FDI up 24pc in Bangladesh

Foreign direct investment (FDI) in Bangladesh has increased by 24 percent in 2013, a UN report says.

The annual World Investment Report by UN Conference on Trade and Development (UNCTAD) was published on Tuesday worldwide.

The Board of Investment Bangaldesh (BoI) held a programme in the city to disseminate the report.

Prime Minister’s Energy Adviser Tawfik-e-Elahi Chowdhury was the chief guest of the event. BoI Chairman SA Samad and other officials were also present.

Jahangirnagar University economics teacher M Ismail Hossain presented a summary of the report.

According to the report, FDI in Bangladesh reached $ 1.59 billion in 2013, up from $ 1.29 billion in 2012.

There has been $ 540 million in completely new investment, up nine percent from 2012.

Most of the investment, however, has come from reinvested earnings. In 2013, reinvested earnings stood at $ 697 million, up 19 percent from 2012.

The companies working in Bangladesh brought $ 361 million in loans from their parent companies, which is 74 percent higher than the intra-company loans in 2012.

According to the report, FDI in telecom has gone down by $51 million.

Most of the investment in 2013 was for 3G network developemnt and payment of fees, therefore they did not generate much employment.

Investment in banking, on the other hand, has more than doubled. In 2012 FDI in banking was $136 million, and in 2013 it reached $327 million.

Bangladesh Bank Deputy General Manager Azizur Rahman said the banking sector had attracted such huge investment because it had fufilled the terms of the Basel II accord.

“Under the accord the banks had to raise their paid-up capital to Tk 4 billion by June 2013. Foreign banks have met this condition,” he said.

In 2013, most of the FDI came to the textile and RMG sector, around $422 million.

Analysts say part of the investment that has moved away from China has come to Bangladesh.

FDI in power, gas and petrolium has gone down.

Energy sector FDI in 2013 was $99 million, down from $127 million in 2012. FDI in food, agriculture and fisheries has also gone down.

Asked about the slow growth of internal investment, BoI Chairman SA Samad said interest rates in Bangladesh were too high.

“With these interest rates, it is tough to make a profit. Tax rates and collection methods also discourage investors,” he said.

“Investment is a long term issue. Nobody makes investment decisions based on just the present conditions. The government has taken several positive long-term initiatives for investment, which are attractive to foreign investors,” Samad said.

“Besides, there are abundant opportunities for foreign investor s in this country,” he added.

He pointed out that even though Bangladesh had no political or diplomatic ties with Taiwan, the country was alllowed to open a commercial office here just for the sake of investment.

Tawfik-e-Elahi Chowdhury said foreign investors were getting more confident about Bangladesh.

“Recently China and Japan have promised work more closely with Bangladesh,” he said.

“Foreign investors are going around the country looking for places to invest. I don’t know what sector will attract more investment, but I can say that foreing investment will go up by 50 percent in the future,” he added.

According to the UNCTAD report, in 2013 foreign companies in Bangladesh earned profits of around $ 377 million.

Global increase in FDI was 9 percent last year, reaching $1.45 trillion, most of which, about $188 billion, was drawn by the United States. China was next, at $124 billion.

According to UNCTAD, FDI willl increase to $1.6 trillion in 2014.