The ministry of finance (MoF) has given policy guidelines for the ministries and departments concerned to go the whole hog for attracting greater volume of foreign direct investment (FDI).
Officials said the move came in line with a study carried out by the MoF that identified infrastructural constraints as a major barrier to FDI inflow into Bangladesh, at a time when some major economic powers are eyeing business prospects in the country.
"You are requested to take prudent measures to implement the suggestions required to attract more FDI in to the country," Finance Minister AMA Muhith told government agencies concerned in a demi official letter recently.
The minister noted that the government has raised investment to a great extent to attain economic growth in the country. "But the private-sector investment is yet to reach the expected level. Alongside local investment we are also far behind in foreign investment. We need to take steps to change the situation."
Titled 'FDI inflows in Bangladesh: identifying its major determinants', the research found out infrastructure inadequacies as the single-most roadblock to foreign investment.
"Insignificant coefficient of infrastructure affirms the fact that inefficient or lack of adequate infrastructure facilities in Bangladesh are further forms as an impediment to FDI-friendly environment," it is stated in the research.
It says the extent of development in infrastructure, such as communications sector, is not sufficient to affirm it as quality infrastructure to attract more FDI.
Suggesting development of quality infrastructures in particular it emphasised encouraging private and foreign investments through public-private partnerships (PPP).
In this context, relaxation of FDI restrictions and an increase in investment in the case of improving infrastructure situation, especially in transport and power sectors, underscored. "Like other South Asian countries Bangladesh is still far away from fulfilling its potential as a destination for FDI," researcher Dilruba Shaheena of the macroeconomic wing of the MoF noted while studying the FDI-inflow situation between 1978 and 2011.
The research also recommended ensuring economic and political stability and giving equal importance to prudent and sound macroeconomic management.
It also suggested adopting deliberate trade policy and a competition policy to attract FDI and to come up with appropriate policies that suit the country's investment climate.
The research also emphasised the need for continuation of the trade-liberalisation process and making important reforms related to trade and WTO agreements -- but with greater caution.
Encouraging and helping domestic investors to seek foreign partners by forming joint ventures is also a major option of the day, as stated in the research report.
This, it says, helps in the mobilisation of finances for their enterprises and allows acquiring new skills, especially in the form of technology transfer, addressing supply constraints, training for labour and skills upgrading.
The government has been suggested to stimulate the linkage of foreign investment to manufacturing front with a view to gaining robust growth in industry sector.
"Regional trade opportunity needs to be exploited in a careful and justifiable manner. Particularly, there should have a cautious dealing in the case of bilateral trade agreement with neighbouring countries so that it does not entail any risk for or reducing the benefits of multilateral liberalisation," it noted.
Emphasising the need for introduction of foreign investment law, the research also suggested making cumbersome customs system transparent, more dynamic and automated.
Strengthening policies related to public-private partnership and making those more up to date are also shown as props in the case of wooing investment from foreign entrepreneurs looking for newer destinations to spread their wings.
youths1990@yahoo.com
