Saturday, 27 November, 2021

Bangladesh needs better investment climate for FDI

Economists say

Bangladesh will have to improve ‘investment climate’ to secure the foreign direct investment (FDI) required to become an upper middle-income economy by 2021, economists said.

According to a government estimate, the country requires attracting an average annual FDI of $6.7 billion to graduate from the lower-middle income status by that timeframe.

The latest Bangladesh Bank (BB) data released last week show FDI inflow declined 13.5 percent to $2.02 billion in 2017, which was $2.33 billion a year ago.

Agrani Bank Chairman Zaid Bakht said the FDI figure fluctuates but stagnation in domestic private investment causes the decrease in inbound investment in the country.

 “FDI depends on investment climate of the country. Foreign firms usually observe the scenario of local investment before going ahead with any investment plan. Now, the authorities will have to concentrate on improvement of local credit flow,” he told the daily sun on Saturday.

Experts think that Bangladesh dropping to 177th position in the Ease of Doing Business Index, a global ranking of economic stability, in 2017 from 176 in 2016 might give a negative signal to foreign investors.

The net FDI slightly increased to $1,030 million in the second half of 2017 from $987.09 million in the first half of the same year, the BB data show.

Policy Research Institute(PRI)’s Executive Director Ahsan H Mansur thinks the data does not represent the overall scenario of the economy as it is a regular and routine work of any data providing agency.

“However, the decline in net FDI inflow is not a good news for the country. The overall situation of foreign investment remains much lower than we expect,” Mansur said.

It may be mentioned that the United States of America (USA) is the highest net contributor of inbound investment to Bangladesh.