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Rising Chinese investment ‘won’t hit other FDI sources’

FE Report | January 31, 2019 00:00:00

The Bangladesh Bank (BB) has dismissed the possibility of any negative impact on the country's overall FDI (foreign direct investment) inflow because of growing Chinese investment here under the Belt and Road Initiative (BRI).

It rather suggested the possible users of BRI funds to maintain good credit rating of the reputed international credit agencies to ensure proper use of the financing.

While unveiling the second half-yearly (H2) monetary policy statement (MPS) in the capital on Wednesday, BB Governor Fazle Kabir said the country's FDI inflow has substantially increased following Bangladesh's inclusion into China's BRI.

FDI from China stood at $ 506.13 million in FY 18.

The BB chief also said investment from different international funds, including the China-led Asian Infrastructure Investment Bank (AIIB), and increased communication of big corporate firms with different global funding agencies, will play an important role in raising both FDI and portfolio investment in Bangladesh.

"So, it is very important to keep eyes on the investment flow, so that financial institutions can scrutinise investment of the firms, accredited by the internationally acceptable credit rating agencies," he opined.

When asked whether or not the higher volume of BRI funds could create problems for other overseas investors like India, BB change management adviser Allah Malik Kazemi said Bangladesh witnessed substantial growth in Chinese outbound investment.

He said the government, financial institutions and private sector entities can use the funds through maintaining all the formalities as they do in using investment of other countries.

The fund flow under the BRI will rise further in the coming days. It will not affect investment from any of the neighbouring countries, as Bangladesh has been welcoming FDI under a single policy.

"But I don't think BRI investment will create negative influence on anyone. The investors come here for their own interest, and we treat all investors in the same way," he added.

China's BRI programme targets to connect Asia with Africa and Europe via land and maritime networks along six corridors with aims of improving regional integration, increasing trade and stimulating economic growth.

Bangladesh is one of the signatory states of BRI, and a key partner of BCIM (Bangladesh, China, India and Myanmar), which is one of the six corridors of BRI.

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