Express (July 27, 2011)
Bangladesh has attracted US$ 913 million in foreign direct investment (FDI) in 2010 calendar year, a leap by 30 per cent, upgrading the country's position to 114 from 119 out of 141 nations, according to the World Investment Report (WIR).
The Board of Investment (BoI) revealed this while launching the WIR 2011 at its office Tuesday.
BoI executive chairman Dr SA Samad, chairman of Privatisation Commission of Bangladesh (PCB) Dr Mirza Abdul Jalil, member (engineering) of Bangladesh Export Processing Zones Authority (BEPZA) Abu Reza Khan, representatives from Bangladesh Bank (BB) and officials concerned of different agencies were present during the launch of the report. It was held at the BoI board room.
The telecom sector alone received $360 million FDI, while the manufacturing sector $238 million in investment from abroad, the report said.
The report added foreign investors poured $145 million into the textile and clothing sector, while the area related to leather and leather products got $46 million.
The BoI executive chairman said: "The FDI inflow to Bangladesh is very low, at the bottom of the table, in terms of absolute FDI."
He, however, said Bangladesh has done well in receiving FDI when compared to other South Asian economies such as Nepal and Bhutan.
He hinted that if the country's GDP growth rate rises to an average 8.0 per cent and the literacy rate increases to 65 per cent, the FDI would be much higher than expected.
"If a country has sustainable growth rate, the FDI flow will automatically grow up, he added.
"Bangladesh's annual FDI ratio is not enough. I think this should be 5.0 to 6.0 billion dollars from the existing less than one billion dollars," he added.
Political instability, military intervention, lack of capacity in the public sector, bureaucratic tangles and natural disasters are some of the major obstacles to investment in the country, he observed.
He said the risk factor perception of foreign investors is gradually declining. "It is a good sign for the country," he added.
Dr SA Samad said the country is safer than India and Pakistan. "Pakistan has become very risky, even I will not invest there." Bangladesh has simplified investment rules, he said.
Dr Samad said it is up to the foreign companies to decide whether to purchase the existing companies or set up new ventures.
He acknowledged that FDI flows for acquisition do not increase the size of the economy.
Prof M Ismail Hossain of Jahangirnagar University, while highlighting the salient features of the report, said most of the foreign investments in Bangladesh have gone into acquisition of older assets rather than setting up greenfield companies.
He said FDI inflow dropped in Pakistan and India in 2010, while it improved in Bangladesh in that year.
Prof Hossain said many developed countries are looking to Bangladesh following increased labour costs in China and Vietnam.
According to enterprise survey of Bangladesh Bank, the FDI inflow was on the steady rise from 2001 to 2005. It rose to US$ 1086.3 million in 2008 but slumped to US$ 700.16 in 2009 and again increased to $913.32 in 2010.
Prof Hossain said greenfield investments plummeted worldwide due to the global financial recession that dented many giant economies.
"But investment increased in manufacturing and telecommunication sectors and marked a fall in power, gas and petroleum," he added.
Mr Hossain said although investment in Africa and South Asia as a whole dropped, South Asia has become a powerhouse of FDI as more than 50 per cent foreign investments were attracted to the region during the said period.
BEPZA member Abu Reza Khan said the number of export processing zones (EPZs) should be increased from the existing eight to absorb investment offers.
PCB chairman Dr Mirza Abdul Jalil said the then Awami League government was able to keep the investment pace in 1996-2001 and the pace would continue during this tenure too.
The BoI executive chairman said an investment of $300 million came in the telecom sector in 2008 and it increased the FDI figure in that year.
Dr Samad said during the tenure of General HM Ershad, the United Nations had set up the UNIDO office to increase the capacity of the government to promote investments in the country.
Dr Samad said global beverage company Coca-Cola had expressed its willingness to invest $50 million to set up a plant in Bangladesh.
"We invited them in this February to register with BoI to set up the plant," he added.
"I just came from Moscow and Gazprom wants to set up its office in Dhaka," he said.
It may be a regional office of the Moscow-based multinational hydrocarbon company, he said.
He said the government is negotiating with Gazprom to strike deals to supply gas production-related equipment.
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