BANGLADESH'S INDUSTRY MINISTER EYES PRIVATE

C O N F I D E N T I A L DHAKA 000757 SENSITIVE SIPDIS DEPT FOR SCA/INSB PASS TO TRADE DEVELOPMENT AGENCY E.O. 12958: DECL: 08/02/2029 TAGS: EIND EINV ELAB ETRD EAID BG SUBJECT: BANGLADESH'S INDUSTRY MINISTER EYES PRIVATE INDUSTRY AND FOREIGN INVESTMENT Classified By: Ambassador James F. Moriarty. Reasons: 1.4 (b) and (d) Summary ¶1. (SBU) Minister of Industry Dilip Barua assured the Ambassador during a July 29 meeting that protecting foreign investments was an "absolute" for his Ministry. Barua also stressed the importance of assisting small and medium-sized enterprises (SME) as a way to diversify Bangladesh's industrial sector. The Ambassador encouraged the Ministry's efforts on SMEs and also cited Bangladesh's ready-made garments industry as a possible model for other sectors of the economy. He cautioned against implementing protectionist policies, which would hinder rather than assist Bangladesh through the global economic downturn. Barua informed us Bangladesh wanted to develop its toy manufacturing sector and asked for USG assistance in identifying potential U.S. investors. Private Sector and Protecting Foreign Investments a Priority -------------- -------------- ¶2. (SBU) The Ambassador discussed Bangladesh's economic development plans with Dilip Barua, Minister of Industries, during a July 29 meeting. Minister Barua spoke positively of Bangladesh's relationship with the U.S. and his desire to enhance bilateral ties. He said protecting foreign investment in Bangladesh was an "absolute" and emphasized that his ministry's priority was developing the private sector. Minister Barua explained that two factors, protecting the environment, especially Bangladesh's water supply, and diversifying Bangladesh's economic base were important components of the ministry's plans. The Ministry's initial focus was on SMEs within the private sector, with special efforts aimed at assisting the poor and disadvantaged, such as women; and the Ministry planned to allocate 1.5 million USD for promoting qualifying SMEs. SMEs and Diversifying Bangladesh's Economic Sectors -------------- -------------- ¶3. (SBU) The Ambassador welcomed the Minister's comments and noted that SMEs drove the U.S. economy. The Ambassador highlighted that easy access to credit and loans allowed SMEs in the U.S. to expand and remain competitive. He suggested that Bangladesh consider providing local SMEs easier access to credit. Minister Barua said his Ministry was looking into a special bank for SMEs and welcomed U.S. advice on best practices for banks dealing with SMEs. The Ambassador also noted that SMEs needed supportive and not restrictive regulation, such as effective rules and regulations for managing labor disputes and streamlined business licensing procedures. He cautioned against the temptation to implement protectionist policies as doing so would hamper and not aid Bangladesh's economic growth and competitiveness. The Ambassador noted that Bangladesh's ready-made garment industry had remained competitive during the global economic downturn and was a possible a model for other Bangladeshi industries, such as molded plastics. ¶4. (SBU) Minister Barua said Bangladesh was very interested in gaining a foothold in toy manufacturing. He asked the Ambassador for assistance in identifying and approaching potential U.S. investors. He noted that this sector could potentially employ a large number of Bangladeshis and expand economic development. The Ambassador said he supported Bangladesh's development of a toy industry and would inform the U.S. Trade Development Agency of Bangladesh's interest. Comment -------------- ¶5. (C) Barua is a member of a tiny communist party. He was appointed as a technocrat (i.e. non-Member of Parliament) in order to represent the Awami League's small leftist coalition partners in the Cabinet. Some of his public comments about the role of the state have been problematic. The Ambassador sought this meeting as an opportunity to engage the Minister on the benefits of private sector-led development. Barua was on his best behavior during this meeting, emphasizing the importance of protecting and promoting private sector investment. We should look for ways to assist efforts to diversify Bangladesh's economy and encourage the growth of small and medium enterprises. MORIARTY