Zambia, Tanzania and Bangladesh: More Needs to be Done FDI Policies and Regulation: How to Foster Economic Development 30 January 2004, Geneva, Switzerland Sanchita Chatterjee CUTS-CCIER

Macro Characteristics Indicators/ CountryBangladeshTanzaniaZambia Population (2002) (in millions) Surface area (2002) (Thousand sq. km) Population density (2002) (People per sq. km of land area) Gross National Income (2002) US$ bn US$ per capita PPP gross National Income (2002) US$ bn US$ per capita Gross Domestic Product ( ) % growth Per capita % growth

FDI Inflows in US$ mn, Source: UNCTAD WIR 2003 Country Bangladesh Tanzania Zambia

FDI Inflows as a Percentage of Gross Fixed Capital Formation, Source: UNCTAD WIR 2003 Country Bangladesh Tanzania Zambia

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