Bangladesh attracts record FDI

Bangladesh attracts record FDI

Belying the dire prediction of doomsayers, Bangladesh has been highly successful in attracting foreign direct investment (FDI). On the World Investment Report (WIR), its ranking in the year 2011 -- the last complete year -has been 16th, just one slot lower than the previous year. However, in grand total the amount US$1.13 billion garnered in 2011 surpassed the 2010 total of $910.33 million by a hefty margin. For Bangladesh to be ranked 15th and 16th among the top FDI-recipient countries for two consecutive years (2010 and 2012) is quite an achievement. This is, moreover, at a time when a squeeze on foreign aid and investment is evident everywhere. What is particularly relishing is the fact that the growth in investment at 24.42 per cent in Bangladesh was a notch above the worldwide growth of 23 per cent.

A lower ranking by just one slot in this case is no cause for worrying; for this can happen as a consequence of many factors coming into reckoning. Despite some negative developments there, the garments sector attracted the highest amount of FDI, followed by the banking and energy sector. This is encouraging for the simple reason that the garments sector still has room for expansion and investment in it means more employment and income of a larger amount of foreign exchange. As for the investment in banking, most of such increased flow of FDI has been purported to facilitating greater depth of activities on the part of existing foreign banks operating in the country or for their technological upgradation. It is difficult to say whether the formal financial institutions have scored any worthwhile success in expanding their coverage to the still-unbanked areas, particularly in the countryside, at the expected level. Banking coverage matters, so also does its quality. The general feeling about the investment in the energy sector -- one that is considered crucial and has the potential to be a catalyst for investment in so many other sectors -- is that it should have taken the number one slot; and better had done so expediently.

That unfortunately has not happened. Investment that gives return in spades but for a shorter period can be lucrative but it has to be resisted at times in the interest of reaping long-term benefits. On that score, the country's power sector should have been the priority area. It still is because without power, investment in other areas cannot be translated into financial growth through increase in production. The government ought to have concentrated more on the energy sector in the interest of generation of power keeping in view the future requirement of the country. In this context, investment in the proposed multi-billion Padma Bridge project could not only boost the FDI ranking but also expedite the economic growth by bringing about easier and faster connectivity between the country's economic zones. So, infrastructure-wise next to energy come communications and this sector should have figured a little more prominently in the FDI.