Interview: Atul Keshap
US investments will slow down if dividends can’t be taken back
Atul Keshap is a former American diplomat, president of the US-Bangladesh Business Council, and senior vice president of South Asia, US Chamber of Commerce. He recently headed a high-level delegation of the US-Bangladesh Business Council on a visit to Dhaka. Before his departure, in an interview with Prothom Alo’s Raheed Ejaz, he spoke at length on the future of investment between the two countries, the prospects, and ways to improve the business environment and situation.
You led a high-level business delegation on your trip to Dhaka. You met with Prime Minister Sheikh Hasina and senior government officials. You met with members of the business community too. So after all these meetings, both in the private and the public sector, what is your impression about further deepening business and investment between Bangladesh and the US?
Atul Keshap: The prospects are very good. We are very grateful that the honourable prime minister gave us time. For three years we have had delegations coming to Bangladesh and we have a very strong and collaborative relationship with the government of Bangladesh, very good discussions with the government officials, very high quality discussions in detail about the kinds of policies that can help draw more foreign direct investment into Bangladesh. So I think there is a moment of opportunity here.
If you look at Bangladesh’s standing in world affairs, if you look at the many talents and skills that its people have, you have ample opportunity to grow your digital economy, you financial inclusion, financial technology, in frontier areas like artificial intelligence, in insurance, in developing a credit sector, the list goes on and on. We already are strong partners in energy. There are huge American energy investments in Bangladesh.
Bangladesh is already a superpower in readymade garments export. But there are many frontier areas where American companies are the very best in the world where they see a lot of opportunity in Bangladesh. So if your government gets the policy framework right, I think it can take very great advantage of its natural talents to intensify the development of the country.
American companies are held to the very highest standards of ethics and transparency by the United States government. We have severe criminal sanctions for any inappropriate business activities. And the US government will go after companies that are found to have engaged in inappropriate acts. As a result of that, our companies engage in a highest level of ethical, managerial and technological practices around the world
Climate conducive to business is the key for attracting FDI. When Washington talks about climate conducive to business, apart from regulatory issues, the issue of corruption is a key concern. The US-Bangladesh Council promotes competitive and transparent business in Bangladesh. So during your discussions with the Bangladesh government officials, did you raise the issue of creating a more congenial business environment?
Atul Keshap: American companies are held to the very highest standards of ethics and transparency by the United States government. We have severe criminal sanctions for any inappropriate business activities. And the US government will go after companies that are found to have engaged in inappropriate acts. As a result of that, our companies engage in a highest level of ethical, managerial and technological practices around the world. We feel that is good for our society, for our companies, and it is good for our prosperity. It is good for countries all around the world.
Every country is different. Every country makes its own sovereign decisions about how it will chart its own national course. But for Americans, we deal completely on the level, transparently. We talk through all the legal compliance because legal compliance is very important. And if Bangladesh can create that kind of environment for American companies, I think you will see a lot of companies starting to come here and investing in new sectors.
You repeatedly mentioned about coming up with a policy framework first, to attract more invest and as fast as possible. So can you elaborate, in reference to policy framework, what are obstacles to attracting more investment from the US?
Atul Keshap: Bangladesh has some very promising attributes that very few countries have. It is a growing market, it is a growing economy. It has an increasingly skilled workforce. It has 700,000 freelance workers in the digital economy. It has so many advantages. There are other countries that would love to have your advantages. But the regulatory issues are critical.
What companies want when they invest in a country, is regulatory and policy predictability and stability. If I am a company executive, I go back to my investment committee and say, there is an opportunity in Bangladesh, we should put a billion dollars in, but this is a ten-year plan. The company investment committee is going to want to know if the regulatory, policy and tax environment is essentially stable so that the fundamental decision making of the investment is solid and valid through that whole time. So that predictability is really critical.
The other is, level playing field. Basically treating the foreign companies same as you would a local company in order that they can help walk the path of prosperity with your people.
