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FDI flow far lower than pledged in three years

Minister tells parliament

FE REPORT | February 14, 2020 00:00:00

Investment in Bangladesh by overseas firms was far below their initial pledges in the past three consecutive years through 2018.

Such a picture was painted in a written speech by AKM Mozammel Haque, a minister in charge of the Prime Minister's Office in parliament.

He said foreign firms' business strategy, local market and fluctuation of foreign exchange rates are believed to be the main reasons behind such poor actual foreign direct investment (FDI) here.

The actual FDI figure in 2018 was $3.6 billion, down by $1.57 billion than what they pledged.

In 2017, the real FDI inflow dropped to $2.2 billion from $10.3 billion pledged.

Overseas firms made such investment pledges during their registration with the Bangladesh Investment Development Authority (BIDA), the country's prime investment promotion agency.

There was an even sharper drop in the size of investment in 2016 by foreign firms.

In 2016, foreign firms pledged to invest here $11.3 billion. But actually they invested only $2.3 billion during the period under review.

In calendar years 2014 and 2015, the amounts were much higher than the proposed sizes of investment.

In 2014, overseas firms pledged to invest $937 million, but they invested actually a much higher amount of $1.5 billion.

Similarly, foreign firms initially wanted to invest $562 million in 2015, but they did $2.2 billion, much higher than the proposed amount.

Mr Haque told parliament that financial health of foreign companies, market and foreign exchange rates are important factors for such a type of drop in the actual FDIs in the country.

"The investment plan of the foreign companies is also an important factor behind the fall in the actual FDIs in the country," he said.

The minister said foreign firms proposed such an investment size during their registration. In many cases, it surpassed and in many cases, it did not.

"They pledge such investment as per their own action plan," he told parliament.

Mr Haque also said comparison of such investment by calendar years is hard as investment is a continuous process.

The government has initiated to promote FDI, including 5-10 years' tax holiday, depreciation allowance, incentive on exports, bond facility for raw materials and machinery and 100-per cent profit repatriation.

Mr Haque said the government already made the one-stop service act-2018 to facilitate foreign investment.

The BIDA has already introduced one-stop service to make investment hassle-free.

It is currently offering 14 online services to investors.

By 2020, the minister said, about 150 services will come under the one-stop service facility that will help reduce hassles facing the investors.

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