The country needs large investments, especially in agriculture, industry and infrastructure sectors. There are reasons to believe that Bangladesh could be the world's biggest exporter of readymade garments, household textiles, information technology, pharmaceuticals, silk products, finished leather goods and jute.
But there has been no substantial investment by overseas entrepreneurs in the country due to lack of proper infrastructure, red tape and corruption in almost every tier of the government functionaries.
Foreign Direct Investment (FDI) plays an important role in the economic development. It denotes the connectivity and trade relation in the global arena. Although its trend was upward in the recent past in Bangladesh, the volume is quite low.
There are certain factors in the country that may be termed investment-friendly, such as political stability, cheap and good human resources, and fiscal and financial incentives. Besides, the government is generous to appreciate the investors for any kind of investment which relates to development.
But still the much-sought-after FDI is not coming to Bangladesh as was expected. Economists say a surge in domestic investment may help Bangladesh attract more foreign investment and log faster growth. But problems in infrastructure and inadequate investment opportunities for small and large local investors hinder the prospect of growth in domestic investment and FDI.
The country holds the potential to grow fast. It offers foreign investors greater market access. Despite that, it lags behind India and Pakistan in attracting FDI. In fact, weak governance, ineffective implementation of policies discourage FDI. Overlapping administrative procedures and absence of a transparent system of formalities often confuse not only investors proposing projects, but also staff and personnel assigned for discharging procedural responsibilities.
Some labour-intensive factories in China, Taiwan and Korea are relocating to Bangladesh to benefit from low labour cost. To encourage more countries to relocate their sunset industries, Bangladesh should facilitate them with the right environment.
There is an inflow of portfolio investment. But the country should deal with speculative investment with great caution. Inadequate domestic investment opportunities encourage investors to put their funds in stocks, which many fear are overvalued.
A specialist on FDI said it is possible for Bangladesh to get $5.0 billion FDI. He identified eleven sectors in Bangladesh that deserve sizeable investment, such as energy, infrastructure, pharmaceuticals, textiles, agriculture, healthcare, telecom, climate change, education, shipbuilding and light engineering.
While the FDI scenario during the past few years is not encouraging, many so-called investors are coming to Bangladesh with 'ill motive'. With little investment of their own, they are taking syndicated loans from banks and other financial institutions and doing flourishing business creating a few jobs for the local people.
The country has an advantage in labour costs that can be converted into an exportable product, but the advantage has many difficulties. The factories have to deal with constraints beyond their control, such as -- power failures, poor communications or increased transaction costs and cumbersome procedures in many government offices.
There is a need for a policy shift to promote 'less gas-consuming' industries, encourage investment in infrastructure, and focus on the service sector, particularly information technology.
There is no doubt Bangladesh needs substantial doses of FDI in many potential and prospective sectors. To obtain that, the government should strengthen one-stop service suiting the needs of the overseas investors. It's time to do the needful for attracting FDI as much as possible.