Foreign Direct Investments in the ten months of the outgoing FY 15-16 has clocked $1.82 billion, up 21 per cent over the corresponding period in previous fiscal year, reports bdnews24.com. The finance minister has described it as ‘the result of a stable political scenario’ while an economist says a ‘climate for investment’ has flourished in Bangladesh with the initiation of a few large infrastructure projects. The latest balance of payment (BoP) figures released by the central bank shows the net FDI between July and April in the current fiscal was $1.82 billion against $1.50 billion in FY 14-15. Most of the FDIs coming in last year were from the US, UK, South Korea, Australia, the Netherlands, Malaysia, Hong Kong, Singapore, Japan and India. The sectors that attracted foreign investors the most were gas and petroleum, textiles, banking, telecom, power, food, cement, leather and leather goods. “We have seen an escalation in both foreign and domestic investment. I think, the country’ situation in the last one and half year has created an air of confidence. Foreign investors are now feel that people are no longer interested in strikes or shutdowns,” said AMA Muhith, finance minister. Net FDI inflow is calculated by deducting the Disinvested amount from the Gross flow. FDIs in Bangladesh come as equity capital, reinvested earning and intra-company loan, makinf up the gross flow. Disinvestment is calculated by deducting the cost recovery and profit-sharing amount, which the foreign companies take out from the country, from the investments they made. Bangladesh’s gross flow crossed $2 billion for the first time in 2014 and the net flow that year was a little over $1.5 billion. In 2015, the net flow stood at $2.2 billion. Muhith says it is ‘the highest ever’ in the country’s history and added that what was more important was an ‘escalation’ in investment. Zaid Bakht, research director at Bangladesh Institute of Development Studies said, a climate of investment has been created as some large infrastructure projects, including Padma Bridge and metro rail, have kicked off. It has prompted domestic as well foreign entities to invest. It seems that the investment scenario in Bangladesh has got a boost. According to central bank statistics, the gross flow of FDI in 2014 was $2.05 billion and the net flow— after deducting the disinvested amount— was $1.52 billion. In 2015, the net flow rose to $2.2 billion, an increase of over 44 per cent in one year. Meanwhile, the inflation rate in the 11 months of the ongoing fiscal ending on June 30 has slightly dropped in Bangladesh, pushing the average inflation to its lowest in a decade. The point-to-point inflation in the country hit a 10-year low of 5.45 per cent in May, mainly due to slight decreases in both food and non-food inflation. “The general point-to-point inflation rate eased further to 5.45 per centage point in May, which is possibly the lowest figure in the last 10 years,” said Planning Minister AHM Mustafa Kamal on Monday, while releasing the monthly consumer price index (CPI) at a ‘Meet the Press’ program held at the NEC conference room. General point-to-point inflation, that is the the per centage change in the CPI during the last 12 months, in April was 5.61, 5.65 in March and 5.62 in February. February’s figure was the lowest in 41 months. According to data from the Bangladesh Bureau of Statistics (BBS), point-to-point food inflation, which tends to be more important in developing countries like Bangladesh where a large amount of household incomes is spent on food, declined to 3.81 per centage points in May, from 3.84 in April. The BBS data showed that the non-food inflation rate also declined slightly to 7.92 per cent in May, down from 8.34 in April. The Planning Minister said the the inflation rate slightly decreased due to the declining price trend of both food and non-food items in the global market, and it was buttressed by adequate supplies of both food and non-food items in the domestic market. “There is good production of food grains and crops, good vegetable production, good supply chain, stable exchange rate and declining trend of oil price,” he said, clearly pleased knowing that keeping prices in check is always a vital issue for Bangladeshi governments. AHM Mustafa Kamal, commonly known as Lotus Kamal, said since the target of containing inflation in the outgoing fiscal year was 6.2 per cent, not only would the target be met, but it would also not go beyond six per cent this year, in line with the projection of the first year of the 7th Five Year Plan. He however did forecast a slight nudge upwards this June in the headline rate, thanks to the holy month of Ramadan that leads to the Eid festival. The data does reveal some discrepancies between rural and urban areas however. While the general rate in urban areas declined to 7.06 per centage points in May, it stood at 4.59 per cent at the rural level, another slight tick downwards. . Meanwhile the national wage index (NWI) witnessed growth at 6.07 per cent in May, going up to 135.39 point. The NWI must be higher than the inflation rate to deliver any increase in real incomes for wage-earners. Average inflation, which differs from the headline rate in that it is a 12-month moving average, also declined to 5.97 per cent in May. A year earlier, in May 2015, the corresponding rate was 6.4 per cent.
