FDI inflow down by 4.74% in H1 2021

At a time when the Foreign Direct Investment (FDI) inflow showed a strong recovery in the first half of 2021, Bangladesh’s foreign investment declined by 4.74 per cent to $1.13 billion.

According to the Bangladesh Bank (BB) data, during January-June period of 2021, the country received $1.13 billion foreign investment, which was $1.18 billion in the same period a year ago.

On the other hand, as per the UNCTAD Investment Trends Monitor released on Tuesday, global foreign direct investment flows in the first half of 2021 reached an estimated $852 billion, showing stronger than expected rebound momentum.

In the first two quarters, investment recovered more than 70 per cent of the loss induced by the pandemic in 2020.

Asian countries received $362 billion showing a 26 per cent growth. But the South Asian nations received $29 billion, which indicated 19 per cent negative growth.

The ongoing Covid-19 pandemic which hit hard the global economy is blamed for the downtrend in investment flows.

“We did not record positive growth in foreign investment as the pandemic hit economic activities as well as investment,” Md Sirazul Islam, executive chairman of Bangladesh Investment Authority (BIDA), told The Business Post.

“But we are hopeful about the strong turnaround by the end of this year as the Covid-19 situation is improving and global economies are also reopening.”

On top of that, efforts are under way to improve business climate through completion of a series of ongoing steps taken for reforms to the Ease of Doing Business, noted the official.

“The pandemic left an impact on the FDI inflow to Bangladesh which is slower than that of our neighbouring countries,” said Zahid Hussain, former lead economist of the World Bank.

The government has taken steps to remove the barriers to attracting investment but the progress is slow especially in business registration, electricity and gas connection and One Stop Services.

Reforms to improvement in investment climate did not take place, the economist observed, suggesting that the government has established some Special Economic Zones, which would resolve land crisis but to reap most benefits, a quick completion of the tasks is necessary.

He called for steps to boost investors’ confidence by bringing most of the countrymen under Covid vaccination.

According to the data provided by the Bangladesh Bank, the net FDI inflow stood at $2.56 billion, down by 10.80 per cent in 2020, compared to $2.87 billion in 2019.