Kazi Zahidul Hasan :
Bangladesh is lagging behind regional and neighbouring countries in attracting foreign direct investment (FDI) for political uncertainty and varying cost of doing business.
Such an uneven inflow of FDI is hindering Bangladesh’s long-term growth prospect, economists said on Friday.
“Our neighbouring economies drew more foreign direct investment than Bangladesh in recent years, benefiting largely their economies,” Dr AB Mirza Azizul Islam, a leading economist of the country told The New Nation on Friday.
Even, they are aggressively perusing FDI by easing policy norms in major sectors of the economy to become an attractive investment destination.
“But, Bangladesh is lagging behind from its neighbours in absence of a congenial business climate resulted from political uncertainty, infrastructure bottlenecks and lack of policy reforms,” he added.
Referring to empirical experience, Mirza Azizul Islam said, FDI gives a fresh boost to employment and help poverty reduction finally helping to accelerate economic growth. But poor FDI into the country compelled it to miss out the opportunity.
“Both Macro economic stability and political stability are key consideration for businesses to relocate or shift their capital in a country,” he said adding, “The other one is necessary infrastructure along with competitive business environment.”
Mirza Azizul Islam mentioned that Bangladesh is yet to ensure these prerequisites to become an attractive investment destination. “The government seems to be serious in promoting foreign investment. But a lot has to be done to improve the investment situation,” he added.
Bangladesh received $2.2 billion FDI last year with the manufacturing sector getting the bulk of the investment, according to the World Investment Report 2016.
The inflow was lower than other Southeast Asian countries like Maldives, Vietnam, Cambodia, Myanmar and India.
Bangladesh is ahead of Pakistan, Sri Lanka and Nepal but trails behind
India received $44 billion FDI last year.
Inflows to Pakistan and Sri Lanka declined to $865 million and $681 million respectively. In Nepal, FDI inflows rose by 74 per cent to $51 million last year.
Net FDI inflows contributed to 10.3 per cent of Maldives GDP, Myanmar 4.8 per cent, Cambodia 9.4 per cent, Vietnam 6.1 per cent and India 2.1 per cent whereas contribution of FDI to Bangladesh GDP was only 1.7 per cent similar to Bhutan.
FDI contributed to 0.4 per cent of Pakistan’s GDP, Nepal’s 0.1 per cent and Sri Lanka’s 0.8 per cent.
“FDI receipt to Bangladesh remained below two per cent of the gross domestic product (GDP) which is frustrating,” Khandker Golam Moazzem, additional research director of the Centre for Policy Dialogue told The New Nation yesterday.
The current trend on foreign investment shows that foreign investors are investing their profits in Bangladesh without potential new investors is investing here.
“New investment is not coming because of fundamental problems persisting in Bangladesh economy,” he said, adding, “Most of our neighbouring economies attract investors with their strong economic fundamentals leading them ahead of Bangladesh in FDI inflows.”
“Fundamental barriers have been holding back FDI inflow into the country,” Dr Zahid Hussain, lead economist of the World Bank’s Dhaka office, told The New Nation.
He has identified inadequate communication network, port facility, land to set up industries, policy reforms and high cost of doing business as fundamental barriers to foreign investment.
“Bangladesh is seeking more foreign investment to accelerate its economic growth. But it has many improvements to make, particularly in its business and investment climate, to lure foreign investment in line with its need,” he said.
Bangladesh is lagging behind regional and neighbouring countries in attracting foreign direct investment (FDI) for political uncertainty and varying cost of doing business.
Such an uneven inflow of FDI is hindering Bangladesh’s long-term growth prospect, economists said on Friday.
“Our neighbouring economies drew more foreign direct investment than Bangladesh in recent years, benefiting largely their economies,” Dr AB Mirza Azizul Islam, a leading economist of the country told The New Nation on Friday.
Even, they are aggressively perusing FDI by easing policy norms in major sectors of the economy to become an attractive investment destination.
“But, Bangladesh is lagging behind from its neighbours in absence of a congenial business climate resulted from political uncertainty, infrastructure bottlenecks and lack of policy reforms,” he added.
Referring to empirical experience, Mirza Azizul Islam said, FDI gives a fresh boost to employment and help poverty reduction finally helping to accelerate economic growth. But poor FDI into the country compelled it to miss out the opportunity.
“Both Macro economic stability and political stability are key consideration for businesses to relocate or shift their capital in a country,” he said adding, “The other one is necessary infrastructure along with competitive business environment.”
Mirza Azizul Islam mentioned that Bangladesh is yet to ensure these prerequisites to become an attractive investment destination. “The government seems to be serious in promoting foreign investment. But a lot has to be done to improve the investment situation,” he added.
Bangladesh received $2.2 billion FDI last year with the manufacturing sector getting the bulk of the investment, according to the World Investment Report 2016.
The inflow was lower than other Southeast Asian countries like Maldives, Vietnam, Cambodia, Myanmar and India.
Bangladesh is ahead of Pakistan, Sri Lanka and Nepal but trails behind
India received $44 billion FDI last year.
Inflows to Pakistan and Sri Lanka declined to $865 million and $681 million respectively. In Nepal, FDI inflows rose by 74 per cent to $51 million last year.
Net FDI inflows contributed to 10.3 per cent of Maldives GDP, Myanmar 4.8 per cent, Cambodia 9.4 per cent, Vietnam 6.1 per cent and India 2.1 per cent whereas contribution of FDI to Bangladesh GDP was only 1.7 per cent similar to Bhutan.
FDI contributed to 0.4 per cent of Pakistan’s GDP, Nepal’s 0.1 per cent and Sri Lanka’s 0.8 per cent.
“FDI receipt to Bangladesh remained below two per cent of the gross domestic product (GDP) which is frustrating,” Khandker Golam Moazzem, additional research director of the Centre for Policy Dialogue told The New Nation yesterday.
The current trend on foreign investment shows that foreign investors are investing their profits in Bangladesh without potential new investors is investing here.
“New investment is not coming because of fundamental problems persisting in Bangladesh economy,” he said, adding, “Most of our neighbouring economies attract investors with their strong economic fundamentals leading them ahead of Bangladesh in FDI inflows.”
“Fundamental barriers have been holding back FDI inflow into the country,” Dr Zahid Hussain, lead economist of the World Bank’s Dhaka office, told The New Nation.
He has identified inadequate communication network, port facility, land to set up industries, policy reforms and high cost of doing business as fundamental barriers to foreign investment.
“Bangladesh is seeking more foreign investment to accelerate its economic growth. But it has many improvements to make, particularly in its business and investment climate, to lure foreign investment in line with its need,” he said.
