FDI in Bangladesh: Prospects and Challenges (Part-01)

FDI is the significant vehicle to build up physical capital, create employment opportunities, develop productive capacity, enhance skills of local labor through the transfer of technology and managerial know-how, and help integrate the domestic economy with the global economy. There is a strong positive relationship between FDI and economic growth in any country like Bangladesh. Because FDI is vital to facilitate capital formation, to transfer knowledge and technology, and to create employment which might have a direct affirmative impact on the economic growth of Bangladesh. At present, Bangladesh counts as an emerging country in South East Asia because of the lowest-paid labor force and lowest import tariff rate in the region. Another aspect is Bangladesh's garment industry has a worldwide reputation and in the last couple of years, Bangladesh's garment industry has increased its annual revenue from $19 billion to $34 billion which spikes a percentage of 79% and Bangladesh is the second-largest exporter of garments in the world with the sector accounting for 80 percent of Bangladesh's total export earnings though overall other sectors growth is not that much impressive.

FDI situation of Bangladesh is more or less the same in the past and present. Inflows of Foreign direct investment (FDI) to Bangladesh declined by 31.79% to $1.15 billion in the first half of 2020, due to the Covid-19 pandemic. According to Bangladesh Bank (BB)'s provisional data, during the January-June period of 2020, the net inflow of overseas investment stood at $1.15 billion, down by 31.79%, which was $1.69 billion in the same period last year. Beside’s Bangladesh’s reserve was approximately USD 3 billion in the past and now it is near to USD 44 billion; whereas the island country Taiwan’s reserve at that time was approximately USD 30 billion and now it has crossed over USD 300 billion. Bangladesh government has the vision to increase the FDI but maybe the vision is blurry to the government officials. Rather Government should target specific countries, sectors of business, industries, and even individual businesses to bring the foreign investment in Bangladesh to create employment, opportunity, and growth for the youth of the country and implement measures to attract the businesses.