FDI proposals and our expectations

The two-day International Investment Summit, concluded on Monday, attracted around $2.7 billion investment proposals from foreign investors from diverse nations. The overseas investment will take place in areas like engineering, ICT, cement, pharmaceuticals, and apparel business, according to a report published in this daily on Tuesday that referred to Bangladesh Investment Development Authority (BIDA) Executive Chairman Md Sirajul Islam commenting about the outcome of the summit.

Of the total, Saudi Arabia alone will invest $1.5 billion in infrastructure and engineering sectors. The Saudi delegation has also expressed their desire to invest in the Bangabandhu Sheikh Mujib Shilpa Nagar in Mirsarai, Chattogram. The investment proposals come as a welcome fillip for Bangladesh's economy at a time when it is struggling to cope up with the huge financial loss already incurred due to the ongoing pandemic.

“We have received investment commitment worth $2.7 billion from foreign investors at the investment summit. The major portion of the proposed investment will come from the Kingdom of Saudi Arabia,” Islam told reporters after the summit. “Three companies from China, two from Turkey, and one from the USA are the major investors, among others.”  On the other hand, Salman F Rahman, private industry and investment adviser to the prime minister said that they had no set target on receiving investment proposals, but sought investors to inform them about the new Bangladesh.

We appreciate the government's efforts in arranging such a crucial investment summit, as Bangladesh lags far behind its peer countries in attracting FDI to kick start its corona-induced faltering economy. The KSA government has long been showing its interest to invest around $15 billion in Bangladesh. However, due to bureaucratic inertia and policy lacuna, the huge investment proposal could not be implemented yet. Now the interest from Riyadh to invest in a special economic zone should be considered as a booster to our investment area.

Bangladesh's historically low foreign direct investment has been a matter of concern as the country’s graduation in 2026 from a least developed country to a developing nation will erode a significant amount of trade and aid benefits. Enhanced FDI will definitely offset our benefit erosion to a large extent.

In 2020, Bangladesh’s FDI dropped by 10.8 per cent to $2.6 billion, while the net inflow of the Foreign Direct Investment (FDI) declined by 1.94 per cent to $1.51 billion during the first half of 2021 at a time when the global FDI increased to $852 billion, according to the latest report of the UNCTAD.

We need to encourage overseas Greenfield investment in energy, infrastructure, and hospitality, and large manufacturing sector. Bangladesh’s incentives towards attracting foreign investment are undoubtedly attractive, but the process and procedures to offer such benefits and services are awfully distressing.  Potential investors from the Middle-Eastern countries, China and the United Kingdom have long been complaining about the investment environment and lack of good governance, holding back their investment decisions. Along with offering tax incentives, other factors like good governance, rule of law, and democratic space are of paramount importance to woo further FDI in our country.

The two-day international investment summit has given us huge investment opportunities. Tapping those overseas investment proposals, Bangladesh Investment Development Authority (BIDA) must equip itself with country-specific dedicated services.  Though the BIDA launched a One-Stop Service facility to facilitate the causes of investors, its service efficiency is still not up to the expectation and below standard.

At the investment summit, Hector Gomez Ang, regional director for South Asia at the International Finance Corporation (IFC) expressed his belief that the policymakers will address soaring non-performing loans in the banking sector, update bankruptcy act, amend foreign exchange regulations and eradicate other regulatory constraints, to attract both local and foreign investors.

Echoing the IFC, we want to reiterate that only tax incentives will not act as a booster to woo investment, regulatory constraints and governance shortcomings must be addressed as a priority task for both local and foreign investment.