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FDI rises 24 per cent in Bangladesh despite political instability

Publication Date : 25-06-2014

 

Inflows of foreign direct investment (FDI) into Bangladesh rose 24 per cent year-on-year to $1.6 billion in 2013 although the country witnessed serious political unrest and an anti-business climate during the period.

FDI inflows increased 13.75 per cent to $1.29 billion in 2012, compared to the previous year, according to United Nations Conference on Trade and Development (UNCTAD).

The telecommunications and banking sectors brought a combined $651 million in FDI last year, while textiles and weaving received $422 million.

The World Investment Report of the UNCTAD, released yesterday, shows Bangladesh is placed as a distant second favoured investment destination in South Asia after India, which got $28 billion or 78 per cent of the total FDI inflows into the region in 2013.

Pakistan stood third in South Asia with $1.3 billion.

The Board of Investment (BoI) of Bangladesh released the UNCTAD report at a press conference at its office in Dhaka. BoI executive chairman SA Samad chaired the event addressed by prime minister's Adviser Towfiq-e-Elahi Chowdhury.

Prof Ismail Hossain who teaches economics at Jahangirnagar University presented a paper on the report highlighting the Bangladesh chapter.

The UN body has been publishing the World Investment Report annually since 1991. The report covers the latest trends in FDI across the world.

Global FDI grew 9 per cent to $1.45 trillion in 2013 and could rise to $1.6 trillion this year, the report said. FDI inflows into developing economies reached a new high at $778 billion or 54 per cent of the total FDI last year. Transition economies got $108 billion.

Of the $1.6 billion FDI that Bangladesh received last year, $541 million came as equity (direct investment in Bangladesh), $361 million as intra-company loans (debt transactions between parent enterprises and affiliates) and $697 million were reinvested earnings (investors' share of profits not distributed as profits).

Of the FDI inflows into different sectors last year, telecommunications got $324 million, mainly for the payments of 3G licence fees and network expansion of the mobile phone operators.

The banking sector, especially the foreign banks, got $327 million to meet their statutory capital requirements under Basel II obligations.

Textile and weaving got $422 million, power, gas and petroleum $99 million, food products $40 million, agriculture and fishing $31 million and others $356 million.

“We are getting a lot of queries from foreign investors. Many delegates are also visiting Bangladesh to explore investment opportunities here,” said Samad of the BoI.

Samad said he sees no reasons for a decline in FDI this year although the banking and telecommunication sectors may not get any amount.

The BoI boss said the government is looking to some other options and forming an economic zones authority and a public-private partnership cell to attract FDI.

Besides the infrastructure constraints, Samad blamed high bank interest rates and an inefficient tax regime for the stagnation in domestic investment, which acts as a catalyst to boost FDI.

“The rise in FDI in 2013 proves that foreigners have faith in Bangladesh,” said Towfiq-e-Elahi Chowdhury.

He said Bangladesh has recently allowed Taiwan to open a commercial office in Dhaka to help them explore business and investment opportunities here.

On energy crisis, Chowdhury said the government is working to explore alternative sources of natural gas. As part of the move, he said, the government will take a decision in a day or two on the import of liquefied natural gas.

 

 

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