Facilitating unhindered FDI inflow

Considering the size of the economy, the average annual flow of Foreign Direct Investment (FDI) in Bangladesh is yet to reach the government's target of 3.0 per cent of the Gross Domestic Product (GDP). An analysis of last year's flow of foreign direct investment based on the data provided by the central bank shows that the country received a total of US$3.47 billion as net FDI, which was higher than that of the previous (2021) year's record by 20.18 per cent. In 2021, the net FDI inflow was US$2.89 billion. A breakup of the inward investment pattern reveals that though the reinvested incomes did register an increase by 60.98 per cent to US$2.51 billion, the equity actually fell to US$1.02 billion (a fall by 10.19 per cent). The intra-company loans, on the other hand, also fell sharply by 129.63 per cent (in absolute terms, the growth was in the negative at minus 0.57 billion). Notably, the highest investment came from the United Kingdom (UK) at US$145.42 million, followed by Singapore (at US$83.40 million) and US$70.56 million from the USA. Obviously, what the economy needs most is fresh investment at an increased level which is not forthcoming at the moment. The slight rise in the last year's overall FDI inflow in comparison with that of the year before, too, was a mere one per cent of the GDP. On that count, the country is still far behind the desired level of FDI inflow.
While the past year demonstrated an overall positive trend in FDI inflow, in the current year (2023), however, the trend has been in the negative so far. If, for instance, the performance of the first three months between January and March (first quarter) is taken into consideration, the volume of FDI inflow amounted to US$626.47 million. Compared to the performance during the first quarter (at US$888.48 million) of the last year (2022), the FDI inflow has dropped by 29.49 per cent. As the BB data show, if compared with the last quarter (October-December) of 2022, when the country received about US$704 million in FDI, the first quarter's record this year is rather dim (as it dropped by close to 11 per cent).
Admittedly, international and domestic factors played their part in the economy's showing the lower-than-expected level of FDI inflow leaving a negative impact on the country's financial account. The oft-quoted factors having to do with the prolonged balance of payments deficit include the reduced flow of homeward remittance, recessionary trend in the global economy, the impact of the Ukraine war and the prevailing volatility in forex regime pushing down the value of Taka against US dollar (USD). Especially, the ever-sliding worth of Taka against the dominant foreign currency, the US dollar, is apt to give a wrong signal about the state of the economy to a prospective foreign investor. In a similar vein, the restrictions on import now in force also act as a discouragement to the potential overseas investors. The higher rate of inflation that the economy is experiencing at the moment means that the cost of doing business here is on the rise.
But these are not the only factors getting in the way of FDI inflow in the economy. The age-old bureaucratic red-tape has still remained the least addressed issue discouraging FDI. So, are the procedural complications affecting repatriation of funds by foreign investors? If so, the government should address the bottlenecks to facilitate smooth flow of FDI in the country.