As Foreign Direct Investment (FDI) has continued to hit the trough, Bangladesh's government needs to reform its investment policies and increase services to the overseas investors through One-Stop-Center.
This was the view enunciated by the Chief Adviser Dr Muhammad Yunus on Tuesday with a focus on bring all the investment promotion agencies under one umbrella to attract more foreign investments into the country. He gave this instruction in a meeting with a group of top foreign investors in Dhaka.
Although our government enacted an act titled "One Stop Service Act 2017" with Bangladesh Investment Development Authority (BIDA) being empowered to implement it in cooperation with other investment promotion agencies like Bangladesh Economic Zones Authority (BEZA), Bangladesh Export Processing Zones Authority (BEPZA) and Bangladesh Hi-Tech Park Authority (BHTPA), One-Stop-Shop (OSS) services have remained sluggish until now.
As a result, FDI inflow has fallen short of expectations. For instance, net FDI declined by 8.8% during the financial year of 2024. According to Bangladesh Bank's latest report, net FDI inflow dropped from $1.609 billion in FY23 to $1.468 billion in FY24, a decline of $142 million year-on-year.
However, the first and foremost reason initially cited for this FDI contraction is the political instability. But there were other causes which stymied the foreign investments including unrest after the fall of the Awami League government on August 5, fluctuation of exchange rates, fragile foreign reserve situation and downgrading of the country's credit rating.
Corruption is another key factor that has long been standing in the way of building up an investment-friendly culture. This is why a stable and corruption-free environment for business must first be established in the first place to attract foreign investments.
Additionally, lack of coordination and labyrinthine bureaucratic systems faced by the foreign investors must be eliminated. Various reports of the World Bank and other agencies point to these bottlenecks. Other issues are tax, tariff concessions and problems in repatriation of returns and capitals by the foreign investors.
Another inhibiting factor for the FDI is the lack of skilled workforce, infrastructural weakness and difficultly to avail land. It is said that if we want to increase foreign direct investment, we have to create a skilled workforce.
Unfortunately, the reality is we have workers abundantly. But they are mostly inefficient and unskilled. At the present time, Bangladesh is attracting FDI mostly due to its cheap labour. But now cheap labour alone is not enough to bring in significant investment. There must be all-out efforts to create a trained workforce. At the same time, land for establishing industrial units along with the development of infrastructure and communication systems is essential.
Another important factor is to expedite shipments through the Chittagong Port. This is because slow turnaround time in the country's largest port was largely blamed for the lack of high-end and fashion clothing orders from top global brands. This issue was also talked about during the meeting between foreign investors and Chief Adviser.
This is high time our government took all kinds of measures to attract FDI. Otherwise, our development march will be hindered to a large extent.
