The issue of Foreign Direct Investment (FDI) has been receiving phenomenal attention from many governments. Bangladesh is not lagging behind from it. Economic development for the developing countries like Bangladesh is largely dependent on FDI. The major challenges for the host country are to ensure an eye-catching and conducive investment climate to foreign investors for FDI inflow. In recent years, Bangladesh has been devoting efforts for attracting FDI offering a lot of lucrative incentives and benefits. Though attempts taken to increase FDI inflow, the result achieved is not appreciable enough for Bangladesh. This term paper will portray the FDI inflow since 1995 and finds out causes and reasons of low-inflow based on data available in web. Here different indices have been shown graphically which have substantial impact on investment decision of foreign investors. Recent indices are illustrated and briefly analyzed here collected from Doing Business Report 2011, Human Development Report 2010, Bangladesh Economic Review 2011, Major economic indicators: monthly update (volume 06/2010), Bangladesh Bank and Global Competitiveness Report by Center for Policy Dialogue. Export data and information on EPZs have also been stated here importantly. Incentives for foreign investors offered by Bangladesh Government and competitive advantages of doing business in Bangladesh are two very important parts stated in this paper. It also finds out the impediments and highlighted prospects for FDI in Bangladesh and provides some recommendations for its enhancements.

1. Welcome to
the Presentation on
FDI in Bangladesh: Problems &
Prospects

2. Prepared for:
Dr. Khondoker Bazlul Hoque
Professor
Department of International Business
University of Dhaka
Prepared by:
MD. Mushfiqur Rahman
Roll: 05
BBA 2nd Batch
Department of International Business
University of Dhaka

3. ECONOMY OVERVIEW
 GDP total: $100.00 bn (at current prices 2010-11)
 GDP per capita: $664 (at current prices
2010-11)
 GDP growth rate (%): 6.0 (at constant prices 2009-10)
 Total exports: $16.20 bn (2009-10)
 Total imports: $23.74 bn (2009-10)
 Total FDI: $0.913 bn (2010)
 Forex reserves: $10.700 bn (Nov 2010)
 Currency: BDT (1 BDT=$0.01438)
(avg 2009-10)

4. GDP AND GNI RELATED DATA OF LAST FIVE
FISCAL YEARS:
GDP data 2006-07 2007-08 2008-09 2009-10 2010-11
(p*)
GDP (bn taka) 4,724.77 5,458.22 6,147.95 6,943.20 7875.00
GNI* (bn taka) 5,077.52 5,942.12 6,706.96 7,589.28 8528.22
Per capita GDP 33607 38330 42628 47536 53236
(in taka)
Per capita GNI 36116 41728 46504 51959 57652
(in taka)
Per capita GDP 487 559 620 687 755
(in US$)
Per capita GNI 523 608 676 751 818
(in US$)
Table 1: GDP & GNI data of last five fiscal years.
*P=provisional
GNI=Gross National Income
[Source: Bangladesh Economic Review-2011 (Bangla version), Ministry of Finance.]

5. MID-TERM MACROECONOMIC FORECAST 2011-
2015
Real sector Projection
2011-12 2012-13 2013-14 2014-15
GDP at current 128.03 145.35 165.31 187.55
price (bn US$)
GDP growth at 13.2 13.5 13.7 13.5
current price (%)
GDP growth at 7.2 7.6 8.0 8.0
constant price (%)
Inflation (%) 6.3 6.1 6.0 6.0
GDP deflator (%) 5.6 5.5 5.3 5.0
Total investment 28.4 30.0 31.6 32.0
(% GDP)

6. GDP at current price (bn US$)
5
4.5
4
3.5
3
2.5
GDP at current price (bn US$)
2
1.5
1
0.5
0
2011-12 2012-13 2013-14 2014-15
FIGURE 3: LINE CHARTS SHOWING PROJECTED GDP AT CURRENT PRICE
COMPARISONS OVER YEARS.

7. 35
30
25
20 GDP growth at current price (%)
GDP growth at constant price (%)
Inflation (%)
15
GDP deflator (%)
Total investment (% GDP)
10
5
0
2011-12 2012-13 2013-14 2014-15
FIGURE 4: LINE CHARTS SHOWING PROJECTED GDP GROWTH AT CURRENT PRICE
(%), GDP GROWTH AT CONSTANT PRICE (%), INFLATION (%), GDP DEFLATOR (%) &
TOTAL INVESTMENT (% GDP) COMPARISONS OVER YEARS.

8. FIGURE 5: PIE CHART SHOWING SECTOR WISE CONTRIBUTION TO GDP

9. WORLD ECONOMY AND BANGLADESH
Economy growth rate (%) 2007 2008 2009 Projections
2010
2011 2015
Bangladesh 6.3 6.0 5.4 5.4 5.9 6.2
Developing Asian economies 10.6 7.9 6.6 8.7 8.7 8.5
Emerging economies and developing 6.5 9.2 5.2 6.2 4.7 3.8
economies
Developed economies 0.2 0.5 0.4 0.4 0.3 0.1
World 5.2 3.0 -0.6 4.2 4.3 4.6

10. YEAR WISE INVESTMENT
Investment in USD million
3500
3000
2500
2000
Investment in USD million
1500
1000
500
0
199019911992199319941995199619971998199920002001200220032004200520062007200820092010
Figure 12: Line chart showing year wise Investment Inflow in USD million.

