Shafiqul Islam Jibon
Bangladesh is in dire need of foreign investment. As a developing country Bangladesh needs FDI (foreign direct investment) for its ongoing development process as it is a powerful weapon for developing the economy and achieving the countries socio-economic objectives.
The climate for investment is determined by the interplay of a whole set of factors: economic, social, political, technological and environmental that have a bearing on the operation of businesses.
FDI has the potential to generate employment, raise productivity, transfer skills and technology, enhance exports, and contribute to the long-term economic development of the world's developing countries.
For doing so the government has already made a policy offering various incentives for foreign and local investments. But real flow of FDI still remains insignificant into Bangladesh.
Despite the wide-ranging incentives offered by Bangladesh to foreign investors, and the identification of the country by global institutions as a highly attractive investment destination, the volume of FDI has remained historically low in this country.
This is mainly due to various problems including insufficient infrastructure, poor law and order situation, political unrest and negative image of the country.
Bangladesh, being a prime destination for foreign investors, is still lagging behind in the race to capture inflows of investments. In recent times, a lot of foreign investors have either visited Bangladesh to study the investment potential or took part in international forum regarding their investment in Bangladesh. But the actual outcome seems far below the potential.
The latest data shows that the Board of Investment (BoI) received FDI (foreign direct investment) proposals worth more than US$ 1.78 billion in November, the highest ever in a single month exposure of its history. Though the BoI has no available data to register FDI for July 2012, it has registered FDI proposals worth $ 18.736 million, $ 343.1019 million and $ 53.778 million in August, September and October 2012 respectively.
According to the 2012 World Investment Report (WIR) of the UNCTAD, Bangladesh received FDI worth $ 1.13 billion ($ 1136.38 million) in 2011, the highest in its history, showing a 24.42 per cent rise compared to the FDI received in 2010.
Bangladesh had received FDI worth $ 910 million in 2010. The FDI inflows in 2008 were worth $ 1.08 billion, the second highest in its history.
BoI officials said that they are satisfied with the investment proposals in the country. But they cannot predict about the net inflows of those investments as the foreign investors have the right to cancel or withdraw their investment plans in anywhere in the globe.
So there is a challenge of the BoI ahead to accelerate the actual inflows of foreign investments. "One of the most significant challenges is the business diplomacy to bring more investments in the country," a senior BoI official said.
He wanted to say that Bangladeshi business diplomacy was weak. Our foreign missions have great duty to make regular contact and convince the foreign investors through their activities.
"Bangladeshi diplomats in different countries should maintain regular contacts and follow-up meetings with the foreign businesses to boost up the FDI," the BoI official said.
In recent interactions' local business leaders also pointed out that some foreign investors who had shown great interest to bring their money into business in Bangladesh, later changed their mind or shifted their plan to other countries due to negligence by government officials.
"Our government officials, especially the BoI ones should become more dynamic and professional to attract foreign investments in Bangladesh," a leader of the Bangladesh Chamber of Commerce and Industry said recently.
He also said another problem lies with the government itself. The board of investment is the principal body to bring FDI, but they are not well equipped to motivate foreigners who are familiar with better business environment.
Most of the officials of the BoI either posted here from the different ministries, who are not dedicated to the business interest of foreign investment in the country. There are about 127 officials including some petty officials are working for the organisation. But it is not sufficient to run the institute smoothly. So it needs to recruit adequate and dedicated manpower.
However, out of remaining 127 staff, at least 80 per cent of them are not willing to stay at the BoI indefinitely. Normally they want to be transferred to other ministries or back to their own ministry for promotion as they think the BoI is not a suitable place to obtain better posting.
"Some of the BoI officials were promoted from the clerical jobs who are now handling registration and communication jobs with the foreign investors," a senior official of the BoI told while giving his comments regarding a recent report item of the FE.
So now the BoI is seeking its own organogram to recruit adequate and trained staff. The BoI did not have obtained its own organogram to recruit skilled manpower in its 26 years of its history. The BoI has made a separate organogram to recruit enough people.
However, the Prime Minister, the Chairman of the BoI itself, has approved an organogram for BoI. But it is still under process to recruit the own staff for BoI. The Prime Minister has approved 227 staff for the BoI.
In recent times, the BoI has improved its performance a lot in some cases such online system for the investment proposals. But the system is still also not have an online payment system the overseas investors prefer.
If the online payment system is activated, foreign investors will not be required to contact third party to pay their money to the BoI's account for finalization of their registration process.
"Sometimes, third party can misguide the foreign investors for their interest. So the online payment system is a must to be included with the online registration system," the BoI official said, adding that this problem will be removed if the online payment system is introduced with the registration of investment through BoI official website.
The government needs to focus to improve the serious deficiencies in infrastructure, power and energy, customs and port management, Telecommunications and transport service, governance and policy related issues.
Corruption and bureaucratic complexities are the great obstacles to attract foreign investments. So the problems should be address as early as possible.
Bangladesh government should also develop long-term strategy to stimulate foreign investment in Bangladesh. If FDI increases then surely GDP growth will accelerate and unemployment will fall, and the country might become a middle income country within the stipulated period.
However, the quarterly (September-December 2012) outlook the Asian Development Bank said the government needs to improve the business climate to attract higher FDI and encourage greater private participation in infrastructure development, through PPPs (Public Private Partnership) to mobilize resources needed to close wide infrastructure gaps.
The writer is a Staff Reporter of the FE