Investment inflow declines 5.11pc
Staff Correspondent: The overseas investment is contradicting with the target of Sustainable Development Goals (SDGs) which is hindering the steady growth of Bangladesh, said experts.
In recent years, Bangladesh has been devoting efforts for attracting FDI offering a lot of lucrative incentives and benefits. Though attempts were taken to increase FDI inflow, the result achieved is not appreciable enough for Bangladesh, they added.
The overseas investment went down to $2.15 billion in the first nine months of 2019 from $2.26 billion during the same period in 2018. In this calculation, the overseas investment declined by 5.11 percent, as per the available data of Bangladesh Bank.
According to the seventh five year plan, the overseas investment or FDI (Foreign Direct Investment) to be increased substantially to $9.6 billion by FY20 from current inflow and ensuring such FDI is crucial to achieve the SDG goal. In terms of sector-specific net FDI inflow, power sector attracted the highest volume of foreign investment (US$82.44 million), followed by telecommunication (US$75.63 million), textile and clothing (US$ 70.05 million), food (40.38) and construction (US$38.13 million). The highest amount of FDI came from the United Kingdom (US$90.01 million), followed by Norway (US$50.40 million), the United Arab Emirates (US$47.12 million), the United States (US$44.46 million) and Hong Kong of China (US$36.02 million).
However, the present scenario of overseas investment in Bangladesh is not still satisfactory enough but given the availability of abundant resources, skilled and cheap labor forces, a stable political atmosphere, effective monetary and fiscal policy, improvement of infrastructure and long term strategic planning.
According to Metropolitan Chamber of Commerce and Industry (MCCI, FDI inflow into Bangladesh is low compared to many countries at the similar level of development.
Bangladesh’s low labour costs are generally believed to be attractive to foreign investors, but yet they hesitate to make fresh investments in the country because of the country’s underdeveloped infrastructure, the leading trade body pointed out. It also mentioned other impediments like the shortage of power and energy, lack of consistency in policy and regulatory framework, scarcity of industrial land, corruption and political uncertainty. The government needs to address these impediments to attract more FDI into the country, it observed.
Talking to Daily Industry, Centre for Policy Dialogue’s Additional Research Director, Khondaker Golam Moazzem suggested for finishing the construction work and setting up of SEZs as soon as possible to maintain investor confidence as well as to retain this momentum.
Foreign investors became interested and started investing because of government infrastructural projects being built to facilitate more businesses. A big jump in FDI will also provide support to stagnant domestic investments and play an important role in overall investment, he said.
“Although, there is no remarkable development in the ease of doing business, it is on the right track. This will attract small and medium size investments,” added Moazzem.
According to the World Bank’s “Doing Business 2019: Training for Reform” report, Bangladesh stands 176th out of 190 countries, for ease of doing business. The country was 177th in the ranking the previous year.
The economist also pointed out that since the lion’s share of FDI is in the power sector, ‘ease of doing business’ is not a major factor. “If the government completes the projects within the deadline, FDI inflow will continue to grow,” said Moazzem.