Understanding FDI

FDI Major Role (?) In Global Business Arguments For & Against FDI FDI for Quick Pay Backs (Outflows) FDI, CSR & Fanfare for People FDI, BRIC and Argentina FDI & Transfer Pricing

Slide-1

FDI Types

Outward

Inward

Classified on Routing Basis

Vertical FDI

Slide-2

FDI in Past & Near Future

Global FDI in USD1999 636 bln

2010 (Forecast) 1.2 Trillion

2011 (Forecast) 1.3-1.5 Trillion

2012 (Forecast) 1.6 – 2. Trillion

FDI by M & A

Investments in High Tech Sectors- Complicated

Slide-3

FDI for Going Global

• Investment Decisions from Assessment of Internal Resources Competitiveness Market Analysis & Expectation Incentives for FDI Infrastructures etc Local Regulations Payback Time Profitability and Repatriation

Slide-4

Studies on FDI FDI Role- Not Substantiated FDI, Account for mere 2% of Global GDP Profit Repatriation by MNC exceed FDI

Inflow FDI in Form of High Tech as Equity FDI for Transfer of Skill & Expertise FDI is Partly Pro-cyclical

FDI & Portfolio Inv. Equally Unreliable

Slide-5

FDI & Employment M & A of FDI hardly promote Employment FDI in Machineries & Intellectual Property FDI causes 60 – 70% Job Losses FDI has Limitations, yet welcome FDI for kleptocracies in governance

misrouted to Swiss & Cypriot Bank A\C Causes Asset Bubbles from black money

Slide-6

World Investment Report 20101. Global Inflow in Billion USD

Year Developed Developing Others Total

2007 1444 565 91 2100

2008 1018 630 123 1771

2009 566 478 70 1114

2. Global Outflow in Billion USD

Year Developed Developing Others Total

2007 1924 292 52 2268

2008 1572 296 61 1929

2009 821 229 51 1101

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3. A LOOK AT TOP 20 FDI RecipientsSlide-8

4. UNCTAD FDI FORECAST

5. Global Economy Contracted 2% in 2009 to grow by 3% in 2010. Net Growth ?

Year USD

2010 1.2 Trillion

2011 1.3 Trillion

2012 1.6 Trillion

Slide-9

FDI in Bangladesh FCY Promotion & Protection

Act 1980 For FDI FDI is welcome

Year Million USD

2009 900

2008 793

2007 793

2006 989

2005 845.30

Special Zones for FDIRefer to Table-2 (Page-6)

Slide-10

FACTS ABOUT BANGLADESH FDI

81% of Total Investment for Private Sector

FY 2008-2009- Private Inv. Tk.120,200 Cr.FY 2009-2010 Tk.136,285 Cr.

14.6% of GDP in FY 2008-2009 and 19.74% of GDP in FY 2009-2010(Prov) Table 4 shows - Doing Business &

Bangladesh

Slide-11

Private Inv. Proposal in 2009-2010 Tk 12,637 Cr. and FDI Tk. 4,262 Cr. Upto Feb 2010(BOI).

Bangladesh Performed Better during Financial Crisis- FDI attracted from EU, ASEAN & FarEast

Bangladesh BB Forum for Facilitating

Recent FDI & Investment Trends

Table-1 Vs Table-3

Slide-12

Recurrent Bangladesh & Draft SFYP

GDP to grow by 6%+

Past 3 years GDP grew 5.9% Average

Poverty 56.67 in 1991/92 to 40% in 2005

5% Top have 20.85 times Income over 5% Bottom

Slide-13

PPP- 2% GDP in 2011 to 6% in 2015

GDP to grow 8% in 2015

Private Inv. 32% of GDP in 2015

from 19%

Average yearly 29.6% Inv. in 2015

Power Generation of 9426 mw Added From US$ 9.5 Bln. Investment by 2015

Slide-14

Profitability Attracts FDI

FDI Constitute some 2% of Global GDP

Can FDI alone Finance Development ?

Bangladesh FDI

FDI (FY 2010) USD 900 mln

Private Investment Tk 136,285 Cr.

GDP- USD 100 bln

Oversight on FDI Needed

Globalisation For Bangladesh

Not Bangladesh for Globalisation

CONCLUSIONSlide-15