BD makes slight improvement as investment spot

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Asjadul Kibria | Published: June 28, 2015 00:00:00 | Updated: November 30, 2024 06:01:00

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An international ranking of attractive destinations to foreign investors has placed Bangladesh one notch up in 48th position among 110 countries.
The Baseline Profitability Index (BPI), constructed by Dr Daniel Altman, an Adjunct Professor at New York University's Stern School of Business, last year had put Bangladesh at 49th stand.  
Thus Bangladesh as an investment destination to foreign investors becomes little bit more attractive, according to BPI ratings.  
India has been put at the top, while the United States at 50th and China at 65th for this year.
The ranking is based on an index for baseline profitability assuming that three factors influence the ultimate success of a foreign investment. These are: the value of an asset grows; the preservation of that value while the asset is owned; and the ease of repatriation of proceeds from selling the asset.
The index combines measures for each of these factors into a summary statistic that conveys a country's basic attractiveness for investment.
Dr Altman wrote about the index and latest annual ranking in the Foreign Policy magazine last week. He claims that the index is a guide for investors to put in their money and make good returns.
"Economic growth alone doesn't determine the returns to investing abroad," he wrote. "You have to worry about things like financial stability, physical security, corruption, expropriation by government, exploitation by local partners, capital controls, and exchange rates as well."
Putting all of these factors together gives a better idea of how big the return will be when it finally reaches an investor's pocket, he added.
BPI calculations also use an index of investor protection compiled by the World Bank.
The rankings were published in the same week when the United Nations Conference on Trade and Development (UNCTAD) released its World Investment Report (WIR) 2015.
The UNCTAD report shows that net inflow of foreign direct investment (FDI) into Bangladesh declined 4.5 per cent in 2014. Inflow of FDI stood at $1.5 billion last year against $1.6 billion in 2013.
UNCTAD estimation is based on the data furnished by Bangladesh Bank.      
The central bank data, however, also show that gross inflow of FDI to Bangladesh stood at $2.06 billion in 2014.
Gross inflows are the total inward direct investment made by non-resident investors in the country while net inflows are the gross inflows minus disinvestment.   
Disinvestment includes capital repatriation, reverse investments, loans given to parent firms and repayments of intra-company loans to parent firms in a certain period of time.
The UN agency report also shows that greenfield investment in Bangladesh having increased last year. "FDI inflows to Bangladesh remained relatively high at $1.5 billion, thanks to large greenfield investments in a range of industries," said the report.
"As one of the most important foreign investors and the largest producer of natural gas in Bangladesh, Chevron (United States) invested $500 million in the Bibiyana Expansion Project and prepared to invest another $650 million to Petrobangla, the local state-owned oil company," it added.
UNCTAD also said that becoming fully operational in 2015 the project in Bibiyana is the largest foreign-investment project in the country in value.
The report also said other significant projects announced in 2014 were in manufacturing industries such as chemicals, construction materials and medical devices, as well as services industries such as telecommunications and transportation.
"In April, for example, a joint-venture subsidiary of Azbil Telstar (Japan) in Dhaka was inaugurated with a local partner, SAKA International, aiming to serve the fast-growing pharmaceutical industry in the host country," it noted.
According to the UNCTAD findings, value of announced greenfield projects in Bangladesh increased to $2051 million last year from $912 million in 2013.
Greenfield investment is generally known as fresh investment made by any multinational corporation into a country to build new factory or plant. The corporation also may have existing investment in the country.   
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