FDI in Bangladesh
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FDI in Bangladesh

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FDI in Bangladesh FDI in Bangladesh Presentation Transcript

  • FDI in Bangladesh TREND AND IMPACT ANALYSIS OF FOREIGN DIRECT INVESTMENT:A CASE OF BANGLADESH Student presentation in the module INTMAN Winter semester 2012/2013 Rifat Ibne Jamal 10/01/2013 1/15
  • FDI in Bangladesh  Introduction  Why is today’s Presentation important? • Bangladesh - a potential FDI destination with interesting developing scenario • A scope for matching theoretical knowledge  Objective/Learning Target • To give audience a bird’s eye view about FDI in Bangladesh • To generate discussion:  in order to explain the impact of FDI trend in light of theoretical knowledge of Spillover Effect  To brainstorm furnishing any suitable recommendation that might be helpful in future 2/15
  • FDI in Bangladesh  Outline Key Economic Indicators Incentives Offered for the Foreign Investors FDI Trend –Bird’s Eye Views Components of FDI inflow Export Processing Zone (EPZ) Sectors for Prospective FDI FDI Inflows by sectors Factor Affecting FDI Growth Spill over Effect of FDI 3/15
  • FDI in Bangladesh Location of Bangladesh (source: BOI,BD) 4/15
  • FDI in Bangladesh  Key Economic Indicators     GDP Growth Rate- 6.3% ( 2011) GDP Per Capita Income- 772 USD (2011-12) Inflation Rate- 7.41% (Nov, 2012) Investment Contribution to GDP- 19.3% ( July 2011-May 2012)  FDI- 1136.38 Million (Jan-Dec 2011), 462.77 million (Jan-June 2012)  Export- 24.287Billion (2011-12)  Import- 35.44 Billion (2011-2012) Source: BOI 5/15
  • FDI in Bangladesh Incentives Offered for the Foreign Investors Tax Exemptions Generally 5 to 7 years. No import duty for export oriented industry For power generation exemption is allowed for 15 years Double taxation can be avoided on the basis of bilateral agreements. For other industry it s @ 5% ad valorem Export Processing Zone (EPZ) Full repatriation of invested capital, profit and dividend Four EPZ so far Wind up on investment either through a decision of the AGM or EGM Duty Remittance and Exit Directly supervised by Prime ministers office Repatriation of the sales proceeds after securing proper authorization from the Central Bank Specially allocated for FDI of manufacturing sectors 6/15
  • FDI in Bangladesh FDI inflow of Bangladesh (1996-2010) Source: Survey Report, Statistics Department of Bangladesh Bank and Foreign Direct Investment in Bangladesh (19712010), Board of Investment. 7/15
  • FDI in Bangladesh GDP Growth in Different Years(1996-2010) Source: Survey Report, Statistics Department of Bangladesh Bank and Foreign Direct Investment in Bangladesh (1971-2010), Board of Investment. 8/15
  • FDI in Bangladesh FDI Trends as Percentage of GDP Source:Bangladesh Economic Update ,Vol. 3, No. 2, February 2012 9/15
  • FDI in Bangladesh FDI Inflows (in million USD) by components in Bangladesh during 1996-2010 Source: Bangladesh Economic Update ,Vol. 3, No. 2, February 2012 10/15
  • FDI in Bangladesh Export Processing Zone (EPZ) -export oriented industrial enclaves -administered by Bangladesh Export Processing Zones Authority (BEPZA) -provide the infrastructures and administrative facilities -support services for a wide variety of enterprises -primary objective is to provide special areas for congenial investment climate, and location free from cumbersome procedures -So far 8 EPZs -Investors from 32 different countries Source: Survey Report, Statistics Department of Bangladesh Bank and Foreign Direct Investment in Bangladesh (19712010), Board of Investment. 11/15
  • FDI in Bangladesh  Overhead Costs- EPZ Cheap Utility Services : Water Supply : Tariff : 22.43 euro cents / cu-m. Gas Supply : Tariff : 6.45 euro cents / cu-m. Power Supply : Tariff : 6.11 euro cents / kwh. •Good ranking in FDI magazine by CTG EPZ (2010/11) among 200 out of 700 global economic zones -cost effectiveness category (3rd position) -Best economic potentials (4th position) • Source: Survey Report, Statistics Department of Bangladesh Bank and Foreign Direct Investment in Bangladesh (19712010), Board of Investment. 12/15
  • FDI in Bangladesh FDI Inflows by EPZ and non EPZ area in Bangladesh Source: Source: Survey Report, Statistics Department of Bangladesh Bank and Foreign Direct Investment in Bangladesh (1971-2010), Board of Investment. 13/15
