Three local firms willing to invest abroad have failed to obtain government’s permission.
The Cabinet Economic Affairs Committee in a meeting on Sunday turned down the proposals of Akij Jute Mills Ltd, Ha-Meem Group and Nitol-Niloy Group.
The three local companies separately sought Bangladesh Bank’s permission to invest abroad. Their proposed investment together amounts US$37.44 million.
After the meeting, Cabinet body chief Finance Minister AMA Muhith said the central bank was asked to seek more information about the aspirant firms and further analyse the matter.
As per the proposals, the Akij Jute Mills, a sister concern of the country’s one of the oldest business houses, Akij Group, proposed investing US$20 million to Malaysia to take over two companies in the South-East Asian country.
Ha-Meem Group, one of the leading readymade garment manufacturers, wanted to invest $10.44 million in Haiti to set up garment factories in the Caribbean nation while Nitol-Niloy Group, a leading trading house of Indian motor vehicles, sought to invest $7 million to set up a bank in Gambia.
The proposed bank was named Gambia Commerce and Agricultural Bank Limited.
These three business groups submitted their petitions to the Bangladesh Bank which controls foreign exchange and money transfer-related matters.
In its analysis, the central bank found that the permission for investment abroad would have a negative impact on the country’s economy as it is related with the country’s foreign exchange reserve.
Though the country’s reserve is now adequate at this moment, the remittance inflow has declined while the export experienced a slowdown and the foreign investment is not satisfactory. On the other hand, the cost for importing capital machinery has seen a rise.
As a result, the country’s current account’s balance saw a deficit of $0.79 billion at the end of December 2016 after a surplus for a long time.
The central bank also said the government has been pursuing for local and foreign investment to reach it 32 percent of GDP to achieve the GDP growth. As part of the move, the government is setting up 100 economic zones to facilitate local and foreign private investment.
So, the three firms have well opportunity to invest in the country instead of any foreign country, it observed.