Report

CONSTRUCTION AND RELATED ENGINEERING SERVICES 113
a cautious approach with respect to import of
construction and related engineering services.
Although Bangladesh took very limited commitments
in a few services such as tourism, financial and
telecommunications services during the Uruguay Round
and spillover negotiations, it ought to undertake
commitments in many other services if it is to sustain a
relatively high rate of economic growth. Bangladesh
being an LDC seems to have taken the stand thus far
that LDCs should not be asked to undertake commitments
in the sectors it does not wish to. However, the
study strongly argues that LDCs should stop insisting
that they do not need to open any sectors. Many sectors
would benefit through an open policy regime and a
predictable competitive environment. Others also
suggest that inadequate infrastructure in Bangladesh
provides immense investment opportunity particularly
in the construction industry (UNCTAD-ICC 2000).
As technology transfer plays a significant role in
the development of this sector and it has high stakes
for domestic service providers, as well as substantial
imports, Raihan and Mahmood suggest that
liberalisation of this sector should be balanced. As of
now there are no major restrictions in the sector. FDI
is allowed and even labour movement is permitted
though subject to existing laws. Bangladeshi construction
workers go abroad to work on construction sites
and it gains substantial amount of foreign exchange as
workers remittances. Their foreign work experience
would be an advantage while working in South Asia.
But for that to happen Bangladesh needs to undertake
commitments in the sector. Bangladesh should undertake
wider and deeper commitments in the sector and
in all modes. Although it may find it difficult to make
such liberal commitments under the GATS regime, it
must do so as part of SAFTA. By so doing in fact, Bangladesh
would gain more by liberalising its services sector
as it will have access to bigger markets in the region.
Nepal
Nepal is one of the few LDCs, which have recently
acceded to the WTO. As part of its accession negotiations
it was asked to undertake relatively liberal
commitments in as many services sectors as it could.
As a consequence, what we have today is undoubtedly
one of the most liberal schedules of commitments in
services undertaken by any South Asian country.
In the construction and related services sector Nepal
has undertaken commitments in two out of five subsectors
– general construction work for civil engineering
(CPC 513) and other (CPC 511+515+518). Unlike
Pakistan which has proposed commitments in some
segments of the only one subsector of the construction
sector at four-digit level classification, these two
subsectors as committed by Nepal are at three-digit
level implying that its commitments fully cover the two
subsectors. Further, Nepal has inscribed no restrictions
of whatsoever nature in Modes 1 and 2 and Mode 3
stipulates that the entry is subject to incorporation in
Nepal with a maximum foreign equity capital of 51%
though Mode 4 is unbound and refers to the horizontal
section. Specifically for the subsector – general
construction work for civil engineering (CPC 513) the
commitment states that foreign equity participation
will be increased to 80% after five years from the date
of accession which will come into effect in April 2009.
In the National Treatment column in both subsectors
Modes 1, 2, and 3 are without any sectoral limitations
and Mode 4 remains unbound referring to the horizontal
section.
As regards the horizontal commitments which
apply to the construction sector, under Mode 4 entry
of three kinds of natural persons is allowed – services
sales persons, persons responsible for setting up a
commercial presence and ICTs. Unlike India and
Pakistan, Nepal has not made any provisions for
professionals or independent professionals. Under the
National Treatment column also there are some
limitations. Under Mode 1 national treatment has not
been accorded with respect to foreign exchange
provided to foreigners (excluding those categories of
persons covered by Nepal’s schedule) to pay for any
cross-border services. Under Mode 3 a foreign investor
reinvesting earnings is required to obtain the permission
of the Department of Industry, all foreign investments
except for financial services require approval by the
Department of Industry, and incentives and subsidies
are available only to enterprises wholly owned by
Nepalese nationals. Under Mode 4 national treatment
is accorded to only those categories of natural persons
referred to in the market access column. Moreover, it
has been made clear that the selling and buying real
estate is the constitutional right of every Nepalese
citizen. The civil code prohibits anyone from selling,
mortgaging, gifting or endowing or disposing any real
property to a foreign individual.
Apart from the limitations inscribed under Market
Access and National Treatment columns Nepal has also
undertaken some additional commitments. The first
commitment stipulates that an environmental impact
is required and approval of an investment will not
normally be withheld except for failure to meet