Oct investment proposals fall by half over restive politics

The Board of Investment (BoI) saw a drastic fall in investment proposals from both local entrepreneurs as well as joint ventures with foreign companies in October last to the prevailing political tensions.

Insiders said the investors lost their confidence because of the prevailing political uncertainty. So they chose to wait before making any new or re-investment.

In October last investment proposals made by local entrepreneurs and joint ventures with foreign companies fell by 50 per cent compared to that of the corresponding month in 2012, according to data available with the BoI.

Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President Kazi Akram Uddin Ahmed told the FE: "The existing political tension is taking its toll on the overall business sector."

The FBCCI chief said: "Businessmen don't have any shortage of capital, but they are losing interest in any new investment only because of the political upheaval including frequent shutdowns and vandalism".

"The local investors have chosen to pause before making their new investment. If the political uncertainty continues for a long time, then the foreign investors will desert Bangladesh for new investment destinations," he added.

In October last 82 local and foreign companies registered with the BoI for investments against 166 companies in the same month last year.

Ahsan H. Mansur, Executive Director of the Policy Research Institute of Bangladesh (PRI), told the FE: "It's neither gas nor electricity. The restive politics is now the main obstacle to business."

He said: "When an investor wants to go for new or re-investment in any sector, primarily his/her requirement is a stable political environment, but now they cannot get that."

Mr Mansur also said: "The government has set a target of 7.2 per cent growth in gross domestic product (GDP) for the fiscal year (FY) 2013-14, but I don't think it could be achieved."

The BoI data also shows that in the last four months from July to October 356 local and foreign investor companies registered for investment. The figure was 586 in the corresponding period of last year.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Atiqul Islam said exports might fall significantly in the next few months.

Export costs increased 13 times due to the air-shipments being made to meet the importers' deadline in the face of political turmoil, he added.

Export orders from new destinations were also affected severely by the restive politics and it dented the hopes of expanding the export markets beyond the traditional destinations, he also said.  

Orders for shipment from the new export destinations fell by 60 per cent in the last three months, he added.

"If this trend continues, the neighbouring nations will take over our business in the competitive global markets," the BGMEA chief said.  

Bangladesh Textile Mills Association (BTMA) President Jahangir Alamin told the FE that for the sake of smooth production the investors needed a peaceful political environment, but now the situation turned out to be totally unfavourable for the businessman.

He said the political uncertainty already started affecting their business as their orders dropped by 40 per cent in the last six months.

The employment generation also fell by 62 per cent during the first four months of the current fiscal, according to the BoI data.