Bangladesh has been ranked among the bottom tier countries in attracting "greenfield" foreign direct investment (FDI) in 2021, for factors like contradictory regulations and profit repatriation difficulties.
According to the Greenfield FDI Performance Index on global ratings, Bangladesh scored 0.30 in the index in 2021 against top-performer Costa Rica, who scored 15.5.
Greenfield investment is a type of FDI in which a parent company creates a subsidiary in a different country, building its operations from the ground up.
In addition to the construction of new production facilities, these projects can include building new distribution hubs, offices, and living quarters.
The Greenfield Performance Index uses a methodology devised by UNCTAD for overall FDI, and applies it to only greenfield FDI, excluding M&A, intra-company loans, and other forms of cross-border investment.
The seventh edition of the Greenfield FDI Performance Index, published this August, however, shows the score was 0.31 in 2020 for Bangladesh.
A score of 1.0 indicates a country's share in global inward greenfield FDI matches its relative share of global GDP.
A score greater than 1.0 indicates a larger share than indicated by its GDP and a score of less than 1.0 indicates a smaller share.
A number of studies conducted by different international development agencies show that such FDI inflow can promote economic growth, develop human capital, and create employment by transferring management skills, knowledge, and innovative technologies.
The 10 worst-performing nations are China, Japan, Bangladesh, Pakistan, South Korea, Indonesia, the United States, Norway, Russia, and Taiwan.
Iraq, Italy and Ecuador came out on the list of bottom-placed 10 economies in 2021.
Japan, the USA, and China are poor performers in the index as they stand out as the lowest-performing countries, given the size of their economies, and also for their typical hard and soft barriers to foreign investment.
In an analysis of the latest report of the Greenfield FDI performance index, the FDI intelligence in its August edition says that the pandemic redrew the map of the world's best FDI outperformers relative to the sizes of their global gross domestic product.
Costa Rica is both an outperformer and an outlier as the only Latin American country in the top 10, which is dominated by major business hubs such as the UAE and Singapore, and countries in emerging Europe.
The global outlook analyzed 101 locations in 2020 while preparing the Greenfield Performance Index.
Of them, 75 had an index score greater than 1.0, while 26 had a score of 1.0 or less.
The Bangladesh Bank says the net FDI in July-March in FY 2022 was $2.652 billion, up by nearly 35% from its corresponding period a year earlier.
Component-wise, of the total stock, equity capital is $1.12 billion, reinvested earnings $1.44 billion, and intra-company loans $90.3 million.
However, in 2021, the global trend was that countries attracted major projects in renewable energy, as well as in the software and IT sector.
