DHAKA — Until recently, outward investment was something corporate Bangladesh could only dream about. But a loosening of government controls has prompted a raft of proposals for overseas expansion as companies seek to diversify earnings.

In October, Bangladesh’s cabinet gave permission to Akij Group, a conglomerate, to buy Robin Resources, a Malaysian fiberboard and composites maker, for $80 million. Akij, which has interests in those sectors as well as in food and beverage, tobacco, cement, jute and textiles, was allowed to transfer $20 million to Malaysia to part-finance the acquisition, with the balance to be paid through offshore borrowings.

“We’re experienced in Bangladesh,” said Shamsuddin Ahmed, chief financial officer of Akij Group.”Now we want to further extend to the foreign land. We want to project Bangladesh on foreign soil.” Approval was conditional on continued employment requirements in Bangladesh, and the repatriation of overseas profits.

Until 2015, Bangladeshi companies were all but forbidden from making investments overseas because of government controls intended to focus available capital investment on domestic development. However, controls have been relaxed since the South Asian nation of 160 million was accorded Lower Middle Income status by the World Bank in July 2015, indicating that average annual income per capita had reached $1,026, measured by the bank’s gross national income formula at 2011 values.

The government amended the country’s 1947 foreign exchange regulations in 2015, paving the way for capital account transactions, and offshore investment applications have since been considered on a case-by-case basis. Up to half have been rejected, and even the largest Bangladeshi companies remain little known outside the country. However, that could start to change as they begin spreading their wings abroad.

Central bank officials say they have drafted an “overseas investment policy” that will be finalized soon with the objective of formalizing the outward investment regime, replacing the current ad hoc approach. In the meantime, a cabinet committee on economic affairs will consider outward investment proposals based on central bank recommendations, according to Eunusur Rahman, secretary of the government’s Financial Institutions Division.

Apparel producer DBL Group is opening a factory in Ethiopia to take advantage of that country’s preferential access to export markets. (Photo by A.Z.M. Anas)
Companies that have recently gained approval for overseas investment include DBL Group, a textile and clothing producer, which is spending $9.5 million to set up an apparel factory in Ethiopia that will become operational in April 2018. DBL employs 30,000 people in Bangladesh and 1,700 in Ethiopia.

Mohammed Abdul Jabbar, managing director, said that although labor was still cheaper in Bangladesh, DBL had been lured to Ethiopia by its preferential market access to the U.S. — Ethiopian goods are eligible for duty-free access under the U.S. African Growth and Opportunity Act. “We’re global,” Jabbar said. “We can now have same kind of competition with international suppliers and claim ‘global’ price. Buyers can’t give us any price they want.”

Other companies that have received official approval to begin operations outside Bangladesh include BSRM Group, a Chittagong-based steelmaker, which applied in 2016 to invest $4.67 million to buy a 10% stake in a Kenyan steel company. However, the group, the country’s largest steelmaker, has not yet deployed the funds. “Studies are still going on, and when everything is clear we will invest,” said Aameir Alihussain, managing director.

Bangladesh has made significant economic progress in recent years, averaging annual growth in gross domestic product of 6.2% between 2007 and 2016. Moody’s, a ratings agency, praised the country’s economic performance in a review in April, noting its “robust and stable growth performance” and “relatively low government debt burden.”