Two regulatory bodies run parallel preparing separate guidelines on equity investment abroad by Bangladeshi businesses, raising concern about possible clash of authority, sources said.
Both the Bangladesh Bank (BB) and the Bangladesh Investment Development Authority (BIDA) are preparing the guidebook under instructions from two separate government high-ups, according to the sources.
The central bank has already prepared its draft of the guidelines and the ministry of finance has forwarded it to the law ministry for vetting, being instructed by the cabinet committee on government purchase back in June 2017.
Besides, the sub-section 6 of the section 4 of the Foreign Exchange Regulation Act 1947 empowered the central bank to specify, in consultation with the government, the classes of permissible capital-account transaction.
On the other hand, the BIDA also has prepared a separate set of draft guidelines on the same, being instructed by its governing body, headed by the Prime Minister.
In March this year, the BIDA shared the guidelines with the ministries and departments concerned for their opinion. The financial institutions division had forwarded the copy to the central bank for comment on the draft.
According to sources, the BB in its comment said according to the Foreign Exchange Regulation Act only the central bank is empowered to specify the classes of permissible capital-account transaction.
If any organisation other than the central bank wants to prepare guidelines on capital- account transaction, necessary amendment has to be brought first in the Foreign Exchange Regulation Act, it argued.
Contacted Sunday, Bangladesh Bank deputy governor Kazi Sayedur Rahman said the draft prepared by the BB was now waiting at ministry level for necessary approvals.
He would not make any further comment on this matter of policy duplication in the matter of offshore investment.
BIDA executive chairman Sirazul Islam told the FE Sunday his office is preparing the guidelines being instructed by its governing board led by the Prime Minister.
"I am bound to carry out a task when the governing board asks for. I am carrying out its decision," he said.
Mr Islam said the draft is now at the final stage and would be sent to government high-ups. "Since it will be national guidelines, it will go to the prime minister's office (PMO)."
He thinks the PMO may also have an inter-ministerial meeting and then it will be sent to the cabinet division for the all-clear.
Mr Islam would not comment on the Bangladesh Bank's opinion in this respect.
When contacted, former central bank governor Dr Salehuddin Ahmed stated that BIDA is responsible to facilitate both local and foreign investment inside the country.
Handling equity investment abroad is not BIDA's task, he said.
"It is central bank which has sole authority to take any decision on foreign-currency issue," said Mr Ahmed.
He noted that it is also the responsibility of the central bank to check who will make the investment abroad in which sector, whether the funds will be repatriated or not, and what guarantee is given against the investment etc.
Executive Director of Policy Research Institute of Bangladesh (PRI) Dr Ahsan H Mansur said both the government bodies can sit together to prepare a set of guidelines instead of drafting two separate documents.
"The main issue is making equity investment abroad has to be allowed by the government," he said
Dr Mansur said in this case the government has to give approval on a case-to-case basis, and to companies having good reputation.
syful-islam@outlook.com