Home ›› 23 Oct 2022 ›› Front
Amid a sluggish investment scenario and economic crisis, 31 Chinese companies have gotten registered with Bangladesh Investment Development Authority (BIDA) between January and August of 2022 with the plan to invest more than Tk 5,957 crore in Bangladesh.
Chinese investment in the country has started increasing at a massive pace even when rising inflation rates followed by interest rate hikes are continuing to pummel the global economy.
The investors aim to grab the growing local market and want to export to the global markets taking the duty-free market access opportunities.
According to BIDA, a total of 82 companies from 27 countries have registered with it during the aforementioned period to invest Tk 6,926.17 crore in Bangladesh.
Other than China, six companies each from India, South Korea and Japan have registered to invest. Also, four companies each from the US and the UK, two each from Malaysia, Germany and Kuwait have registered. The remaining 18 countries each have one company registered.
The total investment proposals include 9,282 employment offers, out of which the Chinese investment proposals make up for 4,420 jobs.
BIDA sources said the bulk of the Chinese investment will come from the China Machinery Engineering Corporation (CMEC), which will pour in Tk 4,295.24 crore in the production of electricity from waste.
This is the highest investment registered by a foreign company in the current year.
CMEC will invest in Bangladesh through a newly registered company named WTE Power Plant North Dhaka Private Limited.
Besides, the remaining 30 Chinese companies have proposed to initially invest Tk 1,652 crore in batteries, aluminium alloy, food, noodles, construction, hair, chemical, etc.
Breaking records
The surge in proposals to invest in Bangladesh’s public and private sectors in recent times from China comes at a time when the global economy is facing a looming recession owing to the impacts of the Russia-Ukraine war, the Covid-19 pandemic and seemingly unstoppable inflation rates.
Investment from Chinese companies in various government sectors, especially in infrastructure, telecommunication, power, fuel, Padma Bridge Rail Link project, has broken all records.
BIDA and Bangladesh China Chamber of Commerce and Industry (BCCCI) have recently signed a memorandum of understanding to further increase investment in the future. Moreover, China has given up to 98 per cent duty-free facilities to Bangladesh.
According to Bangladesh Bank’s data, bilateral trade between the two countries stood at $19.19 billion in FY2021-22, with Bangladesh importing goods worth $18.51 billion from China.
At the same time, Bangladesh exported goods worth $683.43 million to the East Asian country, shows Export Promotion Bureau data, which shows a trade deficit of $17.83 billion between the countries in FY22. Between January and June of 2022, Bangladesh also imported goods worth $9.96 billion from China.
Talking to The Business Post, BCCCI Acting Secretary General Al Mamun Mridha said rising Chinese investment is highly positive for Bangladesh. “China was the top foreign investor in Bangladesh in 2019. But the investment flow lagged a bit as communications were disrupted during the pandemic. Now investment registration is picking up the pace again.”
Besides, he said, the development work for the Chinese Economic and Industrial Zone in Chattogram’s Anwara is ongoing. More Chinese investment in various export processing areas is expected to come once the project is completed.
Mridha says they expect the Chinese investment, registered so far, to see fast implementation from 2023. BIDA, the Chinese Embassy in Bangladesh and BCCCI are already in talks with Chinese investors, who will bring more investment in various sectors of the country, he added.
Disruption leads to boost
Bangladesh received $2.90 billion in foreign investment in 2021, out of which Chinese investment amounted to only $407.88 million. Meanwhile, in the first quarter (January-March) of this year, Bangladesh received nearly $888.50 million in foreign investment, of which $96.74 million came from China.
Research and Policy Integration for Development (RAPID) Chairman Dr Mohammad Abdur Razzaque said, “The registration of Chinese investment in Bangladesh has increased reasonably as economic growth in China is stagnating. This is driving their entrepreneurs to increase investing abroad.
“Hence, they are looking to pour money into economically growing countries such as Vietnam, India and Bangladesh.”
Investment from China slowed down from 2019 due to strict Covid restrictions but that disruption has led to the recent boost in investment flow, he said.
According to Razzaque, the latest Chinese investment has come centring both the export-oriented and local markets. “Investment in various sectors of the country with the aim to export will be more positive.”
He said. “China’s future export possibilities and opportunities are decreasing. That is why they are choosing Bangladesh as a [market with] potential. Bangladesh should give the highest priority to the implementation of export-oriented investment among the registered ones.
“Moreover, there is a need to prioritise the implementation of large investments in the power sector.”
However, registration of foreign investment does not necessarily ensure their implementation as soon as possible.
Razzaque said, “Even though foreign investment is registered, it is often not implemented due to various obstacles. Many investors complain that the business process [in Bangladesh] is too complex. It is important to simplify them.
“Moreover, the bottlenecks to investment implementation need to be removed as soon as possible. That will increase foreign investment a lot.”
