The present situation of foreign direct investment in Bangladesh comes next in the report. This part shows us foreign direct investment in Bangladesh is increasing gradually though still not up to the satisfactory level with some necessary statistics. The foreigners perceive Bangladesh as a country of natural disaster and political instability which is another reason for the low flow of invest able funds.

1. 1
INTRODUCTION
The present situation of foreign direct investment in Bangladesh comes next in the report. This
part shows us foreign direct investment in Bangladesh is increasing gradually though still not up
to the satisfactory level with some necessary statistics. The foreigners perceive Bangladesh as a
country of natural disaster and political instability which is another reason for the low flow of
invest able funds.
Foreign direct investment plays a very important role in the economy of a least developed
country (LDC) like Bangladesh. This is because of the fact that the invest-able fund is very much
scarce in the country. Recently Government of Bangladesh has implemented quite a number of
steps for attracting foreign investors. These steps have resulted into enhancement of the foreign
direct investment. To get a clear picture of the current foreign direct investment position in
Bangladesh and what would be the prospect of it and what actions are taken by the government
and what the future holds for us we have availed this opportunity to select the topic for the study.
The report has two Purposes:
 Primary Purpose: The Primary Purpose is: To fulfill the requirement of “Reason to
increase FDI in Bangladesh last 2 years” course under BBA curriculum in Daffodil
International University.
 Secondary Purpose: The secondary Purpose is: To acquire practical knowledge on
"Foreign Direct Investment in Bangladesh"
FDI & IT’s PROSPECTS
FDI refers to the flow of capital between countries. According to the United Nations Conference
for Trade and Development (UNCTAD), FDI is 'investment made to acquire lasting interest in
enterprises operating outside of the economy of the investor.'*
FDI is distinguished from 'portfolio' investment in that, as well as being „lasting‟; it means that
the investor has control over the assets invested in. A single flow of capital between two
countries is described as outward for the investing country and inward for the recipient country.
FDI is undertaken by both private sector firms and governments.

2. 2
FDI associated with cross-border mergers and aquisions can be horizontal - where the firms are
at the same stage of production; vertical - where firms are at different stages of production; and
conglomerate - where firms are in different industries.
Prospects
Like most other developing and least developed countries, Bangladesh considers Foreign Direct
Investment (FDI) as an important resource for development. In order to attract more and more
FDI, the country undertook a massive liberalization of its investment programme. The Board of
Investment (BoI) was established in 1989 by the Investment Board Act to encourage investment
in private sector, to identify the hindrance of investment and provide necessary facilities and
assistance in the establishment of industries. The wide range of services BoI provides includes
investment promotion and facilitation covering support, suggestion and aftercare support to the
investors. The prime vision of BoI is to promote domestic and foreign investment as well to
enhance international competitiveness of Bangladesh and contribute to overall socio-economic
development of Bangladesh.
The encouraging thing is that the export has been showing steady growth and the trend is quite
encouraging. The foreign exchange reserve is more than US$27 billion and the inflation is within
manageable limit. The remittance earning is also satisfactory and showing little increase.
Remittance earning could be more had the government could send skilled and trained workers
abroad. The overseas employment ministry needs be more active in encouraging vocational
training so that the country could earn more than the present US$15 billion remittance. Another
grey area in the economy is that over 200 thousand foreign workers are working in Bangladesh
and about US$5 billion are taken out of the country by them. They are all skilled hands
employed mostly in the RMG sector. These technical people could be trained in Bangladesh and
the foreign workers could be discouraged and avoided to prevent outflow of foreign currencies.
Presently, except the Bagerhat coal fired electricity project, works in other big projects are slow.
The mobilization of domestic resources as well as encouraging FDI should be augmented.
Besides, the law and order situation along with country‟s politics should be stable so that the
foreign and local investors feel safe with their investment. Though the WB‟s projection is quite
encouraging, but the achievement of this target depends on several factors. The most important is

