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Opportunities & Challenges of FDI in Bangladesh

Objective:

The purpose of this literature is to provide informative knowledge on theopportunities that are available for foreign direct investment(FDI) in Bangladesh

and also providing information on the challenges regarding FDI in the country. Inthis literature there will be brief notifications on factors that affects FDI and alsowhat are the competitive advantage that are present regarding this issue.Opportunities that are present in this country and the challenges that are met in thisaspect, also providing recommendations in regards to what should be done toovercome the challenges.

Introductions:

Foreign Direct Investment (FDI) is considered as one of the vital ingredient sfor overall development process of a developing country like Bangladesh .

Industrial development is an important pre- requisite for economic growth of adeveloping country. Bangladesh is basically a country of agrarian economy. Forher economic development, industrial economy is imperative. So Bangladesh isgradually moving from agrarian economy to industrial economy. In the age ofglobalization, it has become a burning issue to exchange views, ideas, capital andhuman resources. Government of Bangladesh is trying to create a favourableinvestment environment through introducing economic policies, incentives forinvestors, promoting privatization and so on. Therefore, the contribution of FDIis necessary in the enhancement of a countrys economic growth.

Factors Affecting FDI:

Infrastructure Macroeconomic environment Governance International integration Political stability Human resource Technological infrastructure

Competitive Advantage:

Language Social stability Human Resources Natural resources Location Market access GSP facility Cost of business

Opportunities:

Unique opportunities in energy and power Infrastructures

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Opportunities & Challenges of FDI in Bangladesh

manufacturing and knowledge- based sectors will attract substantialinvestment

Bangladesh has become a least cost producer in the world low - cost workforce strategic location

regional connectivity and worldwide access strong local market and growth low cost of energy proven export competitiveness competitive incentives positive investment climate

Challenges:

Poorly developed socio-economic and physical infrastructure Complicated Bureaucracy

Lack of skilled people at various levels Unreliable energy supply Insufficient power supply Lack of effective cooperation of Board of Investment (BOI) Disrupting fiscal policy Corruption Administrative complexity and non-transparency Poor implementation of existing policies Low labour productivity Frequent change in govt. policies Unhealthy trade union practices Underdeveloped money and capital markets and regulations on these

markets Less improved seaport facilities & malpractices at the port Deteriorating law and order situation Political instability and disturbances High cost of doing business Time wasting customs policy Redtapism and corruption in getting infrastructural facilities Unfriendly legal system

Recommendation & Conclusion:

FDI is viewed as a major stimulus to economic growth in developingcountries as it brings prosperity to the recipient countries through technologicaltransfer, increasing volume of exports, enhancing job opportunities andincreasing government revenue. Realizing the importance of FDI, Bangladeshoffers one of the most liberal regimes for FDI in South Asia and these policies areproducing results in terms of increased inward investment. Despite, FDI inflow in theSAARC region particularly in Bangladesh is not satisfactory. Furthermore, the lionsshare of FDI is being repatriated.

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