Foreign direct investment (FDI) inflow to Bangladesh declined by 11 per cent to $2.6 billion in 2020 from a year earlier, the latest UNCTAD’s World Investment Report said on Tuesday. We would say this disclosure is quite disappointing at a time when Bangladesh government claims we have a good investment environment and over 100 specialized economic zones ready for foreign and local investors.
The UNCTAD report said general economic activities and FDI inflow declined in the country’s export-oriented garment manufacturing in the backdrop of cancellation of around $3 billion worth of export orders, primarily from the United States and the European Union. It is obvious when foreign buyers refrain from making new orders or retract from collecting existing orders – be it as fallout of the pandemic or economic recession – consumers slash buying of garments in the first place. Fall in investment in the trade follows.
The FDI inflows are globally shifting from traditional areas to high tech pharmaceutical industry, liquefied natural gas plants and agribusiness. Bangladesh should urgently diversity manufacturing and exports to create new areas of attraction for FDIs which would have steady global demands.
Bangladesh should have higher FDI now when the country is graduating to a developing country status soon. This is the time for more foreign investments to widen our export basket. But what is appalling is that we are failing despite having good prospects. It is the failure of a corrupt and inept administration which lacks efficiency and capacity to lobby at important places to lure investments. Bangladesh has simplified investment laws and created facilities such as one stop service for hassle free investment registration. But our FDI index has gone downwards.
Big investors are now relocating their business from China to Asian countries but Bangladesh seems to have failed to effectively reach them. We claim we are developing faster but India received 27 per cent higher FDI during the same period. Why the FDI has declined instead of rising needs careful evaluation.
