Pandemic may cast a pall on FDI

The rising trend in foreign direct investment (FDI) for Bangladesh may slow down this year due to the economic fallout of the coronavirus outbreak, experts believe.

"The ongoing Covid-19 pandemic will definitely hamper the inflow of FDIs for the country," said Sirazul Islam, executive chairman of Bangladesh Investment Development Authority (BIDA).

The total value of FDIs made across the globe will witness a 20 per cent fall by the end of 2020 because of the emergence of the deadly contagion, according to a projection of the United Nations Conference on Trade and Development.

Policy discussions on long-term solutions to attract more foreign investment are needed to take place, Islam said.

BIDA has already taken some initiatives in this regard and recommended a number of amendments to some regulations that are directly related to FDI, he added.

The prime minister already sat with a few senior secretaries from the General Economic Division, Finance Division and the National Board of Revenue to find a solution to the matter, Islam added.

The Covid-19 outbreak will slow the rate of investment in general, but it will be particularly detrimental to FDIs as foreign investors are worried about the health risks, said Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue.

Investors who were previously keen to invest in Bangladesh may reconsider their plans due to the recent economic uncertainty brought on by the pandemic as well, he said.

"Investors definitely avoid taking risks and so, the whole world will suffer because of this."

There is no way to recover the amount of FDIs lost during this period either, he said.

Similarly, Ahsan H Mansur, executive director of the Policy Research Institute, said there would be a shortage of FDIs this year due to the global economic impact of Covid-19.

"We have to accept this reality as protecting human life is the top priority at this moment," Mansur said.

The executive director also said a lack of proper infrastructure is a major barrier for attracting more FDIs to the country.

There are several mega infrastructure projects in various stages of implementation across the country but even those are now enduring slow progress due to the pandemic.

Foreign investment in Bangladesh fell over 40 per cent year-on-year to around $2.15 billion in the January-September period in 2019, according to Bangladesh Bank data.

Of the $2.15 billion, $602.79 million went to equity, $999.78 was for reinvested earnings and the remaining $551.29 million was in intra company loans.

However, it is worth mentioning that FDIs worth $2.58 billion came to Bangladesh in fiscal year 2017-18, which jumped to $3.88 billion in the next fiscal year, registering a 50.71 per cent increase, according to Bangladesh Bank data.

Since achieving independence, Bangladesh has received a total of $17.31 billion in FDIs, the central bank data shows.