Foreign Direct Investment (FDI) in Bangladesh: Present Status

 Foreign direct investment (FDI) has created immense leaps since the Nineties in terms of its growth at intervals the international economic landscape. owing to dearth of resources in developing and least developed countries, FDI has become a vital a part of their development ways in which and in many cases it tested to be a win-win state of affairs to every host and residential countries. Host countries would like to comprehend from FDI in multiple ways in which like through Bangladesh has capital, technical know how. Home countries collectively profit through finance as they'll penetrate into markets, bring home the bacon access to raw materials for industries and diversify all business functions. they'll collectively overcome trade barriers and cut back transport costs.

Bangladesh is taken into account to be one among the potential economies despite being enclosed by multi-faceted adversities like frequent natural calamities, high density and growth rate of population, unstable politics and a coffee production capability. The resilience and inherent strength of the economy, primarily because of its sturdy sectors like agriculture, readymade clothes and remittances, are the idea of such optimism. However, so as to create its graduation to following level of growth and totally exploit the expansion potential, the country’s investment state of affairs needs to be improved. The shortage of adequate investment is one among the necessary reasons for the expansion below the economic importance. The rate of investment of the country itself has been stagnant at around 24 % to 25 % of the country’s gross domestic product (GDP) for the last 10 years that is way below the amount needed for a rustic attending to be become a middle-income country by 2021 with a rate of 10 %. The sixth five-year set up (2011-15) of Bangladesh targets a value growth of 8 % by the tip of the set up amount. This needs that the full investment needs to grow by 8.1 % per annum and also the share of investment in value needs to be 32.5 % by commercial enterprise 2015. Low domestic investment has been a matter of concern because it holds back foreign investment additionally.

Even though Bangladesh has been Associate in Nursing attempt to herald FDI since its independence and place in situ FDI friendly policies within the early Nineteen Eighties (Foreign Investment Promotion and Protection Act 1980 was such an attempt) a lot of before a number of its neighbors, it's been unable to accelerate FDI at the expected level. Within the Nineties, there was associate degree attraction for the East Asian and European investors to take a position within the readymade clothes business of Bangladesh, due to the Generalized System of Preferences (GSP) and also the handiness of labor at a competitive worth. Currently, the concentration of FDI is principally on transport, storage and communication, producing and power, gas and crude. Different sectors like agriculture, trade and commerce and, services receive nominal FDI. In 2010, producing sector was the very best recipient at 27.82 % of total FDI, whereas the development sector received the bottom with a share of 0.01%. The expansion of FDI in Bangladesh has, however, been terribly inconsistent. A significant flow of FDI was ascertained within the middle 2000s and rose to $913.32 million in 2010.

While discussing the impediments to transportation FDI into the country, a number of problems are raised starting from infrastructural constraints to officialdom complexities to image building. However, the crux of the matter will, in fact, belong 3 broad areas. 1st is that the restricted access to physical infrastructure, significantly provider of gas and electric supply. This has become as a major problems on investment promotion in Bangladesh. As an example, the provision of gas between December 2008 and December 2011 has increased solely marginally from 1,606 million boxlike feet to 1,960 million boxlike feet, indicating a mean growth of 7.4 percent. On the opposite hand, the demand for gas rose by 12.3 % throughout this era, resulting in a large gap between demands and provide. At present, the demand for power in Bangladesh is around 500 power unit, whereas the provision is 4,699 power units within the recent times, the FDI rise has been ascertained primarily within the export process zones (EPZ) as there's very little or no gas and electricity provide constraint just like the domestic tariff space. So as to beat infrastructural bottlenecks, aid for productive capability must be increased considerably. However, effective use of those funds needs to be certain. Public-private partnership development policy may also be a strong tool to tackle the provision aspect constraints.

The second bottleneck is that the culture of resistance politics, that poses a heavy threat for the security of property and resources of prospective investors. jaundice and bitterness among political parties usually result in destruction and have an effect on lives and properties of individuals that successively deter not solely foreign investment however conjointly native non-public investment. Several investors are even willing to pay on infrastructure to facilitate their investment in different sectors, given that there are political stability and sure thing of come on their investment.

The third constraint is that the lack of fine governance and prevalence of corruption, that have place a scar on the name of the country at the worldwide level. Owing to blessings like competitive costs for labor and different services, investors could realize Bangladesh a moneymaking investment destination. However, predicaments like delay and an absence of transparency in deciding} process, a scarcity of effective implementation of rules and strategies, and different and discriminatory incentive plans act as hindrances in transportation in FDI to the country.

FDI isn't a cure-all for slow growth, and its many negative implications too. These embody capital flight and return of profit, dependency on technologies and restricted transfer of technology and transfer evaluation. With effective regulative and oversight mechanism such problems will be addressed. FDI will supplement the native effort to supply product and services and make jobs. If native businesses flourish, foreign investors can suppose to bring their resources. Promotion of native businesses through access to adequate finance associate degreed creation of a facultative atmosphere ought to even be a key target. Economic diplomacy is important at in this day and age and age to draw in foreign resources. This needs to be amid smart promoting ability that in different words is termed ‘branding’. Such image building task needs to be done primarily by the govt. however complemented by the non-public sector and every one voters of the country.