FDI in Bangladesh drops by 36pc

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Bangladesh Auto Re-Rolling and Steel Mills Association Chairman Sheikh Masudul Alam Masud and Secretary General Abul Kasem Mojumder seen, among others, at a press conference at the Dhaka Reporters' Unity in the city Sunday.

FE Report
The Foreign Direct Investment (FDI) in Bangladesh has declined by 36 per cent and stood at $700 million last year compared to 20.11 per cent decline in South Asian countries and 14 per cent in terms of the least developed ones, according to the World Investment Report (WIR), 2010.
FDI inflows to developing and transition economies declined by 27 per cent to $548 billion in 2009 and FDI flows to developed countries suffered the worst decline of all regions, contracting by 44 per cent to $566 billion in the same year, the WIR added.
The WIR, compiled by the United Nations (UN) was been officially released on Thursday by Board of Investment (BoI) at its conference room. The BoI's Executive Chairman SA Samad, Privatization Commission's Chairman Mirza Jalil and Dr. M Ismail Hossain, Professor of Economics, Jahangirnagar University, among others, spoke on the occasion.
The BoI chief said the global economic downswing that led to the downward trend of global FDI is the major reason for the dismal FDI scenario in Bangladesh last year.
He, however, differed on the issue of crises of power, energy and gas which was said to discourage investment, particularly that of FDI, in the country now and in future.
"Not a single investor expressed concern to me for the dearth and crises of power, water and gas in the country," SA Samad told newsmen in reply to a question.
"The investors often express their dissatisfaction over the procedural complexities in investing here, which the BoI alone cannot solve as seven to eight government agencies are involved in the process of implementing any private investment, particularly FDI ", the BoI chief added.
Samad said the FDI in Bangladesh has never been impressive despite the fiscal incentives provided to foreign investors which is the most attractive in the world.
Citing his own finding, the BoI Executive Chairman said 57 Muslim countries received only 2 per cent of total FDI in 2009.
"It is utterly surprising that FDI goes to Vietnam and other LDCs, having less attractive fiscal incentives than those Bangladesh offers. The Muslim countries receive the least FDI," Samad said.
He said incentives alone could not attract FDI in any country. If economic growth takes place and rule of law is ensured, the much needed foreign investment will come to Bangladesh to a great extent.
According to the UN statistics on WIR, Bangladesh received $700 million FDI in 2009 compared to $1.86 billion in 2008, India received $34.61 billion FDI in 2009 compared to $40.14 billion in 2008, Pakistan received $2.38 billion FDI in 2009 compared to $5.43 billion in 2008, Sri Lanka received $404 million FDI in 2009 compared to $752 million in 2008, Afghanistan received $185 million FDI in 2009 compared to $300 million in 2008.
The countries like Nepal and Bhutan posted growth in receiving FDI in 2009, the WIR said. The FDI in Nepal was $39 million in 2009 compared to $1.0 million in 2008 and the FDI of Bhutan was $36 million in 2009 compared to $ 30 million in 2008.
'The current FDI recovery is taking place in the wake of a drastic decline in FDI flows worldwide in 2009. After a 16 per cent decline in 2008, global FDI inflows fell by further 37 per cent to $1114 billion, while outflow fell some 43 per cent to $1101 billion," the WIR says.
"FDI flows to the 49 LDCs declined by 14 per cent to $28billion. The impact of lower inward investment is particularly serious for this group of countries, as the high ratio of FDI to their gross fixed capital formation (24 per cent in 2009) suggests that it is a major contributor to capital formation," the report further added.
Dr. M Ismail Hossain, while speaking on the report, said the country needs FDI with the commitment of emitting low carbon. He said the policy balance is needed between the investors and the country's interest, while coherence between national and international policies is of importance to attract the FDI and reap benefit out of it.
Abu Reza Khan, Member, BoI, said investors are not concerned over power and energy crises. Rather, they are in need of land to invest as dearth of land is affecting the country's FDI badly, he added.