Bangladesh eases more curbs to lure investors shying away from China

Bangladesh Bank is relaxing restrictions further to attract foreign direct investment being diverted from China amidst the coronavirus pandemic.

“Up until now foreign investors could take dividends to their own countries with some restrictions. From now on, they can keep the money in foreign currency accounts and take it to any country,” central bank official Mohammad Khurshid Wahab said.

The investors will also be able to re-invest the money in Bangladesh, added the general manager of Foreign Exchange Policy Department.

Last month, the central bank had waived some restrictions allowing credit permissible income earned by expatriates to the foreign currency accounts.

On Tuesday, Bangladesh Bank announced the decision that dividend payable to foreign shareholders may be credited to their foreign currency accounts maintained in Bangladesh.

The move aims to bring smooth operations relating to foreign investment in Bangladesh, the central bank said in a notice.

Declared dividend may be used, with treatment as inward remittances, for reinvestment in Bangladesh through purchase of shares in existing or other companies.

A number of developing nations have begun a competition to draw investment diverted from China after the novel coronavirus emerged in the country as Sino-US trade war has continued.

In the first quarter of 2020, foreign direct investment in China has government dropped by 10 percent, according to the government.

The Financial Institution Division in a letter last month urged the Bangladesh Bank to ease the restriction on taking dividends on FDI out of the country citing the global trade perspective, especially the problems China is facing now.

It also emphasised steps to change the Foreign Exchange Regulation Act following recommendations by a joint committee of the division and the central bank.