FDI falls by 30 per cent in two months

Shah Alam Nur | Published: April 03, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

Foreign direct investment (FDI) in the country has fallen drastically in the first two months of the current calendar year as the investors are still in 'wait-and- see' mood fearing further political turmoil, officials and industry insiders said.
They also said the prospective foreign investors have adopted a 'go-slow' strategy in making fresh investments since the year 2013. Such an attitude is still continuing as major political parties are yet to begin dialogue to resolve contentious issues.
According to the Board of Investment (BoI) data, in the January-February period of the year 2014, proposals on both new and reinvestment from foreign investors witnessed a decline by more than 30 per cent compared to that of the last corresponding period.
"A large number of foreign or joint venture companies are supposed to invest in the country for fresh or re-investment but due to lack of political stability, they are lukewarm in taking decisions over investment", Rupali Chowdhury, president of the Foreign Investors' Chamber of Commerce and Industry (FICCI) told the FE.
She said 2013 was not friendly for business. So all the investors including foreigners are now closely observing the political situation.
"If it improves, then they will regain confidence."
"To bring the investors back, the government will have to take some initiatives including removal of infrastructure bottlenecks, ready availability of lands, upgradation of skills of the labour force, and removal of administrative impediments," she said.
Syed Ershad, Managing Director of Expeditors (Bangladesh) Ltd, a leading logistic company, told the FE, with new investment plans, the foreign investors are still passing their time in wait-and-see mood.
He said a large number of foreign investors, however, are showing interest in telecom, automobile, paints, pharmaceutical and other sectors for new or re-investment, thanks to lowest production cost here than in any other countries as well as higher rate of return.
AK Azad, former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) told the FE now the country is having a stable political environment now but investors, local and foreign, are taking time for their fresh investment.
He said many of foreign companies are thinking of setting up factories in Bangladesh for manufacturing various products for exporting those items to other countries.
The BoI data also showed, in last January-February period of the current calendar year, only 30 foreign enterprises proposed US$122 million new or re-investment against 43 proposals worth $175 million in the same period of the last corresponding period.
An official of BoI told the FE, for meeting increased demand abroad and in domestic market, many of overseas investors are now keen to increase their production capacity by setting up new manufacturing units. But they are taking time for final decision.
He said, according to a Jetro (Japan External Trade Organisation) survey, more then 80 per cent of Japanese companies are planning to expand their business activities in Bangladesh in next two years.
Nabhash Chandra Mandal, director of the BoI said,Â "The government has taken a number of initiatives including road shows to boost confidence of local and foreign investors".
He said the BoI has planned to arrange several investment meetings with local and foreign entrepreneurs targeting to restore confidence of the investors that Bangladesh is one of the most potential places for trade.
The BoI is going to take up a series of initiatives including two international road shows in the current calendar year to attract new investment, he added.