Zambia, Tanzania and Bangladesh: More Needs to be Done

FDI Policies and Regulation: How to Foster Economic Development

30 January 2004, Geneva, Switzerland

Sanchita ChatterjeeCUTS-CCIER

Macro CharacteristicsIndicators/ Country Bangladesh Tanzania Zambia

Population (2002)

(in millions)

136 35 10

Surface area (2002)

(Thousand sq. km)

144 945 753

Population density (2002) (People per sq. km of land area)

1042 40 14

Gross National Income (2002)

US$ bn

 US$

per capita

48.5

360

9.6

280

3.5

330

PPP gross National Income

(2002)

US$ bn

US$ per capita

234

1720

19

550

8

770

Gross Domestic Product

(2001-02)

% growth

Per capita % growth

4.4

2.6

5.8

3.6

3.0

1.3

FDI Inflows in US$ mn, 2000-02Source: UNCTAD WIR 2003

Country 2000 2001 2002

Bangladesh 280 79 45

Tanzania 463 327 240

Zambia 122 72 197

FDI Inflows as a Percentage of Gross Fixed Capital Formation, 2000-02

Source: UNCTAD WIR 2003

Country 2000 2001 2002

Bangladesh 2.7 0.8 0.4

Tanzania 14.5 20.8 29.3

Zambia 21.2 10.1 25.8

  Sectoral Distribution of FDI No official comparable data for the three

LDCs For Tanzania the estimates have been made using number of approvals by Tanzania Investment Centre. Between 1990 and 2000 manufacturing highest FDI followed by tourism, agriculture and natural resources sector

  Sectoral Distribution of FDI For Bangladesh a World Bank study said that

outside the Export Processing Zone gas and power highest FDI. Within EPZ ready made garments followed by textile, leather goods and shoes, and electronics.  According to Bangladesh Board of Investment, the services sector followed by chemical industry received the highest registered FDI.

  Sectoral Distribution of FDI For Zambia, Zambia Investment Centre holds data

only on pledged investment but not actual investment. As per this data, manufacturing received the highest FDI, followed by services, trading,

agriculture, mining and tourism.

An Overview of Investment Policies Country

Bangladesh

Investment Policy

Non-discrimination Protection from expropriation Repatriation Role for the private sector Registration required Other clearances (e.g. environment) Incentives BITs Investment facilitation: BoI, BEPZA,

Bangladesh Small and Cottage Industries Corporation

An Overview of Investment Policies Country

Tanzania

Investment Policy Minimum period for govt

agencies to process applications for land

Certificates of incentives granted by TIC

Separate statute for mining Incentives Separate Act for Zanzibar BITs and DTTs Investment facilitation: TIC,

ZIPA, Zanzibar Free Economic Zones Authority, Zanzibar Free Ports Authority

An Overview of Investment Policies Country

Zambia

Investment Policy No distinction between foreign

and local investors No business ventures only for

government Not mandatory to register

investment No clearly defined investment

policy Incentives Not many BITs and DTTs Investment facilitation: ZIC,

ZEPZA, Office for Promoting Private Power Investment

Sectoral Case Studies Some sectors studied are important for

overall employment, outputs and export earnings e.g. textiles in Bang, mining in Tanz and Zamb. Some sectors reflect how policies are not in line with economic considerations e.g. telecom and cement in Bangladesh. Common sectors: telecom for Bangladesh and Tanzania; mining for Tanzania and Zambia

 

Telecom

Latest technology has brought in changes; for consumers this brought about better quality of services and greater accessibility

Tanzanian Govt undertook liberalisation in 1993; established TPTC; FDI in the sector high; teledensity improved from 0.3 lines per thousand in 1991 to 0.8 per thousand in 2002;

In Bangladesh in early 1990s, private sector operators were allowed to provide rural telephone services but very low inter connection regime

Mining

It has been an important sector for Africa; both Tanzania and Bangladesh gave incentives though they were not effective.

In Tanzania the govt undertook policy and institutional changes between 1995 and 2001; local/joint ventures and FDI have gradually increased in mining and exploration

In Zambia privatisation of mines were undertaken including that of Konkola Copper Mines; foreign penetration in the mining sector is quite high

Civil Society Perceptions

Civil society: NGOs, trade unions, business associations, academia, media

The number of respondents Bangladesh – 50 Tanzania – 50 Zambia – 43

Results of the survey

Respondents aware of their country experiences Greater agreement on the positive aspects than the

negative aspects Countries with more positive experiences with FDI

show higher agreement levels Respondents believe government policies and

actions are required to maximize benefit from FDI Employment, export and technology requirement

receive the most support from the respondents

Some Recommendations

Improvement in investment climate: improvement of governance, training of government officials, simplification of laws, change in the mindset of officials, rethinking on incentives

Strong but limited government interventions required: careful regulation of some sectors, improvement of information on trade and investment

Privatisation and further reforms be strengthened

 

Some Recommendations

Legal and judicial systems, development of human resources and, physical and financial infrastructure,

Ensure macroeconomic stability and reduce poverty

Regional and sub-regional cooperation: e.g SAARC, SADC, East African Community