The trend of steady flow of foreign direct investment (FDI) is persisting in the first half of 2019, according to the data given by Bangladesh Bank. A 19.47% increase with a staggering $1.7 billion foreign investment showed positivity in the first half.
Of the over-all investment, equity capital was US$ 409 million where intra-company loan was US$ 611.35 million and reinvestment was US$ 671 million.
Talking to Textile Today, business leaders and economists hailed recent regulatory reforms and improve ease of doing business by the government as one of the principal causes.
“In the midst of a slowdown in private sector investment, an increase in foreign investment is a positive sign. It is because of government’s recent reforms, which brought positive changes in doing business,” Centre for Policy Dialogue (CPD) Research Director Khondaker Golam Moazzem told Textile Today.
Moazzem also added that the investment was focusing more on the service sector rather than the manufacturing industry.
“As infrastructural development is going on, it is expected that investments in the manufacturing sector will rise, but it is yet to become observable,” the economist opined.
Bangladesh Investment Development Authority (BIDA) played a major role by providing services within the shortest possible time through its one-stop service (OSS). Which attracted the foreign investors for more investments.
“As we know, the World Bank has named Bangladesh among the top-20 improvers in doing business in 2020. This is because of the government’s many initiatives, such as policy reforms, removing infrastructural deficiencies and creating a positive business environment to boost more investment by creating a business-friendly environment,” said Kazi M Aminul Islam, Bangladesh Investment Development Authority (BIDA) former executive chairman.
“There are lots of reform initiatives and they are all on the right direction. But for lack of proper and slower implantation, Bangladesh still lags behind in ease of doing business.”
Another prominent industrialist, Abdus Salam Murshedy, MD of Envoy Textile Ltd. said, “Compared to the past state of business environment, the present one is better as the government steps have minimized the time for getting business registration, electricity connection and other utility services.”
This enhanced investor’s confidence, which helped Bangladesh receive more investment, added Salam Murshedy.
Experts were also cautious about the challenges Bangladesh have. As per the seventh five-year plan of the government, FDI is supposed to be 3% of GDP and it should be about $9 billion, meaning a significant gap.
“There are lots of reform initiatives and they are all on the right direction. But for lack of proper and slower implantation, Bangladesh still lags behind in ease of doing business,” mentioned Abul Kasem Khan, former Dhaka Chamber of Commerce and Industry (DCCI) President.
In addition, lack of proper execution, lack of cooperation among the ministries, and corruption is a major concern.
In boosting the investors’ confidence, economists, as well as businesspeople, also urge the government to address the challenges properly.
As a whole, Bangladesh is yet to reap the best out of its potential in attracting FDI. For this, the government should stop corruption and ensure good governance in every government agency.