FDI growth trend
We are indeed happy to note that foreign direct investment (FDI) in the country touched the highest mark last year rising by 24.42 per cent to $1.13 billion despite a host of infrastructural and political adversities. A report by the United Nations Conference on Trade and Development (Unctad) also says that the biggest portion of FDI went to the garment sector while the second and third biggest ones went to the banking, and power and gas sectors respectively. All these are good news which undoubtedly shows the tremendous resilience of our economy as well as our work force.
However, the Unctad report also brought it to our notice that in attracting FDI Bangladesh falls far behind India and even behind Pakistan. Also other countries in Southeast Asia are drawing FDI in a great measure.
As we understand it, serious infrastructural problems and unrelenting political instability have been two major impediments to accelerating FDI growth. Add to these the bureaucratic red tape and the cost of doing business. A stable tax policy is also imperative. Therefore, these issues must be addressed properly to ensure increased flow of foreign investment.
Furthermore, sporadic unrest in the garment industry may be responsible for a lower investment in this sector which is why we urge all parties concerned to arrive at a sustainable agreement to quell the unrest. Finally, domestic investment which currently does not account for more than 25 per cent of the GDP, needs a boost to encourage foreign investors. Where the environment is not deemed fully congenial to private investment, how can foreign investors feel drawn to the country?
Some emerging countries are thinking of relocating their investment in countries like Bangladesh which have abundant and trainable labour force with cheaper overheads. Our policymakers need to exploit such advantages through an incentive policy package. We have the potential to attract FDI with steps in right places.