Exploiting full potential of FDI, domestic investment

In a resource-poor country with a very high density of population like Bangladesh Foreign Direct Investment (FDI) becomes a lifeline to survival. FDI is sought by every nation; even the United States of America carefully crafts laws and provides incentives to investors for augmenting national interest in developing technology, skill and employment. In a bigger scenario, the developing and middle income nations compete with each other in offering incentives and in providing protection to FDI.  Bangladesh began its search for FDI since the late eighties, and by mid-nineties, it became a political option to achieve GDP (gross domestic product) growth and to increase export for foreign exchange reserve. However, in this effort, the creative legal changes could not be achieved to compete with other nations in the region; the domestic market demand did not become sufficient to entice investment in large scale either.
Whatever had been achieved in the other nations of the region - such as Sri Lanka, Thailand, Singapore and Indonesia -- was possible due to complete overhauling of the bureaucracy, legal structures and institutional management. Some may attribute successes of Singapore and Sri Lanka to their comparatively smaller scales of economy and smaller population, but cannot deny that the size and scale of FDI proved the committed efficiency of the nations and of their political leadership. Apparent curtailment of individual autonomy was over-compensated by growth in income and skill development.
The environment in Bangladesh never offered sufficient encouragement to foreign or domestic investors. Since the beginning until today, Bangladesh's investment-journey was on a pendulum swing politically and in deciding the economic options. Almost dramatic compulsions of geopolitical options that swung between tendencies of leaning towards religious fraternity or to market-orientated capitalist oligarchy, preoccupied both the bureaucracy and political leadership.  This resulted in lagging behind in efficient governance at all tiers, developing consistent and continued performance by statutory institutions, in stimulating growth towards inclusive and cohesive development.  
Although recently the World Bank has made a 'statistical conclusion' by designating Bangladesh a Lower Middle-Income Country, the reality, however, belies the suggestion when vast majority of the people can at best be described as living near poverty level, deprived of healthcare, pure drinking water, employment and security of life. Indeed there had been progress in the country, but in economic terms, this only constitutes a meagre fraction of the scale of development needed for the size of the population.
It is accepted that no political government can achieve such massive task without large-scale FDI.  It is for this reason that a complete overhauling of bureaucracy and institutional management is urgently required.
A consistent and reliably predictable performance of national economy gives comfort to both foreign and domestic investors. In Bangladesh, political leadership is mostly preoccupied with domestic political compulsions and less concerned with either geopolitical or multidimensional roles to gain from. Export-based growth and incentives are now archaic and less sustainable economic activities. Regional cooperation, interdependence of market for skill, resources and productivity have become the driver for growth and regional stability.  History has over the years created many conflicts and divisions and in the new era for development these are overcome by economic cooperation and sustained investments. Bangladesh's hang-up in overcoming petty regional conflicts only marginalised its role in exploiting the full potential of FDI.
Efficient management of the capital market, repealing of conflicting and ambiguous fiscal and revenue policies, maintenance of law and order and strict adherence to social and political discipline are the prerequisites to attracting foreign investments and mobilising domestic capital.
Foreign investors primarily look for the resource base and demand base in a country before deciding on investment in order that a reasonable profit is ensured and sustained. Political climate and social environment at times may become a secondary consideration when sustained market demand necessitates investments, as it happened in African, Latin American and some Asian countries  where demand for copper, gold, coffee, coco and iron ore were on top of the list of demand in Europe and USA. Investments were made under brutal dictators where rampant human rights abuses were tolerated by the investors.  However, those dictators were gradually removed, and general consensus evolved in protecting human rights and in providing basic human needs to achieve a targeted socio-economic development goal. This was adopted as a policy of Millennium Development Goal (MDG), and many nations in the developed world separately adopted bilateral policy framework for cooperation, transfer of technology and investments both from Official Development Assistance (ODA) and from private institutional sources. Political image, along with social reputation for justice, is now important for attracting FDI.  
Underdeveloped infrastructure may become a hindrance to attracting both foreign and domestic investments but in many countries, infrastructure is included in the list of investments by both foreign and domestic investors. Major infrastructure projects can be developed as public-private venture and thus reduce the burden of the government.   
Consistent and reliable fiscal and capital market management will instill confidence in the investors. Institutional investors will depend more on structure and regime of the capital market and will need corporate management skill to decide on choosing suitable destinations for their investments.
Limiting or restricting capital movement will not encourage investors nor will a huge reserve in both foreign and domestic currency generate investment, productivity or employment. It only adds to an artificial veneering of false representation of the state of the economy.
In a fast moving world, competing with other nations for technology, market and investment, bureaucracy becomes vital in making changes and in adapting to reorientation of effective administrative support. Bureaucracy can also become a difficult constraint to achieve the changes required. A clear political objective, along with politically perceived inclusive plan for growth, can ensure effectiveness of the bureaucratic support.
    kbahmed1@gmail.com