Editorial
Downtrend in FDI flow
An action plan needed for turn around
A declining trend in FDI flows into Bangladesh has been depicted in World Investment Report-2007 of the UNCTAD released by the Board of Investment (BoI) in Dhaka. The FDI in Bangladesh declined by 6 percent against the previous year's level instead of 9.6 per cent as stated in the report. The UNCTAD report based on information collected from Bangladesh Bank during last year's April-May period "did not represent the actual picture at the end of the year," according to BoI. Hence the differences in figures.
The decline coincides with Bangladesh's position in performance index which dropped by two steps from 119th in the previous year to 121st in 2006.
The dwindling FDI flow into Bangladesh stands in contrast with the global trend of an FDI upswing by 38 per cent. It is edifying to note that Pakistan, despite being caught up in political unrest, bagged US$4.3 billion compared with Bangladesh's US$792 million, not much better than that of trouble-torn Sri Lanka's US$480 million.
What went wrong with us? The rate of investment registration itself decreased by 30 per cent in the first nine months of this year, as a result of last year's chaotic political situation. Only firm adherence to the electoral road map accompanied by a steady implementation of reform agenda can restore confidence in our investment climate. On the positive side, port efficiency has improved and investment in stock exchanges has been picking up. What remains to be done now is to identify rules and regulations and simplify them in order to cut back on the stages involved in the decision making processes.
Lack of investors' confidence is an issue that must receive utmost attention of the Better Business Forum to be led by the chief adviser. It is common knowledge that FDI flows tend to increase in a place where local investment has thrived. That is because the essential prerequisite for both is the same: a stable business environment facilitated by the government.
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