Glimmer of hope amid economic crisis

Amid the economic crisis the news on the rise in Foreign Direct Investment (FDI) is a positive one. The rise in FDI is likely to make people hopeful about the future. Despite economic headwind triggered by Covic-19 pandemic and Ukraine-Russia war Bangladesh saw an increase in Foreign Direct Investment (FDI) last year.

This rise in the FDI tells us that hope is not evaporating. Still the economy can turn around. The country received the first installment of $476.2 million out of the total $4.7 billion loan in February from the International Monetary Fund (IMF). The second installment is in the pipeline. The World Bank also agreed to grant Bangladesh $2.25 billion loan for its five projects.

A loan agreement had already been signed between Bangladesh and the global lender at the World Bank headquarters on May 01. All these loans at this crucial moment are going to help Bangladesh to evade the economic collapse as was forewarned a number of economists. But, as we have already cautioned several times, the country must have to use those loan prudently so that people are not burdened with loan repayment.

When the foreign exchange reserve is hovering around $22 billion the loans sanctioned by the IMF and the WB are, of course, going to help our economy survive. And the news of the rise in the FDI has bolstered our hope. According to a report by The Business Post published yesterday, the net FDI inflow reached $3.47 billion at the end of 2022. It was a 20.18 per cent rise when compared year on year. The figure in 2021 was $2.89 billion while it stood at $2.56 billion in 2020 when the Covid-19 pandemic struck Bangladesh like all other countries around the globe.

However, according to opinions of many economists and observers Bangladesh is yet to reach the satisfactory level. They think that the inflow of the FDI in Bangladesh is lower compared to the size of its economy. They said whatever rise in the FDI inflow could be seen there was very little new investment. Most of the rise is a kind of reinvestment.

And so there is no room for the country to be complacent. Bangladesh has to go a long way. And it is still far too soon to say that it would keep increasing as the new investment inflow is still very slow. The government has a target of attaining FDI amounting to 3 per cent of the Gross Domestic Product (GDP). It is still 1 per cent of the country’s GDP. If the country has to receive more FDIs to reach its goal of attaining 3 percent of the total GDO it has to prioritize some measures to attract new investments.

Not that, foreign investors don’t come to Bangladesh. They come to Bangladesh for investment but due to a multitude of problems they simply shy away from investing in our country. One of them is bureaucratic tangle that stands in the way of smooth investment. Fund repatriation is another big obstacle to such investment. The process of fund repatriation is not smooth in Bangladesh.

These are some of the few problems the foreign investor face while investing in Bangladesh. The government must have to ease the process of fund repatriation and remove bureaucratic tangle to attract more and more new foreign direct investment. If done, it will help our economy turn around to a great extent.