THE observation by the President of Foreign Investors Chamber of Commerce and Industry (FICCI) that Bangladesh needs at least $10 billion Foreign Direct Investment (FDI) annually for attaining the projected economic growth is highly reflective of the country’s potentials to move on higher growth. The economy is ready to move upward and become vibrant but as The New Nation reported on Saturday that the FICCI Chief is quite unhappy at the present level of foreign investment which runs between US$1.5 to 2.0 billion annually in the past few years. In her view it should be at least five times higher to exploit the available growth potentials. But the desired capital is not coming and the reasons are not afar to explore.
Most stakeholders blame a highly corrupt and timid bureaucracy, complex investment registration procedure, legal loopholes, shortage of industrial land and energy supply as the main cause. But what appears to be mainly blamed in our view is the political instability below the uneasy calm that hinders potential investors to take risk to make new investment here.
There is no doubt, Bangladesh offers an attractive business potential compared to many South Asian Economies sitting on a strategic location with lower labour cost and expanding export market. The government is also frequently liberalizing business regime to investors’ advantage. But chaos and poor political leadership and poor institutional capacity to use public sector investment and handle private sector expansion has already slowed down the FDI flow when capital flight from the country which was reportedly over US$ 9.0 billion in 2013-14 and even growing, appeared putting wrong signals to foreign investors. Most capital flight seems to be relocation of local capital by individuals and business houses to invest in new business abroad in safe environment.
Development aid figure show that over US$ 22 billion assistance is already spilling in the pipeline as the government is failing to use it to development projects. Many projects remained in the hanging for policy difference with donors while others are facing trouble in lengthy approval process. Even appointment of Project Directors in many cases on political considerations is delaying start of the projects. Meanwhile, corruption is not only eating away much of the development potentials by massive misuse of public funds it is also bringing setback to many foreign investment proposals stalling the arrival of FDI in the country.
We know that the leaders of the FICCI know it well where things hurt but to get things to improve, the country needs improvement in political situation, in the capacity of public institutions and combating corruption. These are conditions to massive inflow of DFI and we are afraid we have to wait.
