Foreign investors playing unfair games........

Foreign investors should up equity and regard the local investment policies.



Bangladesh Bank (BB) has asked the foreign investors to increase their equity and offload primary shares in the local stock market, with a view to contain higher outflow of profit from the country, the central bank governor said yesterday.

With only 30 per cent of their own capital, the foreign investors manage the rest of the amount by borrowing from banks. To keep the profit outflow from our country within acceptable limits, BB has suggested that foreign companies maintain a debt-equity ratio of 50:50 though while registering with the Board of Investment (BoI) they agree on an equity-debt ratio of 60:40, but in practice they are keeping the ratio at 30:70. " Besides, the BB has asked the foreign investors to offload a portion of their shares in the local capital market to increase the equity, added the governor.

We hail this measure of BB.

In many countries the foreign companies take advantage of large profit repatriation in the early years of investment and offload their shares only when the profit becomes thinner. "Eyeing a long-term benefit for the country's economic health, the central bank has already issued letters to different companies. But it is not possible to set any rigid guidelines or force the multinational capitalists to offload shares. Some of the companies have been asked to float shares by 2007 and some by 2008.

In FY(fiscal year) 05-06, FDI declined by 15 per cent while foreign aid by 2 per cent, according to BB statistics. FDI inflow made a 'quantum jump' in FY 04-05. It rose to $800 million from $385 million in FY 03-04. FDI's coming down to $675 million is worrisome for the implementation of ever proposed largest budget.


It is a bold measure from BB that finally it has stepped forward to manage Blood Suckers to offload their shares to boom the ailing local stock markets.



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