FDI inflow down in 2007
Thursday, 25 September 2008
FE Report
The inflow of foreign direct investment (FDI) to Bangladesh fell by 16 per cent in 2007 over that of the previous year, despite a significant rise in both global and regional inflows, the World Investment Report (WIR) 2008 revealed.
According to the Report, the FDI inflow to Bangladesh declined to US$ 666 million in 2007 from $793 million in 2006, in the backdrop of an 18 per cent increase in the inflows to South, East and South-East Asia.
The global FDI inflow also rose in 2007 by 30 per cent to reach $ 1,833 billion, well above the previous all-time high set in 2000, it said.
"FDI inflow in the region increased to yet another record level in 2007, reaching US$ 249 billion - an 18 per cent increase over 2006," said the WIR 2008, which was released Wednesday by the United Nations Conference on Trade and Development (UNCTAD) across the globe.
This year's theme of the annual investment review is "Transnational Corporations and the infrastructure Challenge".
Dr. M Ismail Hossain, Professor of Economics of Jahangirnagar University (JU) presented the WIR 2008 before the media on the day at the Board of Investment (BoI) office in the city with the BoI Executive Chairman Kamaluddin Ahmed in the chair.
Identifying poor infrastructure and weak institutional capacity as major barriers toward the growth of FDI in Bangladesh, Dr. Ismail also stressed the need for bringing about necessary changes in the country's policy, aiming to attract more FDI in the country.
"Government agencies need to enhance their capacity to regulate and monitor the FDI for ensuring its maximum utilisation," he said.
Admitting that the short supply of natural gas is as one of the main problems in attracting FDI in Bangladesh, the BoI Executive Chairman said, "Now our focus is to encourage more foreign investments in services sector instead of gas-based ones."
Responding to a query, Mr. Kamaluddin said despite a fall in the country's FDI inflow, the amounts of both FDI and local investments registered with the BoI increased substantially in recent times.
Some 1055 projects involving Tk 501.935 billion ($ 7.662 billion) were registered with the BoI by local entrepreneurs during the eight months of the 2008 while the number was 286 in 2007, he mentioned.
"It is not necessary that the country's entire infrastructure is to be developed with FDI, we have also to do it on our own," he said.
According to the Report, the global FDI outflow increased by 51 per cent to $ 1997 billion in 2007, out of which 54 per cent or $ 1692 billion was originated in developed countries. The European Union (EU) outflows increased by 65 per cent to $ 1217 billion while that of developing countries rose by 22 per cent to $253 billion in 2007, it added.
The WIR 2008 said despite the financial and credit crisis, which began in the second half of 2007, all the three major economic groupings - developed countries, developing countries and the transition economies of South-East Europe and the Commonwealth of Independent States (CIS) - saw continued growth in their FDI inflows.
"The increase in FDI largely reflected relatively high economic growth and strong corporate performance in many parts of the world," the Report said, adding that reinvested earnings accounted for about 30 per cent of total FDI inflows as a result of increased profits of foreign affiliates, notably in developing countries.
The FDI inflows into developed countries reached $ 1,248 billion, the WIR said, mentioning that the USA maintained its position as the largest recipient country, followed by the UK, France, Canada and the Netherlands.
The European Union (EU) was the largest host region, attracting almost two thirds of the total FDI inflows into developed countries, it added.
In developing countries, according to the WIR, FDI inflows reached their highest level ever ($500 billion) - a 21 per cent increase over 2006.
On the other hand, the least developed countries (LDCs) attached a record 13 billion worth of FDI in 2007, it said.
At the same time, developing countries continued to gain importance as source of FDI, with outflows rising to a new record level of $ 253 billion, mainly as a result of outward expansion by Asian transnational corporations (TNCs), it revealed.
FDI inflows into South-East Europe and the CIS also surged, increasing by 50 per cent to reach $ 86 billion in 2007, it said, adding that the region saw seven years of uninterrupted growth.
Outflows from this region similarly soared to $ 51 billion in 2007, which was more that twice the 2006 level, it mentioned.
Among developing and transition economies, China, Hong Kong and the Russian Federation were the three largest recipients of the FDI, it added.
