DHAKA: Bangladesh, an emerging country with growing economy, has attracted investors from developed countries to its promising sectors including Information Technology and real estate.
Recently many IT startups have got venture capital from Silicon Valley and running their businesses successfully.
But foreign investors are facing numerous hurdles in investing money in the housing sector in Bangladesh.
Though Bangladesh has an exciting market for housing, the government is not allowing foreign loans in the real estate businesses, which forces the foreign investors to limit in a small percentage of investment.
A Japanese real estate company, named Creed Group, who opened their real estate business in Bangladesh, shared their bitter experiences while talking to a large group of journalists at East West Media Group Ltd (EWMGL) conference room on Friday.
Masanobu Kamiyama, Managing Director of Creed Corporation, said, “The biggest difficulty is ‘foreign exchange control. The difficulty for us in Bangladesh is that we cannot provide foreign loans to our businesses in Bangladesh”.
“As a foreign investor, we need to get the enrolment from the Board of Investment (BOI) and the Bangladesh Bank. We applied for several times for permission to bring loans but were rejected. Why? Because we are real estate businessman,” he added.
Muneyoshi Toshihiko, Founder of Creed Group said, “We found Bangladesh an exciting market and so we came up with some investment in Bangladesh for trial just two years ago.”
The major problem here is the traffic jam. We visited Motijheel, Panthpath. Those are good sites, but facing huge jam. Besides, we visited Gulshan, Baridhara, but the lands there are expensive and also traffic jam problems are there. It takes over an hour to reach there from the airport.
“Finally, we came to Bashundhara, a place adjacent to the airport. Infrastructures are excellent, security is also tremendous there. We came to know, a government project styled ‘Purbachal’ is being developed beside it. Also, there is an Army housing project. For this, we choose Bashundhara,” he said.
“We invested and, first of all, we purchased a piece of land on a trial basis. But we saw it’s very difficult to bring money in Bangladesh as we only have to invest money but cannot bring loans. It is also difficult to take money back. Besides, cash efficiency goes very low,” he added.
“We cannot take money back before five years. If we want to do so, we need to wind up the company. In that case, after completion of one project, we would have to open another company. This cannot be a business. We are property developers and we would take bank profit when a project is over. That is the tradition,” he added.
“If we can use a loan from outside of the country, then we would be able to make a big investment. Of course, the government must have its control. But investment in the housing sector is not like other sectors and we cannot wait for a long time.
“We want to bring new technology, design, and improved experience in Bangladesh. In that case, if some changes are needed, the authority should do that for encouraging big investment,” he added.
Narrating their journey in Bangladesh, he said that they came to Bangladesh in 2013 looking or opportunity.
Iqbal Hossain Chowdhury, Chairman of Jams Group, came up with the difficulties that the foreign investors are facing while investing money in real estate sector in Bangladesh.
He said that it is needed to open a joint account to invest in a country from outside. But, investors have to face many obstacles in opening joint proposed account in Bangladesh.
Though there is a directive of Bangladesh Bank in this regard, foreign investors have to face difficulties in opening joint account due to the ignorance of respective bank managers. Even, they can not open an account in all banks due to policy.
Stressing the need for a proper guideline, he said that there should be a proper guideline for foreign investors in opening accounts.
He also said, while they move for the register to the office of the Registrar of Joint Stocks, it takes a long time information of the company.
“If they can apply at BoI, BB, Joint Stock, and Bangladesh Security Exchange Commission from one place through one-stop service, it can take only a week in lieu of 4-5 months in completing all necessary things, he said.
He also said that other countries are following such a system.
It would be helpful for the investor if they can invest loans in the country’s real estate sector, he opined.
He also said an investor can not wind up business before five years which is a major problem for them. The period should be fixed in three years and that would help attract foreign investors.
He also said that they have plans to go for bigger projects with Creed Group in the housing sector in future.
“Couple of months ago, an investment loan proposal of Creed Group came in Bangladesh. Despite the oral instruction of Bangladesh Bank, Security Exchange and BOI, the loan went back after a month-long effort failed to avail of that”, he said adding, the loan came from another entity of Creed Group. They have huge funds. They can invest that fund here.
Md Touhidul Islam, Executive Director (Sales), Bashundhara Group said that foreign investors are facing obstacles in investing money here and also in withdrawing the funds.
They face problems as they need to tell the source of the fund from Anti-Corruption Commission (ACC), National Board of Revenue (NBR).
Mentioning that the real estate business in Bangladesh is passing a bad time, he said that people are discouraged to invest in this sector due to the strict condition of the government.
“Real estate is not only a business of selling and buying apartments. A total of 269 linkage industries are involved with this sector”, he said.
Mentioning that the industry has huge potentials, he suggested for ensuring a proper management for the sake of industry.
Many foreign companies are keen to make a bigger investment in this sector in Bangladesh. A suitable guideline and management are needed to make this sector more vibrant, he said.
BDST: 1124 HRS, DEC 20, 2015
AKA/SMS
