Chinese investors are eager to invest in Bangladesh's green technology, jute, textiles and pharmaceuticals as part of efforts to support the manufacturing transformation envisioned by Chief Adviser Professor Muhammad Yunus.

Visiting Vice-President of the Export-Import Bank of China Yang Dongning stated it during a meeting with the Chief Adviser at the state guest house Jamuna in Dhaka on Thursday (November 27), said Chief Adviser's Press Wing on Friday, reports BSS.

She was accompanied by Dr. Ma Jun, President of the state-run Institute of Finance and Sustainability.

Yang Dongning said that while China has long invested heavily in Bangladesh's large infrastructure projects, its investors are now increasingly focused on key manufacturing sectors. 

These include rooftop solar panels and large-scale investments in Bangladesh’s "golden fibre," jute—particularly for producing energy, bio-fertiliser and plastic alternatives.

Dongning said that Chinese enterprises and the Exim Bank, which has previously financed major infrastructure initiatives in Bangladesh, are interested in funding these direct manufacturing investments as well.

Dr. Ma Jun said Bangladesh's traditional jute industry is a major area of interest for Chinese investors, who are looking to establish joint ventures with Bangladeshi counterparts. 

He said Chinese firms are prepared to use up to one million tonnes of jute to produce green energy, fertilisers and viable substitutes for plastics.

"There are opportunities for joint ventures in jute with Chinese financing," Dr. Ma said.

The Chief Adviser welcomed China's interest in Bangladesh's manufacturing sectors, noting that investors from the world’s second-largest economy could help transform Bangladesh into a manufacturing hub producing goods for export to developed nations including China.

"We can go full speed in these areas," Professor Yunus said, identifying pharmaceuticals and healthcare as additional sectors with strong potential for Chinese investment.

He noted that China, the world’s largest producer of solar energy, could play a significant role in supporting Bangladesh’s transition to green energy through investments in solar panels and rooftop solar systems.

The Chief Adviser also encouraged China to relocate manufacturing plants to Bangladesh, highlighting the potential utilization of country's large pool of young workers. He suggested that closed state-run jute mills could be repurposed for new joint ventures.

"This is a very important dimension. We welcome this. We want to translate these into actions," Professor Yunus said, referring to Chinese interest in jute-based manufacturing.

Yang Dongning said that Chinese companies are also exploring investments in AI and e-commerce, areas in which China has emerged as a global leader.

In response, the Chief Adviser invited Chinese firms to relocate factories to southeastern Bangladesh, which hosts the country's largest seaports and offers strategic proximity to Myanmar, Thailand and other Southeast Asian markets.

"This part of the country has enormous access to the sea. Chinese industries could be relocated here—they can produce goods and export them to rich nations as well as to China," he said.

Professor Yunus also urged Chinese infrastructure companies to build railway links connecting Bangladesh with southern China to facilitate exports from relocated manufacturing plants alongside regional connectivity.

At the start of the meeting, the Chief Adviser expressed deep condolences following the deaths of scores of people at a fire incident in an apartment block in Hong Kong.

Senior Secretary and SDG Coordinator Lamiya Morshed and Chinese Ambassador to Bangladesh Yao Wen were also present at the meeting.

END/ZAK

Companies and organisations will be required to file tax returns on the income generated by employee welfare funds from the current fiscal year and pay a 27.5 percent tax on the earnings. 

The Income Tax Act 2023 incorporates the provision, lifting the tax exemption and amnesty on the compulsion to file returns for funds such as provident funds, gratuity funds and workers' profit participation funds maintained by the private sector.

The law, however, has exempted government-managed provident funds from taxation, raising questions.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce & Industry, said there were many other avenues to collect tax.

"Employees benefit from provident funds after their retirement. So, the authority should not slap taxes on retirement benefit."

He said while levying the tax, the government has not treated provident funds of the private and public sectors equally.

"It is discriminatory," he said, adding that they would appeal to the tax authority for the withdrawal of the tax on income from provident funds.

Debabrata Roy Chowdhury, director for legal, regulatory and corporate affairs at Nestlé Bangladesh PLC, said the introduction of income tax on trust funds would lower the overall income from such schemes.

"This will have an adverse long-term impact on retired employees of private organisations."

Chowdhury urged the authority to address the issue in line with the spirit of the government's initiatives aimed at ensuring social security for private sector employees.

"The recent introduction of the universal pension scheme for private sector employees is a good example of that."

A senior official of the NBR, on condition of anonymity, said the income of government-managed provident funds was exempted in line with the Provident Fund Act 1925.

He said provident funds under the private sector had been historically exempted and there was no requirement to submit tax returns. As a result, it was unclear whether the funds were properly utilised.

"From now onwards, we will see proper disclosure."

The tax official said the contribution of payroll tax is about 3 percent of the total income tax although it should increase as the economy is growing.

Md Shahadat Hossain, a former president of the Institute of Chartered Accountants of Bangladesh, said income from investment in savings certificates, where people invest as a source of future earnings, is already taxed.

"From that perspective, the imposition of tax on provident and other employee welfare funds seems okay."

However, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said social protection for private sector employees was low.

"Provident and other workers' welfare-related funds provide little social protection. The imposition of tax will increase inequality. But there can't be any discrimination in taxation between private and government provident funds."

Khan, citing the latest income tax law that replaced the Income Tax Ordinance 1984, said the NBR tried to find new avenues to increase tax collection and improve the nation's revenue-gross domestic product ratio, which is one of the lowest in the world.

"We can see the desperation of the tax authority to boost collection. This ultimately reveals the inability of the NBR to catch the tax evaders and illicit money makers."