Very recently, the UNCTAD (United Nations Conference on Trade and Development) has published a report where it said Bangladesh’s foreign direct investment (FDI) has been historically low over the last one year. According to the report, FDI has dropped 10.8 per cent to $2.6 billion last year and is unlikely to pick up in the near future as investment commitments remain lukewarm. There is little doubt that this present state in the FDI scenario has been caused by the Covid-19 pandemic. Until the pandemic broke out last year in Bangladesh, the country’s investment environment was an appealing one for global investors.
In fact, Bangladesh has always urged foreign investors to make full use of the prevailing business-friendly environment and formulated policy and regulatory framework conducive to the business community as offered by the government and thus become a part of the country’s historic economic march forward. The government of Prime Minister Sheikh Hasina, from the very beginning of assuming power, has been showing that it perfectly understands the importance of Foreign Direct Investment (FDI) as a powerful engine of economic growth and has been providing special incentives to attract foreign investors.
But, in spite of the fact that Bangladesh offers the most liberal investment climate in South Asia, and the country has always been grouped among the most potential investment destinations, the inflow of FDI in the country has not increased to an expected level in recent years. Covid has added to the woes in the sector already. Although the country, at times in these days, has seen a slightly numerical jump in terms of FDI inflow on a year-on-year basis, the amount has not increased in line with the overall GDP growth of Bangladesh. The amount of FDI in the country has been wavering around one per cent of its GDP for quite a long time, which is a paltry amount when taking into account the global FDI scenario.
While a developing country receives FDI worth two to three per cent of its GDP on an average and FDI exceeding five to six per cent of GDP is considered a significant achievement, Bangladesh with the current meagre FDI inflow lags far behind in this respect. However, the efforts made by the government have already proved effective in improving the situation. We endorse the government’s policy with regard to the present business-friendly environment in the country. In fact, this is the best time for the investors to invest in Bangladesh as the political atmosphere, volatility of which seriously erodes foreign investors’ confidence, is relatively serene and the government has been earnestly trying to alleviate power, energy and land crises, develop infrastructure and establish economic zones and special economic zones across the country to facilitate foreign investors.
More importantly, strengthening the economic and commercial diplomacy will definitely take Bangladesh to a new era of economic sustainability, where foreign investors will become a significant partner of the country’s long stride forward. For the success of economic diplomacy, developing countries like Bangladesh have to ensure steady growth in trade, technology and investment flows. Bangladesh should improve its communications link, both physical and cultural, with the regional organisations, by consciously involving itself in building roads, highways, airlines and promoting travel and tourism. Economic diplomacy requires all the finesse and knowledge of traditional diplomacy.
Hence, there is no alternative to intensifying economic and commercial diplomacy.
