Source: The Finalcial Express, 02-01-2016
Foreign direct investment (FDI) in Bangladesh seemed breaking a long lull with the net amount having totalled around US$ 1.7 billion during the first nine months in the just-concluded year 2015. FDI up by 47pc in first three quarters of 2015 According to Bangladesh Bank statistics, the country received US$1.695 billion in FDI during the January-September period of 2015 as against $1.155 billion during the corresponding period in 2014. It accounted for a 46.75 per cent increase. The gross inflows of FDI during the period, however, figured higher at $2.023 billion. “The amount, although representing only 9-month inflows, is the highest quantity of FDI the country had received up till now,” said an official of the central bank. He expects a total of about US$ 2.5 billion worth of FDI in 2015. The amount was $1.551 billion in 2014, $1.599 billion in 2013 and $1.292 in 2012. As per statistics, the manufacturing sector bagged the highest amount of FDI followed by power, gas and petroleum sector, and trade and commerce. During the first six months of the past year, the manufacturing sector attracted FDI worth about $454.86 million followed by power, gas and petroleum with $236.89 million. Trade and commerce drew $234.01 million of the inward investment flow. Among the manufacturers, textiles and wearing sector attracted the highest amount of $ 234.54 million, food products $ 59.55 million, fertilizer $23.42 million, leather and leather products $20.75 million while pharmaceuticals $15.50 million. Among the top investing countries are the USA, the United Kingdom (UK), Singapore, Korea, the Netherlands, India and Hong Kong. Among them, the United States invested the biggest amount of $218.12 million during January-June 2015 period followed by the UK which put in money to the tune of $154.68 million, Singapore $110.48 million and Korea $101.11 million. The lion’s share of the FDI came in the form of reinvestment of profits earned by the foreign enterprises. The figure was $595.65 million during the first half of 2015. A total of $357.80 million came as equity and $143.41million as intra-company loans. Government officials attributed the gathering momentum to various competitive fiscal and non-fiscal incentives offered by the government to foreign investors, which attracted them to investment in Bangladesh. “There is no lack of enthusiasm among foreign investors about Bangladesh as an investment destination, but, unfortunately, we cannot translate those proposals into reality,” said an official in the Board of Investment (BoI). “We failed to exploit a huge potential of foreign investment mainly due to scarcity of land, undeveloped and inadequate infrastructure and shortage of power and gas”, also said an official. If these constraints are addressed accordingly, he added, there will be no dearth of foreign investment. The average worldwide FDI as a percentage of GDP was 4.72 per cent in 2013. The highest value was in Hong Kong with 27.97 per cent of its GDP. But Bangladesh’s FDI inflow still remains at around 1.0 per cent of its gross domestic product (GDP). On the other hand, FDI inflow to Vietnam, China and India was 6.0 per cent, 5.0 per cent and 3.5 per cent of their respective GDP in 2013. Even landlocked Bhutan received FDI equivalent to 1.12 per cent of its GDP in 2013, according to the World Bank. The FDI inflow into neighbouring India surged 22 per cent to about US$ 34 billion in 2014. The FDI inflows to Pakistan also increased by 31 per cent to US$1.7 billion in 2014. The foreign investment proposals registered with the Board of Investment (BoI) of Bangladesh over the last couple of years had experienced lacklustre responses. Economists and experts attributed the slowdown mainly to the persistent political unrest, scarcity of land, perennial power and energy shortages, delay in getting services, uncertainty in policy continuation and unclear dispute settlement.