The inflow of foreign direct investment (FDI) to Bangladesh fell by 16 per cent in 2007 over that of the previous year, despite a significant rise in both global and regional inflows, the World Investment Report (WIR) 2008 revealed.
According to the Report, the FDI inflow to Bangladesh declined to US$ 666 million in 2007 from $793 million in 2006, in the backdrop of an 18 per cent increase in the inflows to South, East and South-East Asia.
The global FDI inflow also rose in 2007 by 30 per cent to reach $ 1,833 billion, well above the previous all-time high set in 2000, it said.
"FDI inflow in the region increased to yet another record level in 2007, reaching US$ 249 billion - an 18 per cent increase over 2006," said the WIR 2008, which was released Wednesday by the United Nations Conference on Trade and Development (UNCTAD) across the globe.
This year's theme of the annual investment review is "Transnational Corporations and the infrastructure Challenge".
Dr. M Ismail Hossain, Professor of Economics of Jahangirnagar University (JU) presented the WIR 2008 before the media on the day at the Board of Investment (BoI) office in the city with the BoI Executive Chairman Kamaluddin Ahmed in the chair.
Identifying poor infrastructure and weak institutional capacity as major barriers toward the growth of FDI in Bangladesh, Dr. Ismail also stressed the need for bringing about necessary changes in the country's policy, aiming to attract more FDI in the country.
"Government agencies need to enhance their capacity to regulate and monitor the FDI for ensuring its maximum utilisation," he said.
Admitting that the short supply of natural gas is as one of the main problems in attracting FDI in Bangladesh, the BoI Executive Chairman said, "Now our focus is to encourage more foreign investments in services sector instead of gas-based ones."
Responding to a query, Mr. Kamaluddin said despite a fall in the country's FDI inflow, the amounts of both FDI and local investments registered with the BoI increased substantially in recent times.
Some 1055 projects involving Tk 501.935 billion ($ 7.662 billion) were registered with the BoI by local entrepreneurs during the eight months of the 2008 while the number was 286 in 2007, he mentioned.
"It is not necessary that the country's entire infrastructure is to be developed with FDI, we have also to do it on our own," he said.
According to the Report, the global FDI outflow increased by 51 per cent to $ 1997 billion in 2007, out of which 54 per cent or $ 1692 billion was originated in developed countries. The European Union (EU) outflows increased by 65 per cent to $ 1217 billion while that of developing countries rose by 22 per cent to $253 billion in 2007, it added.
The WIR 2008 said despite the financial and credit crisis, which began in the second half of 2007, all the three major economic groupings - developed countries, developing countries and the transition economies of South-East Europe and the Commonwealth of Independent States (CIS) - saw continued growth in their FDI inflows.
"The increase in FDI largely reflected relatively high economic growth and strong corporate performance in many parts of the world," the Report said, adding that reinvested earnings accounted for about 30 per cent of total FDI inflows as a result of increased profits of foreign affiliates, notably in developing countries.
The FDI inflows into developed countries reached $ 1,248 billion, the WIR said, mentioning that the USA maintained its position as the largest recipient country, followed by the UK, France, Canada and the Netherlands.
The European Union (EU) was the largest host region, attracting almost two thirds of the total FDI inflows into developed countries, it added.
In developing countries, according to the WIR, FDI inflows reached their highest level ever ($500 billion) - a 21 per cent increase over 2006.
On the other hand, the least developed countries (LDCs) attached a record 13 billion worth of FDI in 2007, it said.
At the same time, developing countries continued to gain importance as source of FDI, with outflows rising to a new record level of $ 253 billion, mainly as a result of outward expansion by Asian transnational corporations (TNCs), it revealed.
FDI inflows into South-East Europe and the CIS also surged, increasing by 50 per cent to reach $ 86 billion in 2007, it said, adding that the region saw seven years of uninterrupted growth.
Outflows from this region similarly soared to $ 51 billion in 2007, which was more that twice the 2006 level, it mentioned.
Among developing and transition economies, China, Hong Kong and the Russian Federation were the three largest recipients of the FDI, it added.