Image courtesy: Trading Economics

Despite a decline worldwide in foreign direct investments, Bangladesh tended to attract more FDIs than before.

The World Investment Report 2019 released in May indicates that the FDI inflow into Bangladesh rose by 68 per cent to a record high of $ 3.6 billion.

However, the flows around the world continued to decline for the third consecutive year in 2018, falling by 13 per cent to $1.3 trillion from a revised figure of $1.5 trillion in 2017.

This rise in Bangladesh is in part due to investments in the power sector and in labour-intensive industries such as ready-made garments, experts say.

Bangladesh has recently seen a noticeable flow of FDI from companies moving out of China as a consequence of the Sino-US trade war.

Bangladesh Investment Development Authority BIDA) executive chairman Kazi M Aminul Islam, who has pushed for reforms to boost Bangladesh’s rankings in the World Bank’s ease of doing business index, said the rise in FDI is ‘something to add in the long list of our achievements’.

“We have made phenomenal progress in the last 10 years. We have to celebrate, we have to act on and we have to build on that. This is the time. Bangladesh has done one more miracles,” he told a seminar organised by the BIDA.

Salman F Rahman, the prime minister’s adviser on private sector, highlighted the government’s efforts to attract investors and said BIDA would be the main ‘one-stop service (OSS)’ for investors.

“The prime minister has instructed us that our main OSS will be the BIDA. Any investor clicking the BIDA website will be able to connect with other relevant authorities. There will be seamless connections with BEZA, or others,” he said, adding that they are expecting to start this OSS by the end of this year.

The UNCTAD has been publishing the World Investment Report since 1991. The purpose is to examine the recent trends in FDI around the world and the policies relevant to it.

PRI executive director, Mansur, said, “The government is giving highest level of attention to investment promotion including FDI, and we have observed some improvements in the flow of FDIs through acquisition of assets in Bangladesh by multinational companies.”

“New investment flows in the region are primarily from the regional economic powerhouses – China and Japan. Bangladesh should pay more attention to attract the regional investors to Bangladesh,” he said.

China was the top investor last year surpassing the United States, which is traditionally the top investor for Bangladesh.

“The trade war between the US and China may have created some new opportunities for attracting investments from China – both Chinese domestic and foreign,” Mansur said.

“Bangladesh should be ready to get some benefits out of this. All benefits should not go to Vietnam. We must also diversify our production and the ecosystem to attract a broad range of investors, not only garment investors.”

Indian experts say that the rising flow of FDI into Bangladesh can have positive spillover effects in eastern and northeastern India because many foreign investors who invest in Bangladesh want similar investments in neighbouring Indian states to access critical resources or specific advantages.

“If someone is setting an automobile assembly plant in Bangladesh, the company would be keen to set up a tyre manufacturing plant in Tripura to access its substantial rubber output,” said Tripura University economics professor Indranil Bhaumik.

But he said the Indian government – and those in states neighbouring Bangladesh – have to be alert to leverage possibilities.


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