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Bangladesh, the 2nd largest FDI recipient of South Asia

Bangladesh received $3.61 billion FDI (Foreign direct investment) last year, according to a World Investment Report 2019 by United Nations Conference on Trade and Development (UNCTAD).

Comparison of the amount of FDI BD received in FY18 & FY17

The report said that FDI in Bangladesh went up by 67.94% in 2018 compared $2.15 billion in 2017.

According to this report, Bangladesh has reached the country’s highest-ever level in its history. While China became the leading investor with $1.03 billion in Bangladesh.

On the other side, the traditionally top investor United States dropped to fourth with $174 million in investment report of FDI.

The Netherlands invested the second-largest amount of $692 million, and the United Kingdom was the third-highest at $371 million.

According to the UNTACD report, equity investment increased by 108.6% to $1.12 billion, which was $0.54 billion, while reinvestment increased by 2.32% to $1.30 billion. Clearly, investor confidence in Bangladesh has improved, it notes.

Top investors in BD, FDI report FY 2018

On top of that, intra-company loans also increased for the same period by 254%, from $333.24 million to $1.18 billion.

For attracting the FDI, Salman F Rahman, MP said, “If we want to have real investment, we have to develop infrastructure. We have already given licenses to 11 private SEZs. The government is also establishing public SEZs. Moreover, we are establishing country-specific SEZs,”

The rise in the FDI is a result of policy reforms and the introduction of the one-stop service for investors—which is already in operation, said a chief official of the BIDA.

The report also indicated that the investment flow across the world continued to decline.

South Asia scenario

FDI inflows in South Asia grew by 4% in 2018 to $54 billion. FDI to India, which accounted for 70 to 80% of inflows in sub-region, increased by 6 % to $42 billion.

Inflows in Sri Lanka also reached a record level of $1.6 billion, pushed by robust Asian investments, including those from China, India and Singapore.

FDI inflows to top four South Asian countries

Pakistan, the fourth largest recipient of FDI in the sub-region, registered a 27% decrease in investment to $2.4 billion. Nepal FDI received $1.6 billion and the Maldives received $0.55 billion. Bhutan’s FDI inflow declined by 160% year-on-year to log at $0.5 billion last year.

Challenges

One of the big challenges, according to the report, is the new industrial revolution, which could erode the importance of low labor costs, the traditional competitive edge of most SEZs.

“SEZs will need to anticipate trends in their targeted industries and adapt,” UNCTAD report says.

The World Bank’s Doing Business report for 2019 lists Bangladesh as 176th out of 190 countries in terms of ease of doing business.

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