information regarding most demanding countries of their products. They have limited ability to identify appropriate foreign location. They have limited understanding about duty facilities of different international arrangement under or outside WTO negotiation. Bangladeshi companies are still lagging behind regarding achieving international quality certification to make their products acceptable in foreign market. They are yet to calculate market price of their product around the world. Where they could get change benefit or where they could make the investment profitable with available tariff or non-tariff advantages.
3. Lack of competent manpower: Bangladeshi investors are yet to be qualified to contact foreign joint venture investors, yet to deal with foreign trade procedures; they are not in a position to dedicate manpower for foreign market. Shortage of trained manpower is a big challenge for handling international expansion of Bangladeshi
4. Shortage of bank loan: We do not have any fiscal arrangement to finance working capital for international market. We do not have arrangement to finance international investment as well. We don’t have ability to grant credit to foreign buyers.
5. Lack of product diversification facility: Bangladesh is yet to develop sectoral lab for designing new products to promote diversification. At the same time we have limited ability to meet buyer’s specification and achieve foreign quality standards.
6. Lack of competencies to promote abroad: We have limited skill to negotiate satisfactory price with foreign buyers. Limited capacity to advertise our products in foreign market. We are yet to develop channel of distribution abroad.
7. Difficulty in enforcing contracts: Bangladesh has hardly any arrangement to act as intermediary to enforce contracted agreement abroad. Cumbersome and costly dispute settlement procedure is discouraging our investors to go international.
8. Absence of government agencies to assist internationalization of local companies: Bangladesh does not have any government institutions that could assist investors to go international. Such a government organization could facilitate movement of people by negotiating easy visa system, easy movement of goods.
9. Existence of preferential treatments granted to our competitor countries: Bangladesh is still lagging behind to sign free trade agreement with friendly countries. On the other hand, our competitor countries are enjoying free trade facilities in most of the potential investment destinations of Bangladesh through bilateral or regional free trade arrangements.
10. Imposition of non-tariff measures to hinder Bangladeshi trade: Bangladesh is yet to identify non-tariff measures undertaken by our potential investment destinations to hinder Bangladeshi trade and investment. We have to identify the barriers and negotiate with concerned authorities to make the environment friendly to Bangladeshi companies.
At this point of time we could recommend followings to facilitate internationalisation of Bangladeshi companies. The recommendation lists is as follows:
1. Establishing government agencies to assist internationalization of Bangladeshi companies: At first government could establish a legal entity under the ministry of commerce to assist Bangladeshi companies to go international.
2. Produce trained manpower: Special arrangement could be made in the existing institutes to produce qualified manpower for handling market identification, international investment negotiation, and channel of distribution development in abroad, etc. issues.
3. Special funding for the investors going international: Government could facilitate Bangladeshi investors for getting international funds to invest abroad.
4. Establishment of sectoral laboratories cum product diversification centers: Government could facilitate establishment of sectoral laboratories cum product diversification / innovation center to promote local product diversification movement. Both local and internationalized Bangladeshi companies could be benefited out of it.
5. Signing free trade agreement with potential investment destinations: WTO Cell at the ministry of commerce could be transform into Trade Negotiation Commission. They will be specialized for trade negotiation and sign free trade agreement with potential investment destination of Bangladesh.
6. Establishing special authority for dispute settlement in abroad: Bangladesh shall have a specialized authority to deal with the disputes settlement issue abroad. They will assist Bangladeshi entrepreneurs to protect their rights abroad.
Finally, we could state that, internationalisation of Bangladeshi companies is a demand of the time now. Otherwise we will never be able to promote branding Bangladesh issue and get any Bangladeshi Originated Global Brand like Bata or Unilever. Critics could argue that, it will harm Bangladeshi economy by sending foreign currency abroad. But we could strongly state that, internationalisation of Bangladeshi companies will give us more benefit than risk.
It will strengthen employment generation and increase our GNI per capita. Finally it will be helpful to achieve higher middle income country’s status sooner than the projected time.
The writer is Deputy Manager, SME Foundation, Dhaka, Bangladesh