Law and Social Business

[chris macrae]

http://www.thedailystar.net/newDesign/news-details.php?nid=191013

Will Otto's 30 million Euro Invetsment be blocked?

A German federal minister yesterday told the finance minister that their companies are facing legal barriers in spending money in social business projects in Bangladesh.

The issue was raised when a 32-member team led by Dirk Niebel, the German federal minister for economic cooperation and development, and Andris Piebalgs, the European Union commissioner for development cooperation, met Finance Minister AMA Muhith at his office at the secretariat.

After the meeting, Muhith told reporters that a German private company wants to invest 30 million euros in social business projects in Bangladesh.

“Our regulation stipulates that a company must go to stockmarket after a certain period. But it is a problem as social businesses cannot go to the share market,” he said.

The finance minister said the government was considering ways to address the issue.

He said, as investment in social business has not gained much ground in Bangladesh, rules on it are yet to be formulated.

The minister said, except some social investment made by microcredit pioneer Prof Muhammad Yunus, no noteworthy investment has flown into the sector.

Social business, championed by the Nobel laureate, is a cause-driven business, which allows the investors or owners to gradually recoup the money invested but not to take any dividend.

The social business concept has created a buzz in Germany, particularly after last year's “Global Social Business Summit” in the country.

The event brought Prof Yunus, Danone Group Co-Chief Executive Officer Emmanuel Faber, Adidas CEO Herbert Hainer, chemical giant BASF CEO Dr Jurgen Humbrecht and Otto Group Chairman Michael Otto, among others, under one roof.

Grameen of Dr Yunus and BASF, the world's largest chemical company based in Germany, have already formed a joint venture to create mosquito nets to protect the poor against malaria.

During the meeting with the finance minister, the German minister and an owner of a German company expressed their interest to make investment in social business projects in Bangladesh. But the existing rules in Bangladesh have been standing on their way, they said.

Muhith also briefed the delegation about the country's overall economic situation. He said inflation is the biggest problem the country faces now. “In coming days tackling inflation will be a very, very tough job.”

He said, after the present government assumed power two and a half years ago, inflation was under control at the beginning, but as the food and petrol prices increased on the international market, inflation started going up.

He said, although the country harvested a bumper crop, it has little impact on the market.

The finance minister urged Germany and other EU countries to invest in Bangladesh's weak infrastructure including energy, power and transportation.

The German minister emphasised creating congenial environment for investment with no corruption and low bureaucracy.

Niebel termed the trip a historic one as for the first time in the last 15 years an EU development commissioner and a development minister from an important member state are traveling Bangladesh together.

“This shows that Bangladesh is an important partner for us,” he said.

The EU commissioner said the government must step up efforts to tackle corruption, otherwise aid money would not be effective. “I have nothing special in my mind about the issue, but you need to really demonstrate strong leadership to fight corruption,” said Piebalgs.

He also said: “We are looking at ways to increase the attractiveness of your country for our investment.”

The commissioner also called for fixing energy problem to attract long-term foreign investment.