The 17th survey of investment-related cost comparisons conducted by the Jetro said Bangladesh has been indicated 'as the cheapest place' in Asia in terms of nine investment cost components including legal minimum wages, social security burden ratio, office rent, monthly basic charge for using mobile phone and charges of utility services.

The Japanese organization conducted surveys in 30 Asian cities according to 32 cost components.

"The relative position of Bangladesh against the components like salary of mid-level manager, legal minimum wage, rate of increase in nominal wage, per square metre monthly rent of industrial estate, telephone installation fee, monthly basic telephone charge and call charge per minute, international call charge, mobile phone subscription fee, monthly basic mobile phone charge, cost of general use of per cubic metre gas and cost of diesel has been improved," the survey said.

But, the Jetro said, some hidden cost which are abstract by nature but exist in matters related to legal, policy, procedural, system and infrastructure have been playing a vital role in case of elevation of cost of investment.

"Absence of comprehensive one stop service, poor law and order situation, delay in the settlement of L/C payment, sudden changes in government policies, inadequate infrastructure facilities, political instabilities, problem related to Port of Chittagong, political activities like hartal need attention of the Government of Bangladesh to reduce the hidden cost of investment," it said.

According to the survey, the mean order of all the components has switched to 2.44 from 2.49, indicating a very small elevation, which means Dhaka has become a little more cost-competitive from the viewpoint of investment costs.

It said the cost related to the usage of mobile phone has gone down because of internal stiff competition among the mobile operators belonging to private sector.

The survey also found that due to emergence of several new private cell phone operators, the new connection fee for mobile phones has become cheaper and it is anticipated that the call charge and monthly basic charge for mobile phone with ISD facilities will further go down as new operator Warid Telecom of Dhabi Group commenced their operation in Bangladesh recently.

But, the Jetro said, among the 32 cost components mentioned, many of them are controlled and managed by agencies under the public sector.

"Therefore, the government should remain vigilant in case of any change of cost-components in other countries and has to continue its effort to achieve greater competitive edge by adjusting the cost," the survey pointed out.

The wage for workers, salary of the mid-level managers, legal minimum wages, social security ratio, cost of land area of an industrial estate, telephone installation fee and call charges, electricity and water costs, and corporate taxes are among the other cost-components.

It, however, said comparing to other Asian countries, Bangladesh is less competitive in the areas like cost of industrial estate land, monthly basic payment for broadband internet service, new connection fee for fixed telephone line, container transportation cost and rate of corporate taxes.

Specially, the monthly basic payment for broadband internet service in Bangladesh is continuously the highest in Asia, it said.

Regarding telephone service, the survey said, the charge per call in Bangladesh stands around the middle range among the Asian countries, but the new installation fee is quite high.

Regarding the container transport, the survey has been made for the routes from 30 Asian cities to the ports of Yokohama and Los Angeles and the result shows that even after offsetting the proportional cost due to geographical longer distance, the cost of transportation from Chittagong Port is higher than that from Mumbai Port. "This is due to the fact that large container ships cannot come to Chittagong Port due to its shallow draft and, therefore, transshipment of containers becomes necessary either at Singapore or at Colombo," the survey pointed out.

According to the survey, corporate tax in Bangladesh, being 40 per cent for non-listed companies, is one of the highest in Asia. The rate is also highest among all 30 cities considered in the 17th cost survey.

During the budget of 2005-06, the tax holiday period for certain industry has been extended until June 30, 2008 for four and six years depending on the location. "That means, the enterprises which have been enjoying tax holiday so far will have to pay the corporate tax after June 2008, causing disadvantage to the investors," the survey noted, adding that, "Bangladesh might lose its competitiveness if the tax holiday facility is not extended further, while the facility exists in other countries."

In addition, the survey said, the government has to ensure proper care of the existing foreign investors to attract more investment. "If the existing investors are not satisfied, then the probability of getting new FDI will gradually decrease in course of time and the prospective investors will go to other countries, which are keen for attracting foreign investment," it observed.

The Jetro suggested that the government should conduct occasional surveys among the foreign companies on the degree of their satisfaction and try to resolve any existing problem for further improvement.