The US and British envoys in Bangladesh yesterday expressed concern over the flow of foreign direct investment (FDI) into Bangladesh if the proposed Data Protection Act is enacted, as the law may negatively affect business.

Foreign and local investors may have trouble using data freely through international tools if the DPA is enacted, they said at a discussion on "Online Freedom and Business Investment in Bangladesh", organised by the US embassy in Bangladesh and held at Dhaka's EMK Centre. 

The Bangladesh market is very attractive to US investors, said American ambassador in Bangladesh Peter Haas. "For this very reason, we recently opened a Foreign Commercial Service office at the embassy."

"But at the same time, we hear apprehension from businesses that new laws and regulations will make it more difficult for them to do business here," Haas said in his written speech.

We are concerned the latest draft of the DPA does not provide for an independent data oversight authority and that it includes criminal penalties.

— Peter Haas American ambassador

The US has concerns about the regulations on digital, social-media, and over-the-top platforms introduced by the authorities and the DPA. "Because we value our partnership with the government of Bangladesh, we have voiced these concerns directly with the government," he said.

"Before I describe some of our concerns though, let me be clear -- we respect that Bangladesh will choose for Bangladesh," Haas mentioned.

"So, what are some of our concerns? We worry the Data Protection Act, if passed with strict data localisation requirements, may force some US companies currently operating in Bangladesh to leave the market," he said.

The online-platform regulations will similarly dissuade companies from investing in businesses, if they face criminal liability for user content. The consequences could have very negative effects for Bangladesh, he continued.

Over 2,000 startups could be put out of business, and services that Bangladeshis use millions of times every day could become inaccessible, Haas said.

He also expressed concern over human-rights issues that may arise if DPA is enacted.

New technologies have the potential to create new markets and drive prosperity in Bangladesh... These need to be regulated in the right way.

— Robert Chatterton Dickson British high commissioner

"…However, as we look at the draft online-platform regulations, we are concerned about the broad definitions for what type of online content is deemed criminal. The ability to accept criticism and ensure freedom of speech even when that speech is unpleasant are hallmarks of a strong democracy," he said.

"We are concerned the latest draft of the DPA does not provide for an independent data oversight authority and that it includes criminal penalties," he added.

Echoing Haas, Robert Chatterton Dickson, British high commissioner in Bangladesh, said Bangladesh has made remarkable progress in the digital field -- like IT outsourcing and data processing.

However, the continuation of this progress may be affected by DPA, he said.

New technologies like cloud computing, artificial intelligence and machine learning have the potential to create new markets and drive prosperity in Bangladesh.

These need to be regulated in the right way, he said. "We also have some concerns about data localisation."

Bangladesh may also face another huge risk if foreign businesses find themselves unable to access international tools, which is basic for doing business.

Rubaba Dowla, country managing director of Oracle Bangladesh, Nepal and Bhutan, said in 2008, the total export of the IT sector was $25 million, which reached nearly $2 billion in 2021. Export from IT industries will grow to $4.8 billion by 2025, and investment in this sector will also grow to $5 billion by this time.

But, how will the country reach these targets if there are such barriers, she questioned.

Iftekharuzzaman, executive director of Transparency International Bangladesh, said there is a possibility of unregulated use of personal data by the stakeholders. It is a huge risk.

Tuomo Poutiainen, country director of the International Labour Organisation (ILO), also spoke.