More FDI can ensure country’s economic recovery from pandemic: MCCI

The Metropolitan Chamber of Commerce and Industry has recommended that the government should address present shortcomings in the country’s business arena to attract more foreign direct investment (FDI) to ensure economic recovery from the ongoing Covid-19 pandemic.

In a publication – Bangladesh’s Economy in FY21 – released on Monday, MCCI noted that the rate of growth of both savings and investment has also been very slow in FY2020-21.

“As proportion of GDP, gross investment recorded at 29.92 per cent in FY21 from 30.47 per cent in FY20. The share of private investment in GDP recorded at 21.25 per cent in FY21 from 22.06 per cent in FY20, whereas the share of public investment rose to 8.67 per cent of GDP in FY21 from 8.41 per cent in FY20,” the publication said.

It also said that the low level of private investment, local and foreign, has been largely due to the underdeveloped infrastructure and such other impediments as lack of adequate energy and weak transmission infrastructure, lack of consistency in policy and regulatory frameworks, scarcity of industrial land, corruption, and non-transparent and uneven application of rules and regulations in the country.

“The government needs to address these impediments to attract more foreign direct investment (FDI) to the country in order to ensure the country’s economic recovery from the ongoing Covid-19 pandemic,” it added.

The trade body also noted that although net foreign direct investment (FDI) in FY21 increased by 39.37 per cent to $1.77 billion from $1.27 billion in the previous fiscal year (FY20) and the gross inflow of FDI during the period under review also increased by 8.36 per cent to $3.50 billion from $3.23 billion in FY20, Bangladesh’s FDI inflow was lower compared to that in many countries at similar level of development.

“Bangladesh’s low labour costs are generally believed to be attractive to foreign investors, yet they hesitate to make fresh investments in the country because of the country’s underdeveloped infrastructure, and such other impediments as lack of adequate energy and weak transmission infrastructure, lack of consistency in policy and regulatory frameworks, scarcity of industrial land, corruption, and non-transparent and uneven application of rules and regulations,” the publication said.