Foreign Direct Investments (FDIs) have seen a sharp rise for the government’s higher spending on infrastructure, power and energy sector
In January-November of 2018, Bangladesh saw FDI of $2.84 billion, up by 32.09%, compared to the total FDI of $2.15 billion in 2017, according to the Bangladesh Investment Development Authority (BIDA).
Issues like policy reforms by the government and steady economic growth helped the country tap the enhanced FDI inflow. Equity and reinvestment by existing foreign companies doing business in the country are the two major sources of the $2.84 billion FDI, BIDA officials said.
Bangladesh remains in the highest position in business expansion plans by Japanese companies in the next one or two years, according to a recent report titled ‘2018 JETRO Survey on Business Conditions of Japanese Companies in Asia and Oceania’.
Japan has already signed two deals to invest over Tk22,000 crore in Bangladesh’s private sector.
China was the highest investor with $374.52 million, while the United Kingdom made investments of $88.75 million followed by Singapore $77 million as of September, 2018.
During the period, the power sector received the highest investment of $274.50 million, while the textile and clothing sector was the second largest sector with an investment of $146.33 million.
Bangladesh government undertook measures to expedite the business registration process by introducing one-stop services aimed at attracting investments. Additionally, the government has been spending a large sum of money to remove infrastructural deficiencies.
Economists, business people, and government officials are observing this growth as a positive sign for Bangladesh.
The scenario is also good because some of the private Special Economic Zones [SEZs] have started allocating lands to businesspeople, which in turn, will attract more investment.
Although global FDI fell by 20% in 2018, in line with the country’s current positive trend, Bangladesh’s FDI in 2019 is expected to reach $3.7 billion.
Among all the other least developed countries (LDCs), Bangladesh is doing better in terms of economic growth but receiving less FDI.
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.
As part of its reforms, the government enacted the One-Stop Service Act 2017, in an effort to facilitate services and reduce the cost of doing business for both foreign and domestic investors.
However, some industry leaders opined that although government takes initiatives in progress to ensure a business-friendly environment, the rate of implementation is not “satisfactory” to attract new investments.
To attract more FDI, the government has to first attract local investment as foreign investors consider the trend of local investment before making any investment decision. The amount of FDI is not enough considering the size of Bangladesh’s economy, they said.
They emphasized on sustainable investment. Sustainability will depend on the investment climate and for this, Bangladesh will have to improve port capacity and service quality.
The operation of the Special Economic Zones (SEZs) will be another tool to retain the FDI growth trend.
The government is aiming to establish 100 SEZs across the country by 2030, of them 24 SEZs are inaugurated by Prime Minister Sheikh Hasina on 3 April.