FDI still sluggish | 2018-09-10 | daily-sun.com

FDI still sluggish

Sohel Hossain Patwary     10 September, 2018 12:00 AM printer

Despite all-out efforts taken by the government to spur investment, inflow of foreign direct investment (FDI) has not yet picked up in the country.

According to Bangladesh Bank data, Bangladesh’s FDI inflow plunged to   $2.79 billion in 2017-18 fiscal year from $3.38 billion in the previous FY.

According to the Balance of Payments (BOP) data, the net FDI inflow also declined in the immediate past FY. In FY 2017-18, Bangladesh fetched $1.58 billion in net FDI, down from $1.65 billion in 2016-17 FY.

The country’s FDI inflow crossed $1.0 billion mark for the first time in 2011 and it still remains a little above $2.0 billion.

The FDI inflow was $2.01 billion and $1.83 billion in FY 2015-16 and FY 2014-15 respectively. 

Though FDI inflow is hovering around $2-billion mark, it is still far behind the target set by the government.

In its 7th fifth-year plan, the government has targeted to fetech $5.87 billion in FDI in 2017-18 FY but received only $2.79 billion.

The fifth-year plan has set $7 billion FDI  target for the current FY.

The World Investment Report 2018 released by the United Nations Conference on Trade and Development (UNCTAD) cited that Bangladesh lagged behind countries like Myanmar, Cambodia and Ethiopia in attracting FDI in 2017.

UNCTAD data suggest that Myanmar fetched $4.30billion, Ethiopia $3.60 billion and Cambodia $2.80 billion as FDI in 2017.    

Analysts and economist said Bangladesh is performing reasonably well in different economic indicators but the country still lags behind in some critical areas, especially FDI inflows.

The incumbent government is relentlessly working on creating a more favourable investment climate in the country to attract both local and foreign direct investment. It is establishing 100 economic zones across the country as part of its special attention on investment.

But, impediments like the shortage of power and energy, lack of consistency in policy and regulatory framework, scarcity of industrial land, corruption and political uncertainty are the main reasons behind the slow FDI growth, they noted.

“Several constraints including infrastructure gap, scarcity of land, lack of functional one-stop service are the major factors affecting the FDI. Unless we ensure proper utilisation of our potentials and resource, we would not get the projected FDI”, Dr Ahsan H. Mansur, Executive Director of Policy Research Institute of Bangladesh (PRI), told the daily sun.

Referring to the positive growth in other economic indicators, Dr Ahsan said the special economic zones can help boost FDI if the government can utilise this opportunity properly.

Dr Selim Raihan, executive director of South Asian Network on Economic Modeling (SANEM), blamed bureaucratic tangle for the sluggish FDI inflow.

He also said the progress in the development of the economic zones is very slow and the one-stop service yet to become functional.

The UNCTAD report also noted that investment in energy and telecommunication remains stagnant and progress in major public-private infrastructure development has been slow.