Bangladesh: Foreign Direct Investment (FDI)

Over $450mn FDI in Bangladesh till June 2005

By Farid Ahmed, Dhaka : Bangladesh saw a big rise in foreign direct investment into the country between January and June this year though economists have warned that the recent spike in terrorist incidents in the country could adversely affect inflow of funds.

The central bank statistics shows the country attracted foreign investment of $453.7 million till June 30 this year, compared to $138.3 million investment in the first six months of 2004, a year which saw an overall amount of foreign direct investment worth $460.4 million, the New Age daily reported Tuesday.The data compiled in the latest survey conducted by the Bangladesh Bank showed that the inflow of foreign investment covered equity capital of $247.3 million, reinvestment earnings of $140.8 million and intra-company loans of $65.6 million.

The government's investment promotion agency, the Board of Investment, intends to increase the inflow of foreign direct investment to about $800 million in 2005, which will end in about two weeks.

The target of investment inflow into the country for the next year is estimated at $1 billion and the board is more optimistic about achieving the target, considering the interest shown by India's Tata group, UAE's Dhabi Group and other firms from around the world to invest in Bangladesh.

The country received foreign direct investment amounting to $79 million in 2001, $52 million in 2002, $268 million in 2003 and $460 million in 2004, showing a higher growth in foreign investment in recent years. Economists, however, fear that the recent spate of terror attacks might adversely impact FDI.

Meanwhile, despite the confrontational politics and Islamist militancy, Bangladesh has been listed among the "Next Eleven" by Goldman Sachs in the list of 'next generation of nations with promising economic growth potential'.Bangladesh has found itself in line with Pakistan, Iran, Indonesia, Turkey, Egypt, Nigeria, Vietnam, Philippines and, more importantly, South Korea and Mexico after the US-based investment banking and securities firm described Brazil, Russia, India and China as the economic powerhouses of this century, calling them BRIC.

"Economic potential being realised in Pakistan and Bangladesh will have important consequences since it will interest both countries in investing in peace and stability, rather than confrontation," Goldman Sachs observed.

When asked for his comment on the latest foreign investment inflow, the Executive Chairman of the Board and also Energy Advisor, Mahmudur Rahman, said the interest of foreign companies in investing in Bangladesh has proved that it has become an attractive investment destination.

"This is the result of consistent macro-economic stability, facilitative action taken by the Board of Investment and aggressive promotion by the government," he said, expressing "high hopes" that inflow of foreign direct investment in the coming years would be much higher than in recent years.