Foreign Direct Investment (FDI) goes up but not as expected

BTJ News Desk
Bangladesh Textile Journal

Foreign Direct Investment (FDI) to Bangladesh rose 13% year on year to USD 2.89 billion last year, in a positive development for an economy long looking to increase the flow of external funds to accelerate its growth, official report showed. FDI inflow has been far lower than the expected level given by the business volume and potentials of the economy.

There are a number of factors which are considered to play against making a good atmosphere that attracts more investment. Strict regulations, bureaucratic complexities, inadequate infrastructures and lack of one-stop services are really a major challenges in order to lift the volume of FDI’s in Bangladesh.

Fresh investment and equity capital was at a higher level last year compared with 2020 which has been described by economists as a good development for the country’s investment sector. FDI in the field of equity capital rose 35% to 1.13 USD billion, according to data from BB. The inflow of equity capital means that foreign companies brought in fresh funds to the country. There are a lot of positive indicators of the economy but it has not tapped the potentiality of FDI. Some peers of Bangladesh have managed to secure a higher volume of FDI, for instance, Vietnam received around 20 billion USD last year and 4.42 USD billion in the first quarter of this year. The country should follow the measures that Vietnam had taken, said Mr. Rahman.

Government had targeted to attract USD 32 billion in FDI during the seventh Five-year plan period stretching from the fiscal year of 2015-16 to 2019-20 but the country managed less than USD 10 billion. Zahid hussain, a former lead economist of the world banks Dhaka office said that Bangladesh Bank should liberalize its foreign exchange regime further so that business could repatriate funds smoothly. The central bank should provide policy support to them in a way that helps them settle foreign transactions in Bangladesh without any hassles.


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