FDI Goes Up but Not as Expected

As foreign investment continues to rise, Bangladesh’s economy continues to grow and foreign investors are taking notice. In 2016, foreign investment in Bangladesh rose 13% from the previous year to $2.89 billion. The positive trend is attracting additional funds as they look to take advantage of a wide range of opportunities including wholesaling, retailing, and consumer goods manufacturing in one of Asia's most rapidly growing economies.

It's not easy to do business in our country. Especially if your idea involves importing or exporting products. This is primarily because of stringent regulations, bureaucratic complexities, and inadequate infrastructures that render the whole process unreasonably difficult for small-time investors to feel confident enough to put their money into such ventures.

Due to increased foreign capital, there has been an increase in the number of economic activities in Bangladesh. Foreign divestment rose 35 percent year on year to 1.13 billion dollars, demonstrating a return to the role after a gap of some time. According to a report by the United Nations Conference on Trade and Development (UNCTAD), foreign direct investment (FDI) in Bangladesh declined by 14% during the first half of 2016. UNCTAD says part of this decline is due to reinvestment falling.

Intra-company loans increased to $194 million, up 25 percent year on year. Rahman said that the government should ensure one-stop services for foreign investors so that they felt comfortable in making the country their investment hub.

"There are a lot of positive indicators of the economy, but it has not tapped the potentiality of FDI."

Some of our neighbors have been more successful in attracting foreign direct investment than we have been. Consider Vietnam, for example. Last year, it received $19.74 billion and $4.42 billion during the first quarter of this year alone, according to a news story written last month by a member of The Economist staff. "The country should follow the measures that Vietnam has taken," said Rahman.

Rahman wants the development of economic zones in Dhaka to be completed at the quickest possible time because these projects will attract foreign investors. He emphasized that procedures should be simplified and streamlined as many potential investors are shying away from Bangladesh due to unnecessary bureaucratic complications and red tape.

Additionally, in line with the World Bank Doing Business Report's current methodology for calculating the Ease of Doing Business Index, Pakistan is ranked 135 among 189 economies. Though Pakistan made significant gains ahead by 10 places over last year's ranking and comes close to other South Asian economies such as Sri Lanka and Bangladesh.

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