Logistics Sector: Concerns Over Increased Foreign Ownership in Freight Forwarding
Business leaders and experts in Bangladesh's logistics sector have voiced strong opposition to proposals that would allow greater foreign ownership in freight forwarding companies. They argue that increasing foreign joint venture stakes, potentially up to 51% or more, would harm the national economy. A key concern is that foreign entities could repatriate substantial profits annually with minimal actual investment, thereby stifling opportunities for local entrepreneurs, particularly young Bangladeshis.
During a roundtable discussion organized by the Center for Strategic Research (CSR) in Dhaka, participants highlighted that freight forwarding is a low-asset service industry where foreign companies often operate with minimal capital outlay. The current proposal, reportedly under consideration by the National Board of Revenue (NBR), aims to relax foreign equity limits from the existing 40% to 51% in joint ventures, and potentially renew licenses for companies with over 40% foreign ownership. This follows similar relaxations in shipping and customs agent regulations, where foreign stakes were adjusted to 51:49.
Speakers, including Planning State Minister Mo. Junaid Abdur Rahim Saki, emphasized that a shift towards higher foreign equity could endanger the country's import-export trade, making it vulnerable to disruption. They proposed maintaining a 60:40 equity structure favoring local ownership across sub-sectors like freight forwarding, shipping, C&F, and courier express. Additional suggestions included requiring foreign-partnered license holders to reserve $5-10 million in blocked funds and invest 40% of this in local infrastructure within two years.
The debate surrounding foreign ownership in Bangladesh's logistics sector reflects a common tension between attracting foreign investment and protecting nascent domestic industries. While proponents of increased foreign equity might point to potential capital infusion, efficiency gains, and integration into global supply chains, critics raise valid concerns about profit repatriation, limited genuine investment, and the potential for foreign dominance to marginalize local businesses. The argument that freight forwarding requires minimal capital suggests that the primary benefit of foreign involvement might be operational expertise rather than substantial financial injection. Policymakers face the challenge of designing regulations that foster healthy competition and attract beneficial foreign capital without compromising the growth and sustainability of domestic enterprises, ensuring that economic gains are broadly shared within the country.
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