Abu Sazzad :
Bangladesh needs five to six percent Foreign Direct Investment (FDI) of its GDP each year in order to attain a vibrant economy by 2021, said the experts, as the current FDI inflow in the country is not the satisfactory level.
In the fiscal 2010-11, the FDI inflow in the country was $ 913 million, followed by $1136 million in 2011-12 and $1292 million in 2012-13.
The country received FDI worth $1599 million or slightly more than one percent of its gross domestic product in 2013, according to Bangladesh Bank data.
On the other hand, FDI inflow to Vietnam, China and India was 6 percent, 5 percent and 3.5 percent of their GDP respectively in 2013. Even land locked Bhutan received FDI equivalent to 1.12 percent of its GDP in 2013, according to the World Bank.
In 2014, FDI dropped to $1527 million, which was less than one percent of the GDP worth $170 billion, according to Board of Investment.
Foreign investors in different international blamed insufficient infrastructure, bureaucratic hurdles and irregularities for not attracting increased FDI in Bangladesh.
Efficient bureaucracy, simplification in procedures for FDI registration, improvement in legal infrastructure as well as acceleration in one-stop service provided by the Board of Investment are needed for attracting FDI at expected level, said Foreign Investors Chamber of Commerce and Industry (FICCI) President Rupali Chowdhury recently.
The number one obstacle in attracting FDI in Bangladesh is bureaucratic complexities. The further reasons are lack of investors’ confidence and congenial environment, unavailability of land, institutional weakness, corruption, she also said.
Efficient bureaucracy, simplification in procedures for Foreign Direct Investment (FDI) registration, improvement in legal infrastructure as well as acceleration in one-stop service provided by the Board of Investment are needed for attracting FDI at expected level, suggested the FICCI President.
She said, in the recent year, the country received $1 to $ 1.5 billion FDI, but we need at least $8 to $10 billion FDI for achieving the expected level of economic growth or sustainable development, observed the FICCI President.
The government should find out the reasons why new foreign investors are not making investment at expected level in the country, whereas existing foreign investors are earning profit and making reinvestment in the country, said Rupali Chowdhury.
FICCI members have been making many recommendations to the government for attracting FDI, she also mentioned.
Foreign investors are also concerned about inconsistency in the government’s policy, she said adding that government’s agreement with foreign investors should be watertight and it should not be changed along with the changes of governments.
She has underscored the need for strengthening the Board of Investment and ensuring coordination among the government agencies to facilitate the FDI.
Referring to the government’s policy on Korean Export Processing Zone in Chittagong, Rupali said that retreating from such agreement gave wrong signal to the foreign investors.
Centre for Policy Dialogue (CPD) Additional Research Director Khondaker Golam Moazzem has underscored the need for improving the supply chain to attract more FDI in the country. The investment proposals registered with the BoI were not being materialized due to lack of infrastructure and supply chain, he claimed.
An underdeveloped supply chain in the manufacturing sector is the main cause behind low FDI levels in Bangladesh. The business climate is unfavourable as access to utilities, like electricity, gas, transportation, waste management and office space, are still inadequate and below investors’ expectations, said Khondaker Golam Moazzem.
FDI in the energy sector may have a causal relationship with corruption, he observed. Bangladesh’s private sector has been facing multi-dimensional challenges, and the emergence of new entrepreneurship has been constrained by poor skills caused by a lack of effective and quality education, Moazzem said.
Meanwhile, the government plans to establish 100 economic zones across the country over the next 15 years, which are expected to generate about 10million additional jobs. By 2030, the export earnings only from the economic zones are expected to stand at $40 billion.
According to the official sources of National Board Revenue (NBR), the government has announced a set of incentives for foreign investors in economic zones and high-tech parks, including complete tax-waiver facility on their dividend incomes. However, high-tech park investors will get 50 per cent tax-waiver.
