Foreign Direct Investment (FDI) has a great role to play in national development and more so for a resource-constraint country like Bangladesh. Reed J Aeschliman, mission director of the United States International Development Agency USAID, has recently come up with the view that Bangladesh has potential in business and there are opportunities for FDIs in sectors like education, health, agriculture and energy. However, he added that corruption is the biggest obstacle to exploiting the potential. Given our context, he did not exaggerate the issue at all. In fact, there is a predominance of corruption in getting many a service. Conscious minds cannot differ much from Aeschliman’s observations.

Actually, there is no denying this statement either. And, the private sector has to play a major role in exploiting this potential. In our case, domestic and foreign investment is meagre as compared to the potential. In order to get the necessary services in the management of business and commerce in Bangladesh, however, one has to face corruption at various stages.

That is why the investment potential of this country is not being utilised to the fullest. The country has many opportunities to increase FDI in several sectors and Bangladesh has now positioned itself as a developing country in the world. As a result, the Bangladesh government is trying to provide all possible facilities for foreign investment.

Reviewing, Removing Barriers Requisite for Attracting FDIs Arrangements are being made for infrastructure development and provision of special utility services. Enactment of investment-friendly laws or policies is taking place. Competitive incentives are being offered to investors. Demand is increasing exponentially and electricity infrastructure is being expanded at a stable rate. However, it has so far remained challenging as well. A one-stop service has also been introduced to provide various services. However, its effectiveness is still not up to the mark.

The last years saw an instability in the global economy. Energy commodity prices were bullish as demand picked up in the post-Covid recovery process. On top of that, the start of the Russia-Ukraine war created a big stir in the entire global economy. The impact of this tension hit the economy of Bangladesh. This has also affected foreign investment as a fallout.

As per the US State Department’s recent investment climate report, several factors such as corruption, bureaucratic red tape, inadequate infrastructure and limited financing opportunities are creating major barriers to foreign investment in Bangladesh. The Bangladesh government also acknowledges that there are some problems in the field of investment but efforts are being made to solve them.

Many foreign investors register after crossing various obstacles. However, few of them invest ultimately. Reportedly, not even a third of what is registered in Bangladesh results in effective foreign investment in the final analysis. Many quit after being vexed by hassles. The government should look for the real reasons behind this so as to get vital clues.

In terms of economic policies, the government is rapidly undertaking specific reform plans and formulating an open investment policy for all, where the role of the government would be that of a catalyst, not a regulator. This is really wholesome for an investment-friendly atmosphere.

Significant achievements have been made in increasing duty-free trade facilities, rational tariffs and export facilities. Various aspects of tariff structure and import policy are being given due importance. Economists are of the opinion that there are many opportunities for foreign investors to invest in this country, such as infrastructure, information technology products, electronics product manufacturing, textiles and leather, automobile and light engineering, agricultural and food processing and oil, gas and marine economy.

However, as implied earlier, corruption stands as the biggest obstacle to foreign investment in Bangladesh. There is the lack of speedy enforcement of laws to protect foreign investors, bureaucratic complexity and excessive delays in decision-making, poor infrastructure and gas-electricity crisis, land scarcity and difficulty in purchasing, the inability of financial institutions to provide large loans and lack of linkages and coordination between local and foreign investors.

Among the above barriers, some are purely manmade which can be removed with only desire as well as determination. To be candid, they apply more to the officials than to the political elements. Hopefully, there will be a change of mindset in this regard. Previously, there was political uncertainty. However, this has gone down drastically following Elections 2024.

In fact, to increase foreign investment in Bangladesh, domestic investment must also be increased. Foreigners will come forward after they see the proactive presence of domestic investors. In order to instill confidence in their minds, Bangladeshis should demonstrate examples of investment in their homeland and for that to happen all the obstacles have to be removed by the government. It is expected that, as a dominant player in the current politico-administrative set-up, bureaucracy will come forward to pave the way for it. Or else, the scenario is unlikely to improve much.
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The writer is a Professor, Department of Public Administration, University of Chittagong. Email: [email protected]