In a growing list of Bangladeshi companies seeking to invest abroad, Ananta Apparels Limited, a concern of Ananta Group, has sought Bangladesh Bank’s approval to take $8 million to Ethiopia to set up an apparel factory in the African country.
Ananta Apparels recently submitted its proposal with the central bank claiming that it initiated the move to set up the garment factory in Ethiopia to enjoy tax benefits there along with duty-free access to the United States of America.
It said that it would investment $8 million in Ethiopia from its own fund and if any additional fund was required it would be taken from other multinational financial institutions like International Finance Corporation.
Bangladesh Bank, however, has expressed its doubts that establishing apparel industry in Ethiopia would be viable.
The central bank officials said that they already forwarded the proposal of Ananta to the finance ministry as the government preserved the rights to give permission to such investment proposal.
A cabinet committee on economic affairs usually takes final decision on such proposal, said the BB officials, adding that the central bank in its observation expressed doubt about the viability of the investment proposal.
Ananta’s is the latest of such overseas investment proposals by local companies when Bangladesh itself is getting meagre foreign direct investment and the country’s unemployment rate still remains high because of quality job creation.
Seven companies have so far got government approval to invest abroad including the highest approval for $20 million to Akij Jute Mills, a concern of Akij Group, for procuring two Malaysian companies — Robin Resources Malaysia SDN BHD and its subsidiary Robina Flooring SDN BHD.
Of the rest six, three from the health sector, have invested $9.1 million in six countries between 2013 and March 2016.
The companies include ACI Healthcare, Incepta Pharmaceuticals, Square Pharmaceuticals, MJL Bangladesh and BSRM.
A top official of Ananta Group mentioned that availing duty benefit was the main reason behind its move to invest in Etiopia along with taking advantage of competitive labour force there. He said that Bangladeshi products would face high taxation when the country would be graduated to a developing nation, which was another reason for the company’s move.
Asked whether the country’s economy has the capacity to afford such investments, former caretaker government adviser AB Mirza Azizul Islam told New Age, ‘Considering increased intensity of illegal money laundering and infrastructural weaknesses in the country, the government may think about allowing investment proposal of few local companies to keep track on them.’
He, however, said that the government must scrutinise whether the investment would be profitable or not under the tax benefits along with other benefits available in Ethiopia.
Besides, profit repatriation timeframe should be taken into consideration in giving approval, Islam said.
Ananta Group managing director Sharif Zahir told New Age, ‘The company to established in Ethiopia will be under the local company.’
Unless companies like Ananta are allowed to invest abroad, it would not be possible for Bangladeshi companies to become global player, said Zahir, adding that they would repatriate profits to Bangladesh accordingly.
‘The initiative was taken following suggestion from the buyers of our products like GAP International, Dickies, Sears, Khols, Hagger, Ivory International and H&M for diversifying market risk,’ he said. Besides, low labour cost, long-term business opportunity and tax benefits available in the US market were the key reasons behind setting up plants there, he explained.
It also mentioned that around 200 staffers of the entity would be employed in the factory in Ethiopia.
Established in 1992, Ananta Apparels supply products to global banks like H&M, Zara, Gap, Levi’s and Marks & Spencer.
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