Foreign investments

Bangladesh will continue to attract foreign investment, defying slowdown: United States


Bangladesh will remain the most resilient country and will continue to attract foreign direct investment (FDI) to live up to its image as a preferred location for global investors, despite the economic slowdown induced by Covid. This inference can be taken from a new report released by the US State Department.

The US State Department on Wednesday released the “2021 Investment Climate Statements” which mentioned Bangladesh’s sustained economic growth over the past decade, a large, young and hardworking workforce, a strategic location between the large markets of South and Southeast Asia, and the presence of a dynamic private sector.

The government’s efforts in Bangladesh to improve the business environment in recent years are promising, but implementation has yet to materialize, according to report which analyzes the investment climate in more than 170 global economies which are current or potential markets for US companies.

Read: BGMEA discusses export and FDI opportunities with Bangladesh envoy

Bangladesh has made gradual progress in reducing some constraints on investment, including taking measures to better guarantee reliable electricity, but inadequate infrastructure, limited financing instruments, bureaucratic delays, lax application of the Labor laws and corruption continue to hamper foreign investment, the report says.

The slow adoption of alternative dispute resolution mechanisms and slow court processes hamper contract enforcement and the resolution of trade disputes, the report said.

Driven by a young workforce and a growing consumer base, Bangladesh has experienced steady annual GDP growth of over six percent over the past decade, with the exception of the Covid-induced economic downturn in 2020, according to the report.

Much of this growth continues to be driven by the ready-to-wear industry (RMG), which exported $ 28.0 billion worth of clothing in fiscal 2020, and continued remittances , hitting a record $ 18.2 billion in fiscal 2020, according to the US report.

However, the country’s RMG exports fell more than 18% year-on-year in fiscal 2020 as Covid lowered global demand for apparel products.

The government of Bangladesh is actively seeking foreign investment in sectors such as agro-industry, textiles, leather goods, light manufacturing, power and energy, electronics, light engineering, information and communication (ICT), plastics, health, medical equipment, pharmaceuticals, ships, building and infrastructure.

Bangladesh offers a range of investment incentives as part of its industrial policy and export-oriented growth strategy with few formal distinctions between foreign and domestic private investors, according to the report.

Read: Government. launches very first IT office in London to bring FDI into the IT sector

Bangladesh’s stock of foreign direct investment (FDI) stood at $ 16.9 billion in 2019, with the United States being the top investing country with $ 3.5 billion in cumulative investment.

Bangladesh received $ 1.6 billion in FDI in 2019. The FDI inflow rate was only 0.53% of GDP, one of the lowest rates in Asia, according to the report. American report.

As a traditionally moderate, secular, peaceful and stable country, Bangladesh has seen a decrease in “terrorist activity” in 2020, accompanied by an increase in terrorism-related investigations and arrests, the US government said.

The report, however, underlined “the diminishing space for political opposition, undermines the independence of the judiciary and threatens the freedom” of the media and NGOs.

Bangladesh continues to host one of the world’s largest refugee populations, over one million Myanmar Rohingya, in what is expected to be a humanitarian crisis requiring significant financial and political support for years to come.

International retail brands selling products made in Bangladesh and the international community continue to pressure the government of Bangladesh to meaningfully address workers’ rights and safety concerns in factories in Bangladesh , according to the report.

With unprecedented support from the international community and the private sector, Bangladesh’s garment sector has made significant strides in fire and structural safety, the U.S. government noted.

Critical work remains to be done to protect the rights of workers to freely associate and bargain collectively, including in export processing zones (EPZs), he said.

Read: A virtual office at the British Bangladesh mission soon to attract FDI

The Bangladeshi government has limited resources devoted to protecting intellectual property rights (IPRs) and counterfeit products are readily available in Bangladesh, according to the report.

Government policies in the ICT sector are still under development. Current policies give the government wide powers to intervene in this sector, he said.

Bangladesh’s capital markets continue to develop and the financial sector is still heavily dependent on banks, according to the US report.


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