By Shahab Enam Khan
Bangladesh has largely been a peaceful country with a tremendous potential for business, trade, and investment. Despite the prevalent political violence over the past two decades, the country has witnessed an average of 6% GDP growth. Much of this is owing to the courageous private sector and of course, public resilience against violence in any form; Bangladesh has managed to maintain a credible trade and investment portfolio. However, the recent series of killings of foreigners, and of course the heinous Holey Artisan attack has marked a deep scar on the trade and investment portfolio of Bangladesh. One would think that acts of such terrorism would have a negative impact on Foreign Direct Investment (FDI) flows to Bangladesh. Generally, it is perceived that the loss of foreign investor confidence following acts of terrorism would prompt large outflows of capital from Bangladesh and that if Bangladesh is branded a terrorist target, it would attract reduced levels of FDI. However, foreign investor sentiment is not always dictated by general perception.
The incentive for good profit and feasibility for productive trade partnerships often acts as a stronger motivational force than perceived political risk as a disincentive to invest. This is precisely the reason why Bangladesh will continue to be a good destination for business and investment. Like many of the Western or Middle Eastern countries, Bangladesh is also a victim of the ongoing transnational acts of terrorism. Although the proliferation of transnational terrorism influences some corporate decision makers when contemplating whether or not to invest abroad, it has not, apparently, deterred many of the MNCs from deciding to invest in the terrorism-infested developed and developing markets. However, this does not mean that business would go as usual in the wake of terrorism. Bangladesh needs to implement zero-tolerance against terrorism and ensure the safety of workplaces for the local as well as foreign investors to beef up investors’ confidence. This will require the removal of administrative barriers and an improved investment climate backed by strong law enforcement, and the rebranding of Bangladesh with credible facts, figures, and commitments.
A solid foreign investor, in any case, will separate fact from public perceptions and myths to arrive at an investment decision. The investor will make his decision based on the reality on the grounds that it is consistent with its investment objectives. Therefore, the government, along with the private sector, should act together to ensure that the investment climate is sound, and the true ground realities are sent to the investors so that their level of confidence remains steady. This will also require strong implementation of law enforcement along with efficient government agencies to ensure the safety of key installations, infrastructure, and the banking sector. Therefore, countering terrorism and the constant monitoring of terrorist outfits, including its criminal nexus, should remain a priority for the government so that a positive picture is painted for the global community. The partnerships between the government and the private sector, in this regard, will enable a positive environment for trade and investment in the long run.
The writer is a Research Director at Bangladesh Enterprise Institute and can be reached at shahab.e.khan@gmail.com
