Al Amin :
The gross inflows of Foreign Direct Investment (FDI) declined by 27.53 per cent in the first half (July-December) of the current fiscal year (2023-24) due to the lack of pro-investment environment and non-cooperative mentality of the regulatory authorities.
Despite steady economic growth in the country over the past decade, the FDI is also comparatively low in Bangladesh, economists said.
They blamed the time-consuming bureaucracy, poor socio-economic and physical infrastructure, unreliable energy supply, corruption, absence of good governance, low labour productivity, undeveloped money and capital markets, high-cost of doing business, complicated tax system, frequent changes in policies on import duties for raw materials, machinery and equipment and delays in decision-making for the slow pace in FDI inflow.
According to the latest data of the Bangladesh Bank, the gross inflows of FDI decreased to $1,827 million during the six-month period of the current fiscal year from $2,521 million in the corresponding period of the last fiscal year.
Although, the investment (both foreign and domestic) is a key determinant of economic growth and development and considered an engine for job creation, Bangladesh is yet to create a congenial atmosphere for it, the economists opined.
Dr Zahid Hussain, former lead economist of the World Bank Dhaka office, told The New Nation, “Despite the significant economic growth in last one decade, Bangladesh is failing to attract foreign investment due to the lack of underdeveloped infrastructures, non-cooperative mentality of the regulatory authorities and skilled manpower.”
Besides, the foreign investors are discouraged to invest here due to the procedural complications, he added.
Bangladesh’s low labor costs are generally believed to be attractive to foreign investors, yet they hesitate to make fresh investments in the country.
“Underdeveloped infrastructure, and such other impediments as the shortage of 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 are major reasons for the slow pace in FDI inflow,” said Dr Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI).
“The government needs to address these impediments to attract more FDI to the country in order to ensure the country’s economic development,” he added.
On the other hand, the disbursement of foreign aid made by the development partners increased by 7.41 per cent during the six months period of the current fiscal year when the country faced a foreign exchange crunch.
According to the Economic Relations Division (ERD) provisional data, the disbursement of foreign aid increased by $0.28 billion to $4.06 billion during the time from $3.78 billion in the same period of last fiscal year.
Of the disbursement, $3.88 billion came as concessional loans while the rest $0.18 billion in the form of grants, the data showed.
However, the foreign aid commitments surged by $5.23 billion or 297.16 per cent toS$6.99 billion during the time of FY24 from $1.76 billion in July-December of FY23.
Of the commitments, $6.58 billion came as concessional loans while the rest $0.41 billion in the form of grants.
Meanwhile, the government repaid debts of $1.57 billion in July-December of FY24. This consisted of $926 million in principal and $641 million in interest, the data said.
