Investments have seen a sharp rise due the government’s higher spending on infrastructure and the power and energy sector
Government initiatives such as establishing Special Economic Zones (SEZs), mega projects, and regulatory reforms to promote business, have turned Bangladesh into a hotspot for investors from home and abroad.
In recent months, Bangladesh has witnessed a sharp rise in Foreign Direct Investment (FDI) and even recorded the largest ever foreign investment.
Investments have seen a sharp rise due the government’s higher spending on infrastructure and the power and energy sector.
Summit Corporation Limited, a local power company, Mitsubishi, and General Electric (GE), signed a $3 billion (about Tk24,000 crore) deal in July, making it the biggest ever private foreign direct investment in the power sector of Bangladesh.
Japan Tobacco Inc, one of the world’s largest tobacco companies, has recently acquired Akij Group’s tobacco business for $1.47 billion (about Tk12,430 crore), the biggest ever single foreign direct investment in Bangladesh.
Meanwhile, a Chinese consortium of the Shenzhen Stock Exchange (SZSE) and the Shanghai Stock Exchange (SSE) has bought a 25% share worth Tk946.9 crore, in the Dhaka Stock Exchange, as a strategic partner.
On top of that, according to the Bangladesh Bureau of Statistics’ (BBS) provisional data, in the last fiscal year, Bangladesh has witnessed an investment of Tk7,044 crore from both public and private sectors. The amount is 16.9% higher compared to Tk6,028 crore in fiscal year 2016-17.
Of the total investment, 73.87%, amounting to Tk5,204 crore, came from the private sector, while the rest, Tk1,840 crore came from the public sector.
In FY17-18, private sector investment was 14.02% higher compared to the Tk4,564 crore investment the previous fiscal year.
Public investment rose by 25.60% from Tk1,465 crore the previous fiscal year.
Talking to the Dhaka Tribune, stakeholders said that government steps, especially introducing the One-Stop Service and establishing Special Economic Zones (SEZs) to attract investment have paved the way to luring investment from home and abroad.
Special Economic Zones lure foreign investment
“Investment is the topmost priority of our government. As a pro-business government, Prime Minister Sheikh Hasina has taken bold and timely steps such as establishing SEZs, power plants, the construction of the Padma bridge, and the Dhaka-Chittagong four-lane highway. These all drew the attention of investors,” Commerce Minister Tofail Ahmed told the Dhaka Tribune.
“On the other hand, it is offering incentives to export-oriented businesses as well. As a result, considering business prospects and profitability, investors from home and abroad choose Bangladesh as the destination for investments,” the minister said.
In the years to come, Bangladesh will lead the Asian countries as a receiver of FDI, he added.
“I appreciate the government initiative to establish SEZs as it is very difficult for a businessman to purchase or find the space for setting up factories. Investors will enjoy a lot of advantages making investments in SEZs,” Dhaka Chamber of Commerce and Industry (DCCI) President, Abul Kasem Khan, told the Dhaka Tribune.
“We have seen lots of development in the power sector, which increased the power generation capacity. The government has to go for reforms so that we can reduce cost of, and improve ease of doing business,” he added.
Policy reforms boost investor confidence
“In a bid to encourage private sector investors from home and abroad, the government went for massive reforms in rules and regulations,” Kazi Aminul Islam, executive chairman of Bangladesh Investment Development Authority (BIDA), told the Dhaka Tribune.
As part of its reforms, the government has enacted the One-Stop Service Act 2017 to provide services under a common roof within a shorter span of time. It has brought changes in the investment environment encouraging investment, Aminul said.
“The One-Stop Service is a fully automated online platform where one can be registered sitting at home from any part of the world,” he added.
“We have registered $11 billion in investment in the current year, which is much higher than the previous year,” said Aminul.
“One-Stop Service is a good initiative taken by the government. If it is smoothly run, I think, it will bring significant changes in the investment climate of Bangladesh, said DCCI President Abul Kasem.
Proper implementation and continuation of steps for sustainability
The country’s private investment has started to increase. The previously stagnant situation was caused by inadequate infrastructural development and shortcomings in the power and energy sector.
Now that these are on track, what is required is the continuation of the initiatives, along with proper implementation and development.
“Growth of public investment is very much higher than private sector investment. It means the country cannot reap the benefits of public investment. This is because of lack of effective implementation of projects,” Centre for Policy Dialogue (CPD) Research Director, Khondaker Golam Moazzem, told the Dhaka Tribune .
“In reaping the maximum benefit of public investment, timely implementation of projects to ensure the required infrastructure is a must,” said the economist.
“As an essential element of business, electricity generation has given an extra mileage to boost private sector investment,” Abdus Salam Murshedy, managing director of Envoy Textiles, told the Dhaka Tribune.
“The government should continue to invest on infrastructure as a rise in public expenditure will attract private investment,” said Salam, also a former BGMEA president.
“In making development sustainable, Bangladesh has to increase port capacity and think about building a deep sea-port as trade volume would jump sharply due to investment,” he added.