3. 3
ensuring socio-political stability and practicing democracy in all spheres of national life. A
national consensus should be forged to show the world that Bangladesh is truly stable and truly
democratic. If these political conditions and the macro-economic stability can be maintained, the
WB's projection may be achieved.
Reason to Increase FDI in Bangladesh
Bangladesh offers generous opportunities for investment under its liberalized Industrial Policy
and export-oriented, private sector-led growth strategy. All but four sectors-
 Arms and ammunition and other defense equipment and machinery.
 Forest plantation and mechanized extraction within the bounds of reserved forests
 Production of nuclear energy, and
 Security printing and mining.
are open for private investment in Bangladesh. The government‟s role is that of a facilitator
which helps create an enabling environment for expanding private investment, both domestic and
foreign. The Board of Investment (BOI), established by the government for accelerating private
investment, provides institutional support services to intending investors.
General Facilities/ Incentives
1. Tax holiday
Tax holiday facilities will be available for 5 or 7 years depending on the location of the industrial
enterprise. For industrial enterprises located in Dhaka and Chittagong Divisions (excluding Hill
Tract districts of Chittagong Division) the tax holiday facility is for 5 years while it is 7 years for
locations in Khulna, Sylhet, Barisal, and Rajshahi, Divisions and the 3 Chittagong hill districts.
Tax holiday facilities are provided in accordance with existing laws. The period of tax holiday
will be calculated from the month of commencement of commercial production. Tax holiday
certificate will be issued by NBR (National Board of Revenue) for the total period within 90
days of submission of application.
2. Tax exemption

4. 4
Tax exemptions are allowed in the following cases-
 Tax exemption on royalties, technical know-how fees received by any foreign
collaborator, firm, company and expert.
 Exemption of income tax up to 3 years for foreign technicians employed in industries
specified in the relevant schedule of the income tax ordinance.
 Tax exemption on income of the private sector power generation company for 15 years
from the date of commercial production.
 Tax exemption on capital gains from the transfer of shares of public limited companies
listed with a stock exchange.
3. Accelerated depreciation
Industrial undertakings not enjoying tax holiday will enjoy accelerated depreciation allowance.
Such allowance is available at the rate of 100 per cent of the cost of the machinery or plant if the
industrial undertaking is set up in the areas falling within the cities of Dhaka, Narayangonj,
Chittagong and Khulna and areas within a radius of 10 miles from the municipal limits of those
cities. If the industrial undertaking is set up elsewhere in the country, accelerated depreciation is
allowed at the rate of 80 per cent in the first year and 20 per cent in the second year.
4. Concessionary duty on imported capital machinery
Import duty, at the rate of 5% ad valorem, is payable on capital machinery and spares imported
for initial installation or BMR/BMRE of the existing industries. The value of spare parts should
not, however, exceed 10% of the total C & F value of the machinery. For 100% export oriented
industries, no import duty is charged in case of capital machinery and spares. However, import
duty @ 5% is secured in the form of bank guarantee or an indemnity bond will be returned after
installation of the machinery. Value added Tax (Vat) is not payable for imported capital
machinery and spares.
Other Incentives
 Citizenship by investing a minimum of US $ 500,000 or by transferring US$ 1,000,000 to
any recognized financial institution (Non-repatriable).

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 Permanent resident ship by investing a minimum of US$ 75,000 (non-repatriable)
 Special facilities and venture capital support will be provided to export-oriented
industries under “Thrust sectors”. Thrust Sectors include Agro-based industries, Artificial
flower-making, Computer software and information technology, Electronics, Frozen
food, Floriculture, Gift items, Infrastructure, Jute goods, Jewellery and diamond cutting
and polishing, leather, Oil and gas, Sericulture and silk industry, Stuffed toys, Textiles,
Tourism.
Statistical Report of Last 2 Years

6. 6
Actual Previous Highest Lowest Dates Unit Frequency
197.75 187.48 211.99 0.05 1972 - 2016 BDT Billion Monthly
Bangladesh key exports are garments including knit wear and hosiery (80% of exports revenue).
Others include: jute goods, home textile, footwear and frozen shrimps and fish. This page
provides the latest reported value for - Bangladesh Exports - plus previous releases, historical
high and low, short-term forecast and long-term prediction, economic calendar, survey consensus
and news. Bangladesh Exports - actual data, historical chart and calendar of releases - was last
updated on August of 2016.

