Inflow of foreign direct investment into Bangladesh slumped by 56 per cent in 2019 after a huge surge in the previous year, according to the World Investment Report 2020 of the United Nations Conference on Trade and Development.
‘Inflows to Bangladesh, an important FDI recipient in South Asia, fell by 56 per cent to $1.6 billion. The decline reflects an adjustment from a record-high level in 2018,’ the report released on Tuesday said.
Bangladesh in 2018 received $3.61 billion in FDI, the highest ever in the country’s history, with 68-per cent growth over the previous year driven by significant investments in power generation, apparel sector as well as the $1.5 billion acquisition of Akij Group’s United Dhaka Tobacco by Japan Tobacco.
Policy Research Institute executive director Ahsan H Mansur told New Age that it was a big failure of the authorities as the country not attract the FDI at expected level in 2019.
FDI inflow to Bangladesh declined by at least by 24 per cent in 2019 compared with that of the previous year even if the acquisition of the United Dhaka Tobacco by Japan Tobacco was not considered, he said.
‘We have never seen such a big decline and it is a big failure,’ he said.
The big words by the policy makers and investment promotion agencies, including Bangladesh Investment Development Authority and Bangladesh Economic Zone Authority, have not reflected into reality due to lack of preparation, he said.
They could not complete any single special economic zone and could not make the one stop service fully functional while the country could not overcome its image crisis, he said.
There is also a lack of land required for investors, he added.
‘The government will have to find out the reasons why it can not attract FDI and why FDI is being diverted to countries like India and Vietnam and even to Pakistan,’ he said.
In 2019, FDI inflow in India increased by 19.92 per cent, Pakistan by 27.69 per cent, Nepal by 176.12 per cent, Bhutan by 16.67 per cent and Maldives by 4.82 per cent.
FDI also dropped in Afghanistan by 67.23 per cent and Sri Lanka by 53.04 per cent in the year.
The UNCTAD report said that the export-oriented apparel industry of Bangladesh remained an important FDI recipient, with major investors from the Republic of Korea, Hong Kong and China.
In 2020, the sector is expected to be severely affected by both factory close-downs and falling global demand for apparel, it said.
As of April 2020, the country’s garment manufacturers and exporters association estimated that more than $3 billion worth of exports have been cancelled or suspended, it added.
According to the report, FDI inflow to developing Asian economies is projected to plunge by 30 to 45 per cent in 2020 due to the COVID-19 pandemic and FDI in South Asia is also expected to contract sharply.
Mergers and acquisitions declined by 56 per cent in South Asia.