The third I would say is ease and speed of doing business, just being faster than your competition so that you can attract more investment. There are a lot of governments that are very hungry for FDI. If Bangladesh can work on ease and speed, if it can work on predictability, and it can work on level playing field, then there will be many opportunities.
There is the issue of a dollar crisis and there is a concern among a good number of US companies as regards allowing them to take back the dividends of their investments in Bangladesh. Even when the US assistant secretary of state Donald Lu was here, he raised the issue. You had a meeting with the governor of Bangladesh Bank during your visit. Did you raise the issue on this particular issue? What did he say and were you satisfied?
Atul Keshap: Bangladesh has faced challenges since the pandemic and with the war in Ukraine and with the spike in inflation around the world, and part of that is also the interest rate hikes by the Federal Reserve Bank of the United States which has sucked dollars back into the US economy and made it much tougher for countries outside of the US. The governor talked about all of the challenges that this country has had to face, and all of the efforts that they have taken to try to manoeuver through that labyrinth including taking some difficult steps that have met with a lot of positive reactions from the rating agencies, the banks, from the IMF and World Bank. Every indication I have heard is that Bangladesh has taken those tough decisions and is endeavouring to get stronger, coming out of these triple shocks.
What we heard that the experts have now embarked on a path of greater macroeconomic stability, and other policy innovations. They have reduced the pressure in a way that can help adjust the foreign exchange reserves and I think the companies understand that these things take time.
The trajectory is positive. The pathway is clear. It will take time. I think everyone understands that it will take time. These are external shocks that happen in places that are beyond Bangladesh's control. When you are an FDI partner, you are in a partnership -- some of these companies have walked in a partnership for 30 to 40 years -- the lights are on, the energy of the economy is flowing because of investment, so they understand. But they do have expectations that over time they will be made complete and that the Bangladeshi government will meet its long-standing commitments that there is still yet good faith between them. There is a respect for the challenge and there is a respect for the diligence with which the government has been approaching this.
How long the US investors will wait to take back their dividends?
Atul Keshap: Not indefinitely because they have investments they have to respond to. But I think there has been a degree of understanding and the government is moving in the right direction. They key here is, there is a lot of investment that can still come into Bangladesh by the existing long-standing investors, by new investors in the energy sector. And there could also be investors in the renewable sector, not just gas. But as long as this payment issue exits, it will slow down additional investment into Bangladesh.
So I think it is incumbent on the government to try to resolve it as quickly as possible in order to unlock even more investment which will create even more jobs, more opportunities. It will fuel the economy. Industries will be able to come because energy will be expanding in Bangladesh. It is critical to the future prosperity of the country. And the American investors have the investments that are ready to go, but there is this issue.
In the context of investment, labour rights is always a core issue. How do you consider the labour rights and labour scenario in the country?
Atul Keshap: Labour rights are important. These are issues in every country on earth including in America. The US is the global innovator of labour rights. Bangladeshi workers have every right to have safety and to have their basic needs taken care of. This is a sovereign decision for the government. And the key is, how do you bake that cake so you continue to have investment, you continue to have growth in industries, you continue to grow your economy, and you continue to be competitive around the world?
A total of 60 per cent of available FDI on this planet is American, so you want to be competitive. If you bake the policy cake right, you can address the needs of your people, you can address the needs of the foreign investors, you can address the needs of business and grow your economy. There is a reasonable middle in everything. Middle-of-the-road requires constructive compromise. Every side has to give, every side has to get, and that calls for reasonable accommodations.
If you can get a well-motivated policy dialogue to find that reasonable middle, it can unlock a lot of prosperity for Bangladesh because then the investors will say, okay, this is a reasonable labour environment in which to invest. The policy issue on my industry is good, the labour, the tax, the regulation, the law, it all makes sense. The government is an enabling partner. I am going to jump in.
Thank you.
Thank you too.