7. 7
Bangladesh Trade Last Previous Highest Lowest Unit
Balance of Trade -89.35 -66.65 0.00 -128.40 BDT Billion [+]
Exports 197.75 187.48 211.99 0.05 BDT Billion [+]
Imports 287.10 254.13 287.67 0.57 BDT Billion [+]
Current Account 833.00 456.00 1644.00 -1638.00 USD Million [+]
Current Account to GDP -0.80 0.80 3.70 -4.40 percent [+]
Terms of Trade 86.05 85.89 104.70 80.01 Index Points [+]
Capital Flows 4.69 1.54 679.50 -12.72 BDT Billion [+]
Remittances 1214.48 1191.15 1491.36 1005.80 USD Million [+]
Gold Reserves 13.78 13.78 13.78 3.29 Tonnes [+]
Foreign Direct Investment 1700.00 1432.00 1726.00 276.00 USD Million [+]
External Debt 23.50 24.40 24.40 16.17 USD Billion [+]
Crude Oil Production 4.00 4.00 6.00 1.10 BBL/D/1K [+]
Terrorism Index 5.92 5.47 5.92 4.10 [+]
Information related to FDI in 2016:
 Bangladesh Imports at 287.10 BDT Billion
 Bangladesh Balance of Trade at -89.35 BDT Billion
 Bangladesh Consumer Price Index (CPI) at 224.13 Index Points
 Bangladesh Exports at 197.75 BDT Billion
 Bangladesh Cpi Transportation at 207.41 Index Points
 Bangladesh Inflation Rate MoM at 1.54 percent
 Bangladesh Food Inflation at 4.35 percent
 Bangladesh Inflation Rate at 5.40 percent
 Bangladesh Interest Rate at 6.75 percent
 Bangladesh Money Supply M3 at 10344200.00 BDT Million
 Bangladesh Money Supply M1 at 1740413.00 BDT Million
 Bangladesh Average One Month Interbank Rate at 3.70 percent
 Bangladesh Money Supply M2 at 8614.15 BDT Billion
 Bangladesh Current Account at 833.00 USD Million
 Deposit Interest Rate in Bangladesh at 8.20 percent
 Bangladesh Foreign Exchange Reserves at 28802.90 USD Million
 Bangladesh Money Supply M0 at 1070.59 BDT Billion

8. 8
 Bangladesh Employed Persons at 54.10 Million
 Bangladesh Consumer Credit at 7594.16 BDT Billion
 Bangladesh Capital Flows at 4.69 BDT Billion
Problems & Obstacles of FDI in Bangladesh
 Political Uncertainty: Unstable Political situation is the prime barrier to foreign direct
investment in the country. There are instances that frequent hartal, shutdown, and
transportation blockade shied away investors to other countries. In the 21st century,
foreign companies 24/7 service, so they cannot afford to pour in their hard-earned money
in a country of strike that hampers productivity‟s.
 Lack of Infrastructure: Infrastructure is the platform of new investment. Bangladesh
sometime loses FDI it cannot convince foreign investors on power, telecommunications,
port, roads and highways, utility and other facilities‟.
 Corruption: Corruption plays as a major barrier to overseas investment. Bangladesh‟s
corruption perception index discourages foreign investors‟.
 Excessive Bureaucracy: Excessive bureaucracy leads to delay in taking decision and
providing service and also leave scope for corruption. Many believe Tata and Asia
Energy are going to be victim of excessive bureaucracy and indecision in the government
machinery‟s.
 Image Crisis: All these political unpredictability, corruption, bureaucratic bottlenecks
natural calamity, and shortage of infrastructure earn Bangladesh a bad name in world
community. In spite of having cheap labor, competitive business cost and lucrative
incentives, the country often falls victim to image crisis when it comes to FDI.
RECOMMENDATION
 After all this discussion, we can say that only liberal government policy and incentive
packages can‟t do much to attract massive foreign direct investment.
 The Government should need an overall approach to overcome inefficiency in decision-
making, lessen bureaucracy and corruption in government bodies.

9. 9
 The Government should also improve our infrastructure; communication facility, power
supply and distribution by opening up these sectors to the private investors those
considered to be more efficient.
 We should also be more patient on our political issues and increase cooperation to solve
important national problems.
REFFERENCE
1. The Independent news channel by Prof. Sarwar Md. Saifullah Khaled at 26 March, 2016
00:00 00 AM.
http://www.theindependentbd.com/printversion/details/38545
THANK YOU