11. 25000
20000
15000
Employment opportunities (person)
10000
5000
0
Figure 13: Bar chart showing year wise Employment opportunity from Investment Inflow.

12. KEY SECTORS:
 Agribusiness
Ceramics
Electronics
Frozen Foods
Garments and Textiles
ICT and Business Services
Leather and Leather Goods
Life Sciences
Light Engineering
Power Industry

13. SECTOR WISE FOREIGN INVESTMENT (CY 1971-
2010)
Agro Based Chemical Engineering Food & Allied
Glass & Ceramics Printing Publishing & Packaging Tannery & Rubber Products Textile
Services Miscellaneous
Figure 14: Pie chart showing percentage of sector wise foreign Investment (CY
1971-2010)

14. EPZ BENEFITS AND INCENTIVES
The following are just some of the special incentives offered to businesses located in an EPZ:
 10 years tax holidays (5 years for new establishments commencing from 1st January 2012).
 Concessionary tax for five years, after the first ten.
 Duty and tax free exports from the zone.
 Intra and inter zone exporting and sub-contracting.
 Fully serviced plots.
 Readymade factory buildings.
 Available infrastructure facilities.
 Warehouses and bonded areas.
 Duty free import of machinery, raw materials, construction materials and spare parts.
 Sale of 10% finished product to domestic tariff area.
 Sale of 10% surplus raw material to domestic tariff area.
 Sale of 10% defective finished goods and domestic tariff area items.
 100% backward linkage and accessories items are allowed to be sold in export oriented
industries (deemed as exports).
 Sale of old/scrap machineries in domestic market.
 Business and administration support services.
 Customs clearances on site.
 Recreational amenities.

15. YEAR WISE INVESTMENT IN EPZS
Investment(million US$)
350
300
250
200
Investment(million US$)
150
100
50
0
2006-07 2007-08 2008-09 2009-10 2010-11(April)

16. NO. OF INDUSTRIES IN EPZS
180
160
140
120
100
No. of Manufacturing Industries
80 Industries under implementation
60
40
20
0
Chittagong Dhaka Comilla Mongla Uttara Ishwardi Adamjee Karnaphuli
Figure 17: Bar chart showing number of manufacturing industries and industries under implementations in EPZs.

17. SOME IMPORTANT INDICES FOR ATTRACTING
FDI :
 Doing Business Report Indices
 Human Development Report Indices
 Global Competitiveness Report Indices

18. DOING BUSINESS 2011

19. WHO IMPROVED THE MOST IN STARTING A
BUSINESS?
It’s a good indicator that Bangladesh is
in number 9 among the countries
which have improved significantly in
starting a new business. These types of
factors work as positive motivators to
the foreign investors.

20. WHO MAKES REGISTERING PROPERTY EASY—
AND WHO DOES NOT?
Registering properties in
Bangladesh is a long-tiring
task, which can frustrate
investors. So, in this sector
Bangladesh has to
concentrate very seriously
to attract more FDI.

21. WHERE IS ENFORCING CONTRACTS EASY —AND
WHERE NOT?
Another factor of concern is
that enforcing contract is not
easy rather situation is
comparatively worse here.
Steps should be taken to
overcome situation and
create positive impression
among investors throughout
the world.

22. GLOBAL COMPETITIVENESS INDEX

23. HDI VALUE ILLUSTRATION BY YEAR:
HDI Value
0.5
0.45
0.4
0.35
0.3
0.25
HDI Value
0.2
0.15
0.1
0.05
0
1980 1990 1995 2000 2005 2009 2010

24. AVERAGE ANNUAL HDI GROWTH RATE(%) BY
YEAR:
Average annual HDI growth rate(%)
2.05
2
1.95
1.9
Average annual HDI growth rate(%)
1.85
1.8
1.75
1980-1990 1990-2010 2000-2010

25. FACTORS AFFECTING FDI
 Infrastructure
 Macroeconomic Environment
 Governance
 International integration
 Political stability
 Human resources
 Technology infrastructure

26. COMPETITIVE ADVANTAGES
 Language
 Social Stability
 Human Resources
 Natural Resources
 Location
 Market Access
 GSP Facility
 Cost of Business

27. IMPEDIMENTS OF FDI IN BANGLADESH
 Complicated Bureaucracy
 Political Unrest
 Corruption
 High Inefficiency Cost
 Absence of Autonomous Regulatory Bodies
 Differential Treatment
 Insufficient Power Supply
 Inconsistent Policy Implementation
 Tax Authority’s Discretion
 Lack of effective cooperation of Board of Investment (BOI)
 Legal Absurdity
 Disrupting Fiscal Policy
 Administrative coordination problem
 Time wasting customs processing

28. RECOMMENDATIONS
 Ensure of Good Governance
 Coordinated Government Agencies
 Dynamic and Independent Govt. Agencies
 Accountability and Transparency
 Developing Diplomatic Relation
 Devoting Efforts to Shift FDI Track
 Ensuring Power and Energy
 Political Reformation

29. THANK YOU