Challenges and threats that foreign investors are facing in Bangladesh

Foreign Direct Investment (FDI) is one of the most lucrative way for any recipient country to
increase their volume of exports, enhancing job opportunities and increasing government revenue.
Bangladesh is also considering Foreign Direct Investment as an important resource for
development. In order to attract more and more FDI, Bangladesh undertook wide range of services
includes investment promotion and facilitation covering support, suggestion and after care support
to the investors. The prime vision of BOI (The Board of Investment) 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 result is quite impressive as
Bangladesh a record level of foreign direct investment (FDI) inflow in 2018, topping the list in
South Asia. Creating history the FDI in 2018 is $3.61 billion, according to World Investment
Report 2019 by United Nations Conference on Trade and Development (UNCTAD).

Though the Bangladesh Government has taking lots of initiatives to attract more FDI, but there are
some challenges & threats that are facing by the investors in investing Bangladesh

Infrastructure

The host country's better infrastructure draws foreign investors. FDI depend mostly on quality and
quantity of physical infrastructure like roads and highways, transport, power, telecommunications
and so on. Banking and other financial services also affect the FDI inflows significantly. Good
transport facilities-road, rail and air, including developed port systems, energy and water and low
cost utilities like telecommunications are important infrastructural factors in attracting FDI.Both
the government and private sector need to come forward to invest in infrastructure development.
For the purpose, appropriate policies are needed such that the private sector can smoothly operate
in providing infrastructure services. Similarly, both public and private universities should come
forward in introducing courses/programs that produce graduates with technical and management
skills required in modern industrial and other activities.

Capacity to supply adequate electricity and gas, water supplies to industries

Industries in Bangladesh are not getting adequate power supply, gas and water supplies in their
industry. Moreover they have to pay high price for using electricity and gas to Distribution
Company. But there is a good news that Bangladesh has taken initiatives in building power plants
which will reduce the inadequacy of electricity supply.
Political Unrest

The political situation in Bangladesh is extremely vulnerable because of the continuous

dissatisfaction among the political parties, which in turn pollutes the entire investment
environment. It is unfortunate that Bangladesh is an exception where most of the political violence
centered on industries. Even EPZs are not exempted by any means. However, the situation has
been apparently improved since the present interim government has taken over.

Human resources

Skilled workforce is a key resources in any country. In Bangladesh the young people are in
adequate numbers. But they need to skill up themselves by the technical knowledge to become a
better resources. The company who is going to invest in Bangladesh will be attracted by the
manpower that should have skill to do the job. Otherwise they will show lack interest on investing
in Bangladesh. So the government should increase the facility to give this vast young workforce
with adequate knowledge to help them becoming competitive.

Complicated Bureaucracy

Bureaucratic inefficiencies discourage investment in Bangladesh.Complicated administrative

procedures and lack of transparency in regulatory and administrative systems can frustrate
investors seeking to undertake projects in the country.

Corruption

Bangladesh is well known for its corruption rate all over the world. Though the scenario has
changed for few years but the corruption didn’t eradicate permanently. In a recent report titled
‘2017 National Trade Estimate Report on Foreign Trade Barriers’ declared the corruption is the
key barrier for FDI in Bangladesh.

Weak law, order, and enforcement raise security concerns among foreigners

The collapse of the Rana Plaza building and the death of 1,129 workers in April 2013 highlighted
health and safety concerns in the country’s factories. Moreover, weak law enforcement agencies
also a matter of concern for the investors security issue. So the foreign investors are investigating
this matter before making any investment. The government is taking many possible steps to build
secure and stable healthy environment for the investors in different sectors.
Export promotion zone (EPZ)

EPZ is important to attract the FDI in Bangladesh. The EPZ should have all the basic infrastructure:
electricity, water & gas, fully serviced plots available, Factory building available on rental basis,
Enclave for workers Dormitory and Day Care Centre, Warehouse/ go down available. Till now
Bangladesh is lacking in providing all this facilities.

In spite of all the challenges and threats the FDI in Bangladesh has increased in the recent years.
The government is also taking measureable steps like investment promotion and facilitation
covering support, suggestion and after care support to the investors. Also factors such as sound
economic growth, a young talented workforce, and infrastructural development necessary to attract
investments are visible in Bangladesh. So foreign investors have poured funds here, giving FDI a
sharp rise, despite global slowdown. Bangladesh needs to undertake effective promotion measures
to convince the potential foreign investors that their involvement in business activities in the
country is valued, they would be facing friendly regulations, and they can enjoy investment
incentives that are competitive with those offered by other countries in the region and the
developing world. The country also trying to move forward through implementing investment-
friendly policies, simplifying regulatory practices, and removing inefficient bureaucratic
procedures.
References:

https://www.thedailystar.net/law-our-rights/law-analysis/news/making-bangladesh-attractive-fdi-
destination-1707178

https://www.thedailystar.net/news-detail-241435

https://www.lawyersnjurists.com/article/socio-economic-role-of-export-processing-zone-epz-in-
bangladesh/