Global recession badly hits FDI flow in first six months

FE Team | Published: March 14, 2010 00:00:00 | Updated: February 01, 2018 00:00:00

Siddique Islam
The inflow of foreign direct investment (FDI) was badly hit by the global recession in the first half of this fiscal recording a 67 per cent fall over that of the same period of the previous fiscal.
This was revealed by the central bank in its Major Economic Indicators: Monthly Update - February 2009, released recently.
The inflow of net FDI came down to US$197 million in July-December period of the fiscal 2009-10 (FY) from $603 million in the corresponding period of the previous fiscal.
"The FDI drastically fell during the period under the review due to the global meltdown that had hit different countries including Bangladesh," a senior official of the Bangladesh Bank (BB) told the FE Saturday.
He blamed the global recession along with a nationwide acute crisis of gas and electricity for the fall.
The BB official also said the figure of FDI was higher in the first half of the last fiscal following the purchase of 30 per cent stake, owned by AK Khan Group, worth $350 million in the mobile phone company TM International Bhd (TMIB), known as AKTEL, by a Japanese company.
"We expect that the flow of FDI will rise in the month of January after adjustment of $300 million, invested by Bharti Airtel, for acquiring 70 per cent stake of Warid Telecom," the BB official added.
The fund has already been remitted through a foreign commercial bank, another BB official confirmed.
"Both local and foreign investments will increase sharply after announcement of the guidelines on Public Private Partnership (PPP) investment initiative," the BB official said, adding that power, energy and telecom sectors will be able to attract more investment under the initiative.
Besides, the flow of FDI may rise in the near future due to recovery of major economies from the global meltdown that encourages investors particularly foreign ones to invest in the country for taking advantage of cheap labour, they added.
In FY09, the flow of FDI grew by nearly 26 per cent to $941 million against $748 million of the previous fiscal, according to the central bank statistics.
A total of around $430 million was invested in the country's telecommunication sector, particularly by fast-growing mobile phone companies in FY 09, the central bank officials added.
The flow of portfolio investment has also recorded a fall of $41 million during the period under review due to the global financial meltdown, the central bank officials said.