Foreign investment dropped 32 percent year-on-year in the first quarter of the year due to uncertain business climate. Between January and March, foreign direct investment or FDI stood at only $410.68 million in contrast to $606.92 million a year earlier, according to data from the central bank. Foreign investment is split into three categories: equity, reinvestment of earnings and intra-company loan. In the first quarter of the year, equity capital or new investment declined 54 percent from a year earlier to $90.29 million. Reinvestment of earnings also fell 9 percent to $299.86 million. Intra-company loans also declined four-fold year-on-year to $20.53 million during the period. FDI also decreased over the previous quarter by 24 percent. Economists and businessmen blamed at different times the perennial infrastructural bottlenecks, administrative barriers and uncertainty for the fall in fresh FDI. The problems with roads and highways, ports and land have remained the same. “If uncertainty persists in a country, attracting foreign investment is very difficult,” said Aftab ul Islam, former president of the American Chamber of Commerce. And the uncertainty has compounded after the recent Islamic militant attacks. However, it is just not Bangladesh but many other countries are facing this uncertainty. As a result, FDI has decreased in those countries too, he said. The former AmCham chairman did not agree with the notion that the lack of infrastructure affects FDI. “Investors would invest in a country where infrastructure deficit exists.” To attract more foreign investment, governance has to be improved, he added. The foreign investors take into account what the World Economic Forum, the International Finance Corporation’s Ease of Doing Business and the Logistics Performance Index are saying about Bangladesh. But Bangladesh has not improved significantly in these rankings, particularly in the sectors critical for the economy. In the latest WB’s ease of doing business ranking, Bangladesh’s position dropped two rungs to 174 out of 189 countries due to stalled regulatory reforms. The overall private investment rate has gone down in terms of gross domestic product, according to the latest figures from the Bangladesh Bureau of Statistics. Bangladesh’s ranking is very low when it comes to getting electricity connection, property registration, contract enforcement and dispute settlement. Alternative systems to resolve dispute and recover defaulted money are not functioning properly. However, there has been some progress in the preparatory work for the special economic zones by way of signing contracts. The Bangladesh Economic Zones Authority in its governing body meeting last month took a decision that a policy would be formulated to provide one-stop services to those who would invest in economic zones.
