• Wednesday, Dec 02, 2020
  • Last Update : 11:22 am

Companies invest for future despite economic slowdown

  • Published at 10:19 pm October 25th, 2020
foreign investment
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This is because of Bangladesh’s resilience in coping with disaster and better forecast of economic recovery by the global agencies

So far, the Covid-19 pandemic has been the only one of its kind, which was able to disconnect the world for a certain period and forced people to stay at home.    

Hence, the novel virus disrupted the global supply chain and hit hard the demands of consumer’s goods as well as services, as people's lives across the globe and economic activities came to a standstill.

Global economies are still bleeding and bearing the brunt of the pandemic's devastating fallout.

As an integral part of the global economy, Bangladesh’s economy is not out of that shock. 

A drop in demands have shelved new investments as investors fear further fall and an unprecedented squeeze in fund flow to invest.

But experts said businesses should keep moving forward, as there is a ray of hope and light at the end of the tunnel.

Amid the shocks, Bangladesh has received investment proposals from both local and foreign investors.

This is because of Bangladesh’s resilience in coping with disaster and better forecast of economic recovery by the global agencies. 

Where investment is being done  

Investments are seen in the area of new products - such as personal protective equipment (PPEs), medicine related to Covid-19, medical equipment and technology - as the demand has increased.

On the other hand, a good number of companies are going to invest their proposed money for business expansion.

“Investment proposals from local and foreign investors came to a halt during April and May earlier this year, which was almost zero. But in June-August period, it resumed albeit slowly,” Md Sirazul Islam, executive chairman of the Bangladesh Investment Development Authority (BIDA) told Dhaka Tribune. 

If the coronavirus infections do not escalate, the investment would increase in the months to come. But there is fear of a second wave in winter, which may hinder new investment, feared Islam.

People invest when there is additional money in hand. Since the pandemic hit the economy in both demand and supply, it has cast a negative impact on investments, he observed.

"But we are witnessing investment in business expansion, as well as new investment," he added.

“The size our economy is growing and will continue to grow. With the economic growth, the demands of steel and steel products will also increase,” Tapan Sengupta, deputy managing director of BSRM, told Dhaka Tribune.

"Considering the future demands, we are going to invest Tk700 crore in business expansion even amid the pandemic," he added.

Most of the new investment proposals are seen in new products as well as services, which have bright prospects.  

“There is a huge opportunity for Bangladesh in lingerie products and to take the opportunity, we have planned to invest amid the pandemic,” Sharif Zahir, managing director of Z&Z Lingerie, told Dhaka Tribune.

"Covid-19 will not last forever and it will be over today or tomorrow. Hopefully, we will get the vaccine soon. We are hopeful to make investment by next year if the situation improves," he added.

Experts welcomed the investment proposals, as it would build confidence and help retain employment as well as capacity.

“It is a positive sign for the country that there are new investment proposals amid the pandemic. Most noticeable aspect is investment in new products, such health, pharmaceuticals, Covid-19 related products and ICT-based products,” Khondaker Golam Moazzem, research director at Centre for Policy Dialogue (CPD), told Dhaka Tribune.

On the other hand, investment to grab online-based customers in the global market expansion is also seen, said the economist.

On top of that, e-commerce platforms have also made investments to increase their capacity and network in light of the Covid-19 pandemic, he added.    

Proposed investment scenario

According to Bangladesh Exports Processing Zones Authority (Bepza) data, Bangladesh received over $81 million investment from eight companies during the Covid-19 pandemic in different export processing zones.

Besides, there are more disclosures from foreign and local companies, beyond the EPZs investment and they are making investment in special economic zones (SEZS) as well as other zones.  

Marico Bangladesh Limited, an Indian multinational company, has decided a phase-wise investment of Tk227 crore for the purpose of increasing manufacturing capacity and setting up operations in the special economic zone.

Banga Plastic International, a sister concern of Pran-RFL Group, is going to establish a personal protective equipment (PPE) and toy manufacturing industry with an investment of $18.08 million (Tk153 crore) at Adamjee EPZ.

Chinese e-commerce giant Alibaba's subsidiary Daraz has announced plans to invest Tk500 crore by 2021 in Bangladesh to set up logistics infrastructure and hubs that would help expand its footprint in all 64 districts.

Z&Z Lingerie Limited, a Bangladeshi company, is going to establish an intimate garment manufacturing industry in Chittagong Export Processing Zone with an investment of $25 million (Tk212.5 crore).

The board of directors of Square Textiles has decided to invest Tk30 crore for balancing, modernization, rehabilitation and expansion (BMRE) purposes. 

BSRM Steels is set to invest Tk700 crore in a new plant to produce an additional 500,000 tons of re-rolling products per annum to meet growing market demand.

Bangladesh's leading full-stack B2B e-commerce platform for neighborhood shops and online sellers, ShopUp has raised a Series A round of $22.5 million (Tk191.25 crore).

Giant BD Co Ltd, a South Korean company is going to expand its business with the investment of $10 million (Tk85 crore) more in Comilla EPZ.

Beyond these companies, there are more companies, who are planning and making investments.

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