  • FDI in Bangladesh  Sectors for Prospective FDI • Textile • Frozen Foods • Leather • Agro-based Industry • Information Technology • Power and renewable energy 14/15
  • FDI in Bangladesh FDI Inflows (in million USD) by sectors in Bangladesh during 1996-2010 Source: Source: Survey Report, Statistics Department of Bangladesh Bank and Foreign Direct Investment in Bangladesh (19712010), Board of Investment. 15/15
  • FDI in Bangladesh FDI Inflows (in million USD) by sectors in Bangladesh during 1996-2000. Source: Survey Report, Statistics Department of Bangladesh Bank and Foreign Direct Investment in Bangladesh (19712010), Board of Investment. 16/15
  • FDI in Bangladesh FDI Inflows (in million USD) by sectors in Bangladesh during 2001-2005. Source: Survey Report, Statistics Department of Bangladesh Bank and Foreign Direct Investment in Bangladesh (1971-2010), Board of Investment. 17/15
  • FDI in BD FDI Inflows (in million USD) by sectors in Bangladesh during 2006-2010 Source: Survey Report, Statistics Department of Bangladesh Bank and Foreign Direct Investment in Bangladesh (19712010), Board of Investment. 18/15
  • FDI in Bangladesh The country-wise FDI inflows in Bangladesh from top 10 investing countries during 1996-2010 [ Source: Board of Investment,Bangladesh. 19/15
  • FDI in Bangladesh The country-wise FDI inflows in Bangladesh during 1996-2000 Source: Survey Report, Statistics Department of Bangladesh Bank and Foreign Direct Investment in Bangladesh (1971-2010), Board of Investment 20/15
  • FDI in Bangladesh The country-wise FDI inflows (in million USD) in Bangladesh during 20012005 Source: Survey Report, Statistics Department of Bangladesh Bank and Foreign Direct Investment in Bangladesh (19712010), Board of Investment 21/15
  • FDI in Bangladesh The country-wise FDI inflows (in million USD) in Bangladesh during 20062010 Source: Survey Report, Statistics Department of Bangladesh Bank and Foreign Direct Investment in Bangladesh (1971-2010), Board of Investment 22/15
  • Trend of GDP, GDP Growth, FDII/GDP and FDII/GDP, Export, Export/GDP, FDI Inflow and Domestic investment over time Source of data: Bangladesh Board of Investment (BOI) 23/[Enter sum]
  • FDI in Bangladesh Source:BOI,Bangladesh 24/15
  • FDI in Bangladesh Factor Affecting FDI Growth Political culture Inefficient port handling Bureaucracy Inadequate infrastructure Power crisis Sloth information flow Corruption Sluggish administrative bodies 25/15
  • FDI in Bangladesh Ranking of Bangladesh:Doing Business Overall ranking: 107 out of 183 countries (2010) Subcategories: Starting a business: 79 out of 183 countries Registering property: 172 out of 183 countries Paying Taxes: 93 out of 183 countries Getting credit: 72 out of 183 countries Protecting investors: 20 out of 183 countries Trading across border: 112 out of 183 countries Enforcing Contracts: 179 out of 183 countries 26/15
  • FDI in Bangladesh Spill over Effect of FDI  Demonstration effect : by way of imitating industryspecific technology (food, cement )  Competitive effect:  Cost reduction ( telecommunication)  Scale economies, crowding out (textile and garments)  Via foreign trade -Exports: reduction in foreign market entry costs by way of imitation or cooperation with foreign affiliates; ‘learning-by-exporting’(light engineering) -Imports: import capital goods with embedded technology (telecommunication, cement, mining) 27/15
  • FDI in Bangladesh Spill over Effect of FDI in Graph Source: Stephan, J. (2012), The Technological Role of Foreign Direct Investments in Central East Europe, forthcoming 28/15
  • FDI in Bangladesh  Sources: • • • • • • • • • http://www.doingbusiness.org/rankings http://www.bangladesh.gov.bd/ http://boi.gov.bd/ https://www.cia.gov/library/publications/the-worldfactbook/geos/bg.html Bangladesh Economic Update ,Vol. 3, No. 2, February 2012 http://www.populstat.info/Asia/bangladc.htm http://www.fdiintelligence.com/ Rahman,A.,(2012): Foreign Direct Investment in Bangladesh, Prospects And Challenges, And Its Impact On Economy Mottaleb, K.A., 2007, Determinants of Foreign Direct Investment and Its Impact on Economic Growth in Developing Countries, MPRA Paper 9457, University Library of Munich 29/15
  • FDI in Bangladesh  Research/Discussion Question Considering yourself as CEO of an MNC, if you choose any preferable sector for entering in the market of Bangladesh through FDI mode, then how do you justify your motivation of strategy from the perspective of OLI paradigm? 30/15
  • Thank you for your attention! 31/15