Proposals for joint ventures and cent-percent foreign investment in the country fell about 13 per cent in the last fiscal year from the level a year ago, according to the registrations made with the Board of Investment (BoI).
Such downturn in the proposals by foreign entrepreneurs has continued over the last three financial years in a row for reasons that, according to analysts, include indecision on part of investors for political uncertainties.
According to BOI sources, about 124 investment proposals for joint ventures and 100-percent foreign investment worth about USD2.383 billion were registered with the BoI in the fiscal year 2013-14 as against 219 proposals worth about USD2.733 billion in the previous fiscal. The amount was 4.4470 billion dollars in fiscal 2011-12.
Actual investments in the country fall far below the figures indicated in projects registered with the investment board, sources in the investment-promotion agency admit.
"The actual investment made during the July-December period of last fiscal amounts to USD666.07 million," said BOI Executive member Nabhash Chandra Mandal while talking to The Financial Express.
The BoI officials, however, expected more FDI in the second half as the trend over the last few years indicated better inflows in second halves.
Investment by local entrepreneurs, however, showed an uptrend in the last fiscal (2013-14) as 1,308 investment proposals, involving US$6.392 billion, were registered with the BoI.
The investment made by domestic entrepreneurs marked a 14 percent growth as against the investment in the previous fiscal. In the previous year (2012-13), some 1457 proposals worth about US$ 5.599 billion were registered with the BoI.
Of the proposed investments, the highest amount worth about USS2.03 billion was registered for 92 projects in service sector, followed by US$ 1.06 for 348 projects in textiles, US$ 1 billion for 311 chemical industries and US$ 960 million for 116 agro-based industries.
In case of FDI, the highest amount of investment (1.78billion) was recorded in energy sector, where international oil giants are engaged and want to be in exploration and extraction of natural gas.
In the last three fiscals, the highest number and amount of investment proposals from local entrepreneurs were registered with the BOI. But, like FDI proposals, the local investment figure also came down substantially in 2012-13 due to political unrest.
Still, the situation is yet to see any substantive change. Foreign investors are still in confusion about the country's political future-evidently as the two major political camps were yet to come to terms on the election issue.
A stable political situation, sources said, will determine actual flow of foreign investment.
Economists and experts attributed the dwindling of flow of FDI mainly to country's poltical ambience, lack of power and energy, underdeveloped infrastrcture as well as scarcity of land.
According to them, the trend is quite natural as uncertainty is still looming large over the country's political situation--although it improved a lot after the January 5 elections were over.
"Although at the moment there are no strikes and violent political programmers in the country, stability, in true sense of the term, has not yet returned," said former adviser of caretaker government Dr Mirza Azizul Islam.
"Still there remains lot of uncertainty," said Islam, on a note of skepticism about FDI inflows.
"You cannot expect probable foreign investments unless there is stability," said Dr Islam. "Investment needs peaceful atmosphere."
The economist came to the conclusion that the present situation is not investment- friendly.
Lack of power and energy and scarcity of land for foreign investments are also discouraging the FDI inflows, the adviser went on explaining the factors that scale down prospective investment.
Also, he noted that the government is doing little about the economic zones.
Dr Islam made some suggestions to attract investment. Those include improving efficiency of government officials, reducing corruption, creating skilled manpower, ensuring security of life and wealth, providing enough utility services, gas and electricity in particular.
"We are observing a depressive trend in both foreign and local investment sectors for the last couple of years," said another economist, Abu Ahmed, also a professor of the University of Dhaka.
"How can we expect that entrepreneurs would come to invest their hard-earned money in such a volatile situation?" wondered the DU professor.
He drew the inference that the investment sector would not improve unless the situation is improved immediately.
Foreign Investors' Chamber of Commerce and Industry (FICCI) president Rupali Chowdhury, while addressing its golden-jubilee celebration, also called for political stability, good governance and reduction of corruption, energy security and infrastructure development to attract more foreign investment.
The officials of the (BoI) also admitted that the volatile political situation had discouraged many of the entrepreneurs from making big investments. They, however, said local businesses have started regaining confidence, after the election, which they had lost over the years due to political uncertainty and frequent shutdowns.
Meanwhile, the world investment report of the United Nations Conference on Trade and Development, released recently in Dhaka, said foreign direct investment in Bangladesh increased by 24 per cent to US$1,599 million in 2013 compared to US$1,293 million in the previous year.
According to the report, the Textiles and Wearing sector attained the lion's share of the total FDI in 2013 as the foreign entities have invested US$ 422 million in the sector. FDIs in banking and telecommunications sectors followed the chart with US$327 million and US$324 million FDIs respectively. Overseas investment in power, gas and petroleum was only US$99 million in the previous year while it was US$238 million and US$127 million in the years 2011 and 2012.
While unveiling the report, adviser to the Prime Minister, Towfique-e-Elahi Chowdhury, said: 'We are expecting to get 50 percent growth next year…. the amount could be US$ 2-2.50 billion.'
The country has the potential to get huge amount of FDIs in the coming days, if the government could ensure favourable atmosphere for the investors with adequate electricity, said Privatisation Commission member Mosharraf Hossain Bhuiyan while addressing the